“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Sarah Rose, the SVP of international digital advertising at IPG’s Kinesso.
Elon Musk’s $44 billion bid to buy Twitter and take it private is at a 38% premium to the company’s share price.
Although the deal is still pending FTC approval, it’s difficult for shareholders to say no to that kind of money, and the company has great interest in seeing this move forward.
So, what will happen to Twitter? Musk has expressed that his goal is to create a safe platform for free speech that supports a democratic civilization. However, what does that really mean for Twitter’s advertisers and users, and how do we get there?
It comes down to two factors.
1. An evolving ad model
Marketers require reliable first-party data that can be personalized in a privacy-compliant way. In social media environments like Twitter, brand safety remains a concern, and this does require additional, deeper integrations with ad verification partners such as IAS, DV and MOAT.
Musk, meanwhile, has publicly stated that a subscription-based model will allow for confirmed authenticated user interaction. It protects the advertising model in ways that benefit Twitter’s ad revenue while adding another revenue stream and supporting data for better brand messaging. In addition, those that can afford ad-free environments will support the platform’s technology innovation. This dynamic creates better value for data licensing and better supply and demand economics for advertising. This would be a win-win for all sides.
Twitter’s public record of ad dollars is 4.5 billion US dollars in 2021, which means, on average, it is grossing $12.3 million per day across an estimated 206 million daily activated users. Each user is supporting about $0.06 US dollars per day in advertising, which adds up to about ~$2.00 a month per user. A subscription model would need to compete with these economics globally. From an advertising POV, this new model is compelling to marketers if the economics work to support privacy-safe first-party data integrations.
Alternatively, Twitter’s data licensing business has grown minimally YoY at a steady rate of $500M+. There’s potential for it to grow even more with the subscription model, negating any loss in ad revenue. The new model would certainly be a shift for Twitter and could increase profitability while ensuring better marketing execution.
2. A new moral compass
For all the benefits that social media platforms provide as a communication platform, they are also prone to algorithmic fake news, bot accounts, misinformation and disinformation. This is not good for marketers, advertisers or end users.
As researcher Tristan Harris explained in a Netflix documentary, The Social Dilemma, technology is superseding the pace at which humans can comprehend facts, information and associated complexities on these platforms. Musk has the opportunity to remedy this reality through the acquisition. However, monitoring hate speech and un-fact-checked news will not be enough. It will be up to Musk to introduce technology capable of competing with sophisticated AI on the platform and create a better human experience. Musk’s leadership proposal could also be a strong position to protect marketers, advertiser and users in the platform.
One example of this technology is click-guided image diffusion, where a user can input text into a box and AI will build a real-life image that’s easily disseminated, retweeted and unidentifiable to the human eye as “fake.”
Twitter’s turning point
Although there are still many benefits for marketers on Twitter, safety of message is still a growing concern. Technology improvements to recognize and automate verifiable information can be key for Twitter’s evolution into a safer free speech platform and for advertising.
While Elon’s track record is a bit unclear when it comes to media platforms, we do know he is an open end user of the platform. His aspirations to evolve the company into a better open forum for free speech could possibly benefit the digital media ecosystem with technology improvements.
Musk has made it publicly clear he is not a fan of the old advertising models. Social media platforms, however, as with other media entertainment streaming platforms like Netflix are evolving into hybrid subscription-based business models that can benefit marketers and the user experience.
We will see how the broad strokes of change at Twitter will affect social media advertising. could end up being beneficial to technology and the industry.