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Insider Intelligence Slashes Advertising Forecast by 37% Following Musk’s Takeover
Insider Intelligence Slashes Advertising Forecast by 37% Following Musk’s Takeover
April 11, 2023 – A clearer picture is emerging of Twitter’s ad business after Elon Musk’s takeover nearly six months ago—one of significant damage to the company’s core revenue stream.
Insider Intelligence has slashed Twitter’s global ad revenues by 37% in our latest worldwide ad revenues forecast. This is the second consecutive downgrade since Musk first offered to buy the company in April 2022. In Q3 2022, we decreased our outlook for the company’s ad business by 30% compared with the prior forecast.
We expect Twitter’s global ad revenues to plummet 27.9%, from $4.14 billion in 2022 to $2.98 billion by year-end 2023. As a result, its share of the global digital ad market will slightly shrink from 0.8% to 0.5%. For comparison, our Q3 2022 forecast projected 2023 revenues at $4.74 billion.
“The biggest problem with Twitter’s ad business is that advertisers don’t trust Musk,” said Jasmine Enberg, principal analyst at Insider Intelligence. “None of Twitter’s efforts to bring back major advertisers—including ad incentives and brand safety partnerships—will work with Musk at the helm. Twitter needs to unravel Musk’s personal brand from the company’s corporate image to regain advertiser trust and bring back ad dollars.”
US AD REVENUES
We forecast Twitter’s US ad revenues will decline by 28.6% in 2023, from $2.36 billion to $1.68 billion. Twitter’s share of the US digital ad market will drop from 1.0% to 0.6%.
UK AD REVENUES
In the UK, the company’s ad revenues will drop from £282.1 million ($347.6 million) in 2022 to £202.2 million ($249.1 million) by the end of this year, a decrease of 28.3%.
“Twitter’s content moderation and ad performance issues predate Musk, but they weren’t necessarily dealbreakers because advertisers trusted that Twitter was on their side,” said Enberg. “True, Musk exacerbated many of those problems, but as brands and advertisers consider whether to resume spending, they are now grappling with the larger question of whether to spend on a platform defined by chaos, arbitrary changes, and uncertainty over its future.”
We also believe subscription service Twitter Blue won’t make up for the lost ad revenues.
“The blue check mark no longer stands for credibility,” said Enberg. “It represents clout on a platform whose cultural relevance is fading, along with support for Musk. There’s no reason for previously verified individuals and organizations who relied on the blue check mark to establish authority to pay, and many users don’t want to be seen as supporting Musk and what they believe he represents.”
USAGE
Last December, we projected that Twitter would lose users for the first time since we started tracking the metric in 2008. Its worldwide user base is anticipated to decline by 3.9%, with another 5.1% next year (read full press release). That’s a loss of 32.7 million users in just two years.
In the US, Twitter’s core user base of those ages 18 to 44 won’t change. The steepest declines in the US will come from users ages 45 and older and 17 and under. Many of those are marginal users, and some started using the platform only last year to watch the acquisition drama unfold. Political preferences also play a role in users’ decision to leave or stay.
TIME SPENT
We forecast time spent on Twitter among US Twitter users will decline by two minutes in 2023 and another two minutes in 2024. That’s partly due to the proliferation of hateful content and technical issues on the platform under Musk, but it’s also because of longstanding challenges. Twitter lags in social video—which is the single biggest driver of time spent on social media.
“Twitter engagement is still heavily dependent on the news cycle,” said Enberg. “The takeover saga caused a spike in time spent in 2022 that has now dissipated, as users have lost interest in Musk’s antics.”
“At the same time, Twitter continues to struggle with creators. Creators are critical to social media engagement. While Musk has said he plans to improve creator monetization on the platform, Twitter’s new ad-revenue-sharing program for reply tweets won’t been enough to move the needle for most creators, and they have to sign up for Twitter Blue to be eligible.”
Methodology
Insider Intelligence forecasts and estimates are based on our proprietary analysis, and include both quantitative and qualitative data curated from public companies, government agencies, research and media firms, and interviews with expert executives in relevant fields. We regularly re-evaluate available data to ensure our forecasts reflect the latest business and economic developments and trends.
About Insider Intelligence
Insider Intelligence is a leading research provider focused on digital transformation. We empower professionals with actionable data, insights, and analysis to make informed decisions in a digital world. Formed as a merger of eMarketer and Business Insider Intelligence in 2020, we produce nearly 200 forecasts, 300 reports, 7,000 charts, and 1,500 newsletters across the Advertising, Media, and Marketing; Financial Services; Healthcare; and Retail and Ecommerce industries. Insider Intelligence is a division of Axel Springer S.E.
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