After months of histrionics and legal wrangling, Elon Musk’s off-again-on-again purchase of Twitter became official on October 27, 2022—little more than six months after the high-profile mogul first revealed that he had become the platform’s largest stakeholder. Almost immediately after the acquisition closed, General Motors suspended its Twitter advertising and a number of celebrities announced that they were quitting the platform altogether.

Given that Twitter remains a relatively small player in the social advertising space (consider that in 2021, Alphabet’s revenue was more than 50 times larger than Twitter’s; Meta’s was 20x), it would be easy to overreact to this news. But at the same time, Musk’s purchase represents more than a mere change of ownership. So, as Twitter and Musk continue to dominate the headlines, it’s reasonable to ask: What should your next move be? We have some thoughts.

Reasons for Optimism

What He’s Said

Even though Musk once infamously tweeted “I hate advertising,” since becoming the CEO he has said the right things about the future of Twitter as an advertising medium. In a “Dear Twitter Advertisers” tweet posted the morning of the acquisition, he said that he “believes that advertising when done right, can delight, entertain and inform you,” and that “Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise.”

Marketers are also encouraged by the fact that, in the back-and-forth leading up to the acquisition, Musk made the number of spam bots on the platform a central point in his negotiations. He has been vocal about his desire to (finally!) eradicate the bots, a system upgrade that would be universally celebrated—especially by advertisers and media planners.

What He’s Done

What the Twitterati are most excited about is the promise of innovation that Musk brings with him to the platform. Given his reputation for challenging assumptions and introducing game-changing technology, it does not seem unreasonable to anticipate that the functionality of Twitter in November 2022 might barely hint at what Twitter could become after a few years with Musk at the helm. Elon’s followers (Muskateers?) might go so far as to say that Twitter is about to go from good to awesome.

So there’s that.

REASONS FOR CONCERN

The potential issues associated with Musk’s purchase of Twitter make it easy to understand why some brands and personalities have chosen to step away from the platform, at least in the short-term. Here’s an incomplete list of things to consider as you try to make that decision for yourself:

Loosened Content Restrictions

Back in March, Musk declared: “Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy.” The self-proclaimed “free speech absolutist” believes that Twitter is “the platform for free speech around the world.” So there is little doubt that under his leadership, Twitter will become a more open space.

Eventually—maybe even soon. But for now, the company has not made any changes to its moderation policies. As a next step, Twitter will establish a “content moderation council” to help it determine the best approach to aligning platform content and usage with the vision of its new CEO.

Implication: Fewer restrictions will almost certainly mean more toxicity, increased distribution and redistribution of questionable content and misinformation, and, consequently, greater risk for brands seeking to avoid association with controversial subjects and/or inappropriate material.

Conflicts of Interest

Elon Musk is now the CEO of both Twitter and Tesla (among other businesses), which creates immediate tension for automakers who previously have used Twitter as an advertising platform. For some, staying on Twitter will feel like business as more or less usual given the complex interconnectivity of international commerce. On the other hand, some would argue that advertising on Twitter is tantamount to investing in Tesla inasmuch as the debt to acquire the latter is secured by the business of the former.

But there is more to it than that. Tesla has been called the largest active AI experiment in the Western world. Now that Musk and his techno-sleuths have access to the audience and advertising data of every OEM on the platform, what is to keep them from leveraging all of that campaign data to better understand what sells cars online to different audiences?

Implication: Depending on the vertical you compete in, if you continue to spend money on Twitter, you could be helping to fund and enlighten your competition—and you have to be cool with that.

Leadership Turnover and Staff Reductions

One of Musk’s first acts as CEO was to fire several of Twitter’s most senior leaders: the CEO, the chief financial officer, the head of legal, and the general counsel. Musk also dismissed Twitter’s board, leaving him solely in charge of the enterprise. Within days, several others in senior management resigned, including CMO Leslie Berland and Chief Consumer Officer Sarah Personette, who was in charge of Twitter’s ad sales business. Curiously, she announced her departure just 24 hours after tweeting that she was “looking forward to the future” of the company.

