Despite cutting 80% of staff, reinstating some unsavory voices and now changing its globally recognized name to X, the company formerly known as Twitter continues to draw crowds. Not Facebook or YouTube-sized crowds, but a lot more people than you’re likely to find pretty much anywhere else.
Which makes it surprising to many in the ad industry that the company seems to be doing everything in its power to make being an advertiser on the platform as unpalatable as possible. In fact, thanks to all the turmoil, ad revenues are down 50% since October.
While many have pointed to hiring ad vet Linda Yaccarino as CEO as the company’s attempt to address this, the truth is, Twitter has never functioned particularly well as an ad-supported business.
Maybe after more than ten years of trying, taking a different path is the right thing to do.
Per Yaccarino, this different path appears to involve turning X into an “everything” app encompassing “audio, video, messaging, payments/banking – creating a global marketplace for ideas, goods, services and opportunities.”
Many observers are finding this grand vision far-fetched, pointing out, for example, that X couldn’t even remove the bird logo from its San Francisco headquarters without getting the police involved.
Yet at the same time, there’s a certain unremarked humility if you squint a little. Musk isn’t trying to make X into an ad behemoth where everyone else has failed. Instead, he’s taking that lesson to heart and trying something new.
And while the general consensus seems to be that Musk has engineered a non-stop dumpster fire since acquiring Twitter, two facts would seem to contravene this.
First, despite nine straight months of upheaval, users have not fled Twitter en masse. Users are down, but according to SimilarWeb, Twitter’s website still ranks as number five in the world by traffic.
Second, Musk’s controversial management style and mass layoffs have won plaudits and been copied by other business execs, including Meta’s Mark Zuckerberg, who said that the Twitter layoffs were “good for the industry.” This from someone who is allegedly contemplating a physical fight with Musk.
None of this is to say X is destined to succeed. But Musk’s actions haven’t killed the company yet, despite dire prognostications. Not only are everyday people still using X, but the platform remains the public square where journalists, academics and politicians break news and talk about serious issues.
X can’t fully ditch advertising – at least not yet. The company recently announced a program that gives top content creators a cut of the ad revenue generated from their posts. Someone needs to be buying ads for that to work – not to mention, to keep the lights on at the company.
But on a longer time horizon, X’s ambitions clearly involve new revenue streams. How quickly these can be realized and what exactly they are – outside of selling blue check marks – remains to be seen.
While some argue that Musk’s success with PayPal, Tesla and SpaceX has blinded him to his potential fallibility when it comes to X, the flip side is that maybe absolute failure isn’t the foregone conclusion many think it is.
Tesla remains the world’s most valuable car company. And through SpaceX, Musk “has become the most dominant player in space,” according to a recent article in The New York Times, which details just how reliant governments and militaries worldwide have become on the company’s technology.
Finally, it can’t be overlooked that with all the drama and attention swirling X, Elon Musk appears to be having the time of his life. And really, isn’t that what it’s all about?
Peter Epstein is CEO of Silver Triangle.