What Could A Twitter Acquisition Mean for Advertising?

Twitter is a United States-based company that is the 7th most popular social media worldwide and the 9th most visited website globally in 2021. However, throughout 2022, Twitter and Elon Musk, a well-known multi-billionaire for his Tesla and SpaceX companies, have had an on-and-off acquisition deal for Twitter. This deal’s repercussions could change how businesses can effectively digitally advertise their products on the platform.

The timeline of Musk’s attempts to buy the platform has been turbulent at best. In April, Musk approached Twitter to purchase for $44 billion, eventually backing out in July, publicly claiming it was due to the rampant bot problem on the platform. Twitter sued Musk, claiming he was conducting a fishing expedition to try and remove himself from the acquisition and violating the deal’s non-disparagement section by publicly criticizing the company. Musk decided to proceed with the acquisition only weeks before the trial began. Allegedly, Musk’s statements and behavior were to drive share prices down and secure a better deal, an illegal offense. A judge paused the case to allow the company and Musk to settle terms. The current deal could mean a lot of change to Twitter users and companies attempting to advertise on Twitter.

Hundreds of millions of people use Twitter all across the world, with an estimated total of 450 million monthly active users. Regarding location, the top country of users is the United States with 76.9 million users; second place is Japan with 58.95 million users, and India in third place with 23.6 million users. The top 12 countries of Twitter users all have over 10 million users, respectively. The company has a market capitalization of $31.34 billion and a current network of $13.316 billion.

Twitter’s CPM is, on average, $6.46, meaning it is one of the cheaper ways to run ads on social media platforms (in comparison, Pinterest’s average CPM is $30.00). In addition, the ads reach 5.8% of the world population over 13 years old. Some of the top advertisers from 2020 were Nestle, based in Switzerland, at $13.04 million, Verizon, based in the United States, at $6.4 million; and Unilever, based in the United Kingdom, at $4.36 million. Twitter's current business model is based on advertising revenue to make a profit - which Musk is looking to change.

So, where do we stand today? Musk wants to change the Twitter business model outside his debated social goals. Musk is looking to move away from revenue by ads and instead make the platform focus on a subscription model, having consumers pay a monthly subscription fee for full access to the platform, ad-free. As many companies already advertise on Twitter, an ad-free subscription service would severely hurt companies and businesses looking for new international customers/conversions through Twitter.

The Twitter platform is changing, and the acquisition of the company by Elon Musk will create waves within both the user community and the digital marketing community. Musk will need to be wary of losing investment from companies in their advertisements as the acquisition progresses. According to a Hubspot study, in a poll of over 300 marketers, 79% said they planned to continue investing in Twitter Links. Large amounts of those marketers will probably turn to invest further in Meta’s Instagram and Facebook and other platforms such as LinkedIn, Youtube, and TikTok to reach new customers.

Musk’s plans are currently alleged, as we will not know anything official until the acquisition finishes and official statements are made.