Twitter aims to diversify beyond advertising, but can it be done? – News

The advertising situation on Twitter has been particularly dire since Musk took over the company in late October



AFP files

AFP files

By AFP

Published: Fri 25 Nov 2022 at 22.08

Is it a dream or a possibility? Elon Musk wants to diversify Twitter’s revenue stream beyond advertising, a feat none of the major social networks have yet achieved.

Something of a gold standard, social media ads can be tweaked and tailored to individual users on a mass scale, and have been particularly lucrative for Meta’s Facebook and Instagram as well as Google.

“Facebook pretty much set the standard for having an advertising model for social networks,” said Jasmine Enberg, an analyst at Insider Intelligence. “But that doesn’t necessarily have to be the way social platforms make money.”

Social networks face budget cuts from inflation-hit advertisers and increased regulations on the use of lucrative personal data, so it makes sense for them “to explore new, non-ad revenue-generating techniques,” she said.

The issue is sensitive for Twitter, whose revenue is 90 percent dependent on advertising. Advertisers, on the other hand, don’t necessarily need Twitter and can turn to other social networks.

The advertising situation on Twitter has been particularly dire since Musk took over the company in late October.

In recent weeks, half of Twitter’s top 100 advertisers have announced they are suspending or have otherwise “apparently stopped advertising on Twitter,” an analysis by the nonprofit watchdog group Media Matters found.

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They fear being associated with toxic content as Musk, who describes himself as a “free speech absolute”, advocates for looser moderation.

Social media is testing two alternative solutions in particular: charging everyday users and charging content creators.

Forum platform Reddit has implemented a hybrid model that monetizes via advertising, paid subscriptions, and digital coins that grant users access to special privileges.

That said, “it’s always hard to charge for something that used to be free,” said Carolina Milanesi of research firm Creative Strategies.

“Unless you provide something different or create a different product, you can’t go from not charging to charging,” she said.

While Twitter has offered a paid subscription with additional features since last year, Musk aimed to raise the price to $8 a month and include account verification in the plan’s perks.

However, a partial launch was chaotic and caused the proliferation of so many fake accounts that the rollout of so-called Twitter Blue has now been paused.

“Finding a way to charge users for premium features and monetize users is not a bad idea,” Enberg said.

But she said the benefits offered by Twitter may not have been enticing enough, and that the verification aspect should be more of a security feature than a monetization feature.

Finally, because paid subscribers – arguably the most active on the network – would see 50 percent less advertising than non-paying users, the plan would “dilute the quality and size of the addressable audience for advertisers”.

Some newer platforms are trying to do without advertising altogether with no guarantee of long-term viability.

For example, on Discord, a social network for live discussion, subscribers have access to several emoticons.

And on fledgling photo-sharing app BeReal, users can escape ads with in-app purchases for extra features, according to the Financial Times.

Twitter had about 230 million daily active users in June, and Musk continues to congratulate himself on growing that number since the takeover.

But more users don’t necessarily translate into dollars.

Snapchat, which also launched a paid version in June, has gained more and more users, but not necessarily money.

Faced with this reality, platforms are competing for content creators to attract and retain audiences – and either take commissions or get them to pay to promote their messages and videos.

This represents “a really big opportunity” for Twitter, Enberg said.

Twitter “has a lot of celebrities and well-known influencers, politicians and journalists” with whom it could form a mutually beneficial financial relationship, she said.

Milanesi added that while the network already offers some promotional tools, they are “quite expensive and not very effective”.

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