We should note also that it has been widely reported that Musk plans to lay off as many as 25% of Twitter employees throughout the company in what is being referred to as the “first round of layoffs.”

Implication: New leadership often means a new way of doing business, which can be especially tricky for advertisers who depend on relationships to do innovative work. What’s more, a large reduction in workforce may also compromise site features, technology implementation, sales support, and user experience.

Potential for Controversy

There is nothing low-profile about Elon Musk. His ideas, behavior, and public statements have a way of commanding attention and headlines, in no small part because he challenges conventional thought and norms. In that sense, he is not just some other rich guy buying a somebody else’s business. Unless he modifies his approach significantly—and there is no reason to believe that he will—from this point forward, Twitter will be synonymous with Elon Musk.

Implication: Musk’s volatile public persona makes his future actions impossible to predict. If you are actively promoting your brand on Twitter, you may face backlash from consumers if Musk says or does something controversial in the months and years ahead.

Changes in the Userbase

We have already seen evidence that some are abandoning Twitter due to the change in ownership. At the same time, we could see others leave the platform or simply lose interest as popular celebrities and creators depart and take their followers with them. On the flipside, as content restrictions are loosened, we should also anticipate an influx of new users who may have previously left the platform for less restricted (and less popular) platforms like Parler. That influx could have further impact on who stays, who goes, and who actively participates in the Twitter conversation.

Implication: For marketers, the true value of any platform is the people who use it. Of all potential sources of risk and uncertainty associated with the changes at Twitter, for us this may be the greatest. Put simply, the Twitter audience we see a year from now will be different from the Twitter audience we see today. For sure.

Change in the Cost Structure

Shortly after completing the deal, Musk announced his intentions to begin charging users $20 per month for the Blue checkmark that designates them as a “verified user.” In effect a subscription, Blue would come with a series of other benefits, including priority in replies, mentions, and search. Apparently, that announcement did not land well, however, because within a couple of days the proposed cost of Blue was reduced to $8 per month.

Implication: If the uptake is significant, this new model could fundamentally change the way Twitter works. In its current iteration, however, Blue hardly makes an impact. Consider that the 420,000 verified accounts currently on Twitter represent less than 0.2 percent of its almost 240 million daily active users.

Debt/Solvency

The acquisition of Twitter (for $44 billion) did not come without consequence to Musk’s vast business interests. WARC reports that Musk is already feeling the heat from lenders, who are “preparing to withhold $12.7 billion until the billionaire puts together a clear and serious business plan. It means the company is in an extremely awkward position, as the cost of servicing existing debt is already high and has this year ballooned to an annual cost of around $1 billion.”

All of which makes it hard to ignore this headline from eMarketer: “Twitter to bring in $1 billion less from ads than previously predicted.” Although the forecast projects $4.67 billion in ad revenue for Twitter in 2022 (up 4.9% from 2021), that’s a massive downgrade from the March forecast, reflecting that “social media ad revenues have taken a hit across the board.”

Implication: Debt creates uncertainty and potential instability while also increasing the likelihood of cost increases for advertisers on the platform.

So, What Should You Do About It? 

With a new Musk/Twitter headline hitting our feed literally every hour, it is much too soon to say with confidence how all of this will play out. We’ll conclude with three words of advice:

1. Don’t Panic – It has been only about a week since the deal closed. Even in those few days, Musk has made (and sometimes unmade) a number of high-profile, controversial decisions. In such an uncertain environment, it is not unreasonable to simply “wait and see.”

2. Carefully Consider the Potential Risks – We have outlined a number of issues that should give any marketer pause as you consider how best to use Twitter to engage with consumers and promote your brand. Now is a good time to talk through those issues and decide how/whether Twitter should be part of your future marketing communication plans.

3. Be Prepared to Move Quickly – If past is indeed prologue, Elon Musk will remain both unconventional and unpredictable. Oh, and controversial. Should his Twitter gambit go horribly wrong—or become successful beyond our wildest imaginations—you’ll want to be in a position to react responsibly, rationally, and quickly enough to gain an advantage.

We’ll be watching all of this along with you, of course. One thing for certain: It won’t be boring.

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