Ever since Elon Musk took over Twitter (now X) last year, the network has been in the headlines, often for the wrong reasons. Most recently, X has come under fire after a report by Media Matters for America pointed out that ads on the platform for companies such as IBM and Apple appeared alongside “explicitly pro-Nazi” content. In no time, Disney, IBM, Sony, Apple and Warner Bros announced they would no longer buy advertising on X. With this, the network is confronted with the potential threat of losing approximately 90% of its total income, say experts.
According to Prabhu Ram, head of industry intelligence group at CyberMedia Research, “X faces the looming possibility of a cascade effect, where a multitude of brands, including potentially major and long-tail brands, may join the trend of boycotting the platform. While brands acknowledge concerns related to user safety and the risks associated with user-generated content, recent incidents suggest a heightened vigilance among them to avoid aligning with any misinformation or harmful content.”
Where does India stand in all this hullabaloo? For FY 2022-23, Twitter Communications India recorded a total revenue of Rs 207.69 crore compared to Rs 156.8 crore in the previous fiscal.
With close to 26.5 million users, India contributes to roughly 5% of Twitter’s user base. While the country offers the third-largest audience segment after the US and Japan, it contributes barely 4% of its ad revenue, thanks to the low CPMs (cost per million impressions). In any case, X no longer offers the same level of engagement that it did in its Twitter avatar for advertisers in India, say experts.
Sumeer Mathur, chief strategy officer, Dentsu Creative India, says the shift can be attributed to the changing demands of advertisers and the effectiveness of alternative platforms such as Instagram and YouTube in meeting those demands. “Advertisers allocate smaller amounts to promoting a tweet or a trend on X, opting instead for investments in branded content with platforms like Spotify or e-commerce platforms such as Nykaa. However, sectors such as sports, politics, BFSI, and auto, which inherently involve a news angle and require immediacy, continue to see a lot of conversation on X,” says Mathur. In many cases, X serves as a tool to amplify content hosted on other platforms.
On shaky ground
In September, global web traffic on the site dropped 14%, according to Similarweb. Overall traffic on X has sunk nearly 7% through the first nine months of 2023 compared with the year-ago period, the market research firm said in a recent report, while noting that social media usage is down across the board.
Himanshu Arora, co-founder of digital marketing agency, Social Panga, points out that advertisers seek consistent policies and outcomes to effectively meet key performance indicators (KPIs). Under Musk’s leadership, X has seen some turbulent times as well as frequent changes in policies and features that pose risks for brands. The fact that Musk himself is no stranger to controversial comments and “hate speech” also makes brands uncomfortable with the platform. It doesn’t help that the network itself is increasingly seen as his “personal playground”.
Arora observes, “Musk has chosen not to follow the standard playbook of apologising for any potential harm caused by his comments. He has taken an aggressive stance and his response may strain his relationship with these crucial financial contributors.” He adds that the timing of this uproar couldn’t have been worse considering we are approaching the year-end, which sees a heightened ad spending.
Despite the numerous controversies that X has found itself mired in since the Musk takeover, it has also made significant changes that have helped it reinforce its role as an advertising medium. Indeed, X has also started ad revenue payouts to users with X Premium membership. Says Mitesh Kothari, co-founder and chief creative officer at White Rivers Media, “While there might be a few challenges in attracting new users and generating more ad revenue, X offers its classic blend of content and real-time engagement that keeps a diverse audience base hooked.”
Although Meta positioned Threads as an alternative to X, experts say it has yet to prove itself as the ‘IT’ platform for real-time events with high engagement.
CyberMedia’s Prabhu Ram concurs, pointing out that X continues to remain an indispensable hub for public conversation, exemplified by its immediacy and underscored by the recent OpenAI saga. He believes it will continue to shape global conversations, but adds that the focus needs to be on reinforcing content moderation policies, ensuring a higher degree of transparency and harnessing advanced technologies across the board.