By David F. Carr, Senior Insights Manager, Similarweb
There has been no shortage of headlines surrounding Twitter following Elon Musk’s takeover. From mandatory long working hours to paid-for verification, the tech CEO’s changes to the platform have been consistently dominating the news cycle.
These changes have had a significant impact on Twitter’s engagement. Over 1 million users have already left the platform and another 32 million are forecasted to jump ship over the next two years. Musk’s tumultuous takeover of the social media platform has not gone down well with many users.
This exodus of users and constant negative headlines could spell trouble for Twitter. 90% of the platform’s revenue is generated by advertising and this growing negative public sentiment could drive brands away from the platform – a move which appears to have started already.
How digital market data can highlight potential revenue woes for Twitter
Web and app traffic can be used to gain insights into consumer behaviour, market trends, and business performance, including advertiser interest in Twitter.
The standard way of advertising through Twitter is through its advertising portal (ads.twitter.com). Analysing traffic to this portal provides an understanding of interest in Twitter advertising and, by extension, its revenue outlook.
So, what do the numbers show?
Advertisers are leaving the platform Looking at traffic to Twitter’s advertising portal in March 2023 and comparing it to a year prior (five months before Musk’s takeover) can give us a good understanding of brand interest for Twitter advertising.
The numbers don’t look good for the platform. Between March 2022 and March 2023, traffic to Twitter’s ad portal fell by 18.7%. This shows that the drop in users and news headlines could have had a significant impact on brand perception of Twitter as a viable advertising avenue.
Similar figures are also recorded on a quarterly basis. Comparing Q1 2023 with Q1 2022, we can see a 17.8% decline in traffic, further reinforcing the fact that brands may not be happy with Musk’s iteration of the social media platform.
These figures should be worrying to Twitter. Such a steep decline in advertising traffic to the platform’s ad portal will likely have a strong knock on effect on revenue. And given that most of the company’s revenue comes from advertising, this will have a huge impact on its overall outlook.
Twitter’s loss is Snapchat’s gain
There may also be more for Musk to worry about alongside revenue loss. Reducing spending in Twitter advertising will leave brands with larger marketing budgets for other areas. And this budget could go towards Twitter’s competitors.
It appears that this is already in effect. While Twitter has lost 18.7% of traffic to their advertising portal over the last year, Snapchat has seen a drastic increase of 127.5% traffic to theirs (ads.snapchat.com) in the same timeframe.
Additionally, Pinterest and TikTok’s advertising portals are also on the rise, with traffic increasing by 30.5% and 23% respectively. It’s clear that Twitter’s loss is good news for other social media platforms.
Advertisers leaving Twitter in favour of other social media platforms could be cause for concern. If they find greater success reaching new audiences on other platforms, they may allocate their resources there permanently. Twitter will have to work hard to regain lost advertising and maintain competitiveness in the social media advertising landscape.
A positive outlook
While data over the last year shows a worrying outlook for Twitter, it doesn’t tell the full story. Traffic to ads.twitter.com increased by 8.6% between February 2023 and March 2023. This could suggest that advertisers are returning to the platform following an initial rocky takeover.
There could also be other factors at play that influenced the decline in traffic. Similar to Twitter, Facebook and Instagram (which share an advertising portal) saw a 2.6% decline in traffic between March 2022 and March 2023. And again, just like Twitter, they saw an increase in traffic between February 2023 and March 2023. This shared pattern could mean that it wasn’t Elon Musk’s takeover that caused the decline in brands advertising on the platform.
One possible factor that could have had an impact is the wider economic sentiment. Rising inflation and the potential looming recession mean that budgets are tight and brands are having to focus their spending on the highest-value areas. And over the last year, this may not have been Twitter.
Advertisers also want to reach the largest audience in the most cost-effective way, and lately, Twitter’s population of active users is falling. Web traffic fell, on a year-over-year basis, for the first three months of 2023 and by 7.3% in March, while app user engagement also declined.
Whether because of Elon Musk’s takeover, pre-existing weaknesses in the business, or economic challenges, Twitter is struggling, and those who advertise and market themselves through the platform are challenged to decide how much to continue to focus on it.