Twitter’s latest filing admits risk of losing advertisers and staff due to Musk takeover

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Shortly before the presentation for display buyers later this week on 2022 New frontsTwitter acknowledged in new SEC filing that its core advertising business could now be threatened by a takeover by Elon Musk, in addition to recruiting and retaining efforts and other factors. While Musk sees Twitter as a more freedom-of-speech platform, he made no guarantees to Twitter advertisers that Twitter would remain “brand-safe” after the acquisition. To the extent that he clarified his vision, Musk said just that he believes any speech not considered illegal by the government will soon be allowed on Twitter.

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Of course, today Twitter already moderates a wide range of prohibited types of content, in addition to what is considered illegal. Axios list offers Moderation policies that can be revoked include those that target certain types of misinformation, deepfakes, impersonation, targeted attacks, hateful content, graphic violence, self-harm, platform manipulation, and others.

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Meanwhile, a lighter touch on Twitter’s existing content moderation policy has already raised concerns among advertisers. it may allow more bullying, hate speech, hate speech, misinformation and other offensive content to gain popularity. And if there’s one thing advertisers don’t like, it’s that their business is promoted along with divisive and hateful content.

They may simply decide that access to Twitter’s small user base – at least compared to larger social giants like Meta and TikTok – is not worth the risk. Twitter ended the last quarter with 229 million monetizable daily active users; Only Facebook It has 1.96 billion daily active users.

Twitter latest SEC filing agrees losing an advertiser is a possible risk.

Among the many new risks associated with the transactional nature of Musk’s deal, such as if the merger is delayed or not closed (the latest with a billion dollar financial hit on Twitter, for example) – the company said it was exposed to new risks related to its “business relationships, financial condition, results of operations, cash flow and business”, including “whether or not advertisers continue to spend on our platform.”

As the company explains later in the statement, amid continuing risk factors, it continues to receive “a significant portion of our advertising revenue” and the loss of this could be detrimental to the business. He also notes that if his reputation among advertisers deteriorates, he may become less competitive.

“We believe our ability to compete effectively for advertiser spending depends on many factors…,” Twitter says, including “our reputation and the strength of our brand relative to our competitors, including advertisers’ perceptions of the health and safety of our platform. ”

Although it is not necessary new The risk to Twitter, in any case, is one that advertisers take into account more carefully when budgeting months in advance.

According to reports, Twitter advertisers are already spooked by the news of Musk’s acquisition.

In accordance with adage, the immediate reaction from advertisers was anxiety and confusion. The report notes that brands have begun reaching out to agencies to help them understand and prepare, with one agency executive saying advertisers were preparing to stop spending money after the Musk takeover if things seemed to be going in an undesirable direction.

This was recently reported by the FT. Twitter sent assurance emails to advertisers to help quell those concerns, but automakers were especially concerned about giving Musk, who also runs Tesla, deeper access and insight into their marketing programs.

While Musk many ideas To reduce Twitter’s reliance on advertisers for monetization, neither is an immediate solution that could keep the business financially afloat in the face of an advertiser exodus.

Linked to advertiser interest in the platform is Twitter’s ability to grow its user base, an area in which the company has historically fought. And while Musk believes that changing Twitter’s content moderation policy will result in many more people coming to Twitter, it’s not yet clear if Twitter will lose existing users after the deal closes. It is possible that existing users may delete their accounts or reduce their engagement, which could affect a company’s ability to increase daily active users, which is important to its advertisers.

And in the filing, Twitter suggests that growth could be affected if influential accounts stop posting content — the possibility of Twitter becoming a haven for hate speech is an unwritten subtext here. Another possible problem was that the content partners were unable to renew their agreements with the company.

Of course, much of what Twitter presents as risks applies to any company doing business in its industry. In the meantime, advertisers take a wait-and-see attitude towards the social network.

However, the company also acknowledged the more immediate threat of employee layoffs and the inability to effectively hire employees as other potential impacts of the merger, and noted that “current employees may be distracted and their productivity reduced as a result due to the uncertainty surrounding the merger.”

Musk downplayed any worries about employee exits when talking to reporters on the red carpet at the annual Met Gala in New York, declaring that “this is a free country” and that: “Of course, if someone is not happy with this, he will go somewhere else of his own free will. This is fine.”

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