According to a recent forecast, Twitter’s advertising revenue is expected to decline by 28 percent in 2023 due to the platform’s struggles under the ownership of Elon Musk. The analysts at Insider Intelligence have reduced their earlier worldwide revenue estimate from $4.74 billion to $2.98 billion, citing a deteriorating trust in the platform.
Jasmine Enberg, principal analyst at Insider Intelligence, stated that “Advertisers’ lack of trust in Musk is the biggest hurdle for Twitter’s ad business. To regain advertiser confidence and attract ad revenue, Twitter needs to separate Musk’s personal brand from the corporate image of the company.”
After the takeover of Twitter by Musk, which was marked by turbulence, several major advertisers have already suspended their activity on the platform. This was due to the fact that the Tesla tycoon loosened the reins on content moderation and laid off over half of a 7,000-strong workforce.
As per Pathmatics, in January, fourteen out of the top 30 advertisers on Twitter stopped advertising on the platform after Musk took charge on October 27. With the decrease in trust from advertisers, Insider Intelligence has noted that Musk’s efforts to build up a subscription service will not compensate for the lost ad revenue.
Insider Intelligence predicts that under Musk’s leadership, Twitter’s remaining users will spend less time on the platform, with usage dropping to an estimated 34 minutes per day, a two-minute decrