Twitter or the challenge of doing without advertising

Elon Musk wants to diversify Twitter’s revenue streams beyond advertising, but no major social network has ever done without advertisers.

“Facebook has quite simply fixed the economic model”, says Jasmine Enberg of the firm Insider Intelligence: the service, free, is paid for by selling advertising space.

This model has proven particularly profitable for Meta (Facebook, Instagram) and Google (search engine, YouTube), which can fine-tune ads on a massive scale.

But “this is not the only way”, tempers the analyst.

Faced with budget cuts for advertisers affected by inflation and increased regulation of personal data collection, “all platforms are exploring other methods.”

The situation is particularly difficult for Twitter, which depends 90% on advertising for its turnover, but where advertisers can do without more easily than its neighbors.

It has been a disaster since Tesla’s boss took over at the end of October.

According to the NGO Media Matters, half of Twitter’s 100 major advertisers have announced that they have suspended or “appear to have suspended” their spending on the social network.

They fear being supported by increasingly toxic content, as the new owner, who is a big fan of provocations, is pushing for looser moderation.

Elon Musk “did not understand that Twitter is a brand in itself. The platform has cachet. Now companies no longer want to be associated with it”, said Sarah Roberts, social network specialist at UCLA University.

– Taxation of users –

Platforms try two types of solutions: charge users and/or content creators.

Reddit, a forum platform, has a hybrid model with advertising, a paid subscription and tokens that provide access to privileges.

But “it’s always complicated to ask for money for something free,” sums up Carolina Milanesi of Creative Strategies, “unless you bring something new”.

Twitter’s developer conference in April 2010 (GETTY IMAGES NORTH AMERICA/AFP/Archives – JUSTIN SULLIVAN)

Twitter has been offering a paid subscription with additional features since last year.

Elon Musk wants to raise his price to $8 a month – the equivalent of the cheapest deals for Disney+ and Netflix – and include account verification.

But the partial launch was messy, and prompted an explosion of fake accounts that ended up being shelved indefinitely.

“The idea is not bad in itself, but he did not see the right price level,” said Jasmine Enberg.

“The benefits may not be attractive enough to get enough people to sign up. And account verification is to ensure the integrity of conversations, it shouldn’t be charged.”

“Blue Verified” subscribers – arguably the network’s most active users – will also have half of the advertising exposure, which will “reduce the quality and size of the audience” for advertisers, he believes.

Newer platforms are trying to do without advertising entirely, with no guarantee of long-term profitability.

In Discord, a social network for live discussions, users can subscribe to gain access to more emoticons, in particular.

New platform BeReal, which is enjoying huge success, is also hoping to break away from brands with in-app purchases, according to the Financial Times.

– Taxing influencers –

Twitter had about 230 million daily active users as of June. Elon Musk continues to congratulate himself on growing the number of users since he took over.

Elon Musk at the presentation of the new Tesla Model Y in Hawthorne, California, in March 2019 (AFP/Archives - Frederic J. BROWN)
Elon Musk at the presentation of the new Tesla Model Y in Hawthorne, California, in March 2019 (AFP/Archives – Frederic J. BROWN)

But it doesn’t necessarily translate into dollars.

Snapchat, which also launched a paid version of its application in June, has more and more users, who pay less and less.

Faced with this fact, platforms compete for the favors of content creators, to attract and retain audiences, but also take commissions from their income or pay them for promoting their messages and video.

“This represents a great opportunity for Twitter, with many celebrities, political figures and journalists with whom the company can enter into fruitful partnerships for both parties,” said Jasmine Enberg.

The tweet network already offers promotional tools, but they are “expensive and not very effective”, judge Carolina Milanesi.

Following the same principle as the Apple and Google app stores on smartphones, which take a percentage of the profit, you have to justify these commissions by investing in “services that really create value”, he insisted .

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