Twitter troubles escalate as advertising boycott grows

Just over a fortnight since Elon Musk’s $44bn (£38.1bn) deal for Twitter went through, it is fair to say the buyout is hardly going smoothly, with the social media giant facing a growing advertising boycott, a celebrity exodus, a class action lawsuit from former employees – and even possible bankruptcy.

In fact, the writing was on the wall within hours of the deal, with General Motors, General Mills, Mondelez International and Volkswagen AG all pausing their advertising on the platform seemingly even before the ink was dry.

They were followed swiftly by advertising group IPG, whose clients include American Express, ExxonMobil, JustEat, Mattel and Spotify.

Meanwhile, WPP-owned Group M is now advising its clients – including Colgate-Palmolive, Ford, Google, L’Oreal, LVMH, Nestle and Uber – that the site is a “high risk” media buy.

Its advice warns marketers: “Based on the news yesterday of additional senior management resignations from key posts, high profile examples of blue check abuse on corporate accounts, and the potential inability for Twitter to comply with their federal consent decree, GroupM’s Twitter Risk Assessment is increased to a High-Risk rating for all tactics.”

And it emerged over the weekend that Omnicom Media Group is also telling its clients to pause their spending on Twitter in the short term, at least.

A leaked memo from the group, which serves 5,000 clients in 70 countries, including McDonald’s and Apple, states: “Twitter’s ability to maintain their previous level of brand safety measures and effectiveness seem impeded in the immediate term.

“Whilst OMG believes this is unlikely to result in a significantly higher risk environment for advertisers, the risk of being associated with unsafe content could rise and as such should be considered when deciding on use of the platform.”

Musk has even warned that filing for bankruptcy is a distinct possibility in an email to staff, in which he wrote: “Sorry that this is my first email to the whole company, but there is no way to sugarcoat the message. Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn.”

In fact, one of the few companies which seems to be backing the site is Elon Musk’s own SpaceX, which has bought an advertising package on Twitter for its satellite internet service Starlink, although even he does not seem that confident of success having tweeted that “SpaceX Starlink bought a tiny – not large – ad package to test effectiveness of Twitter advertising in Australia & Spain. Did same for FB/Insta/Google”.

Twitter, which generated more than 90% of its second-quarter revenue from ad sales, must now try to reassure advertising giants that the site is worthy of their budgets, in a market that already has the jitters due to the global economic meltdown.

So far, Musk has blamed Twitter’s “massive drop in revenue” on a coalition of civil rights groups that has ramped up pressure on advertisers, demanding they suspend ads globally after he laid off roughly half of the staff.

Directly addressing brands who have paused their ads, Musk said: “I understand if people want to give it a minute.” But he added that “the best way to see how things are evolving is just use Twitter.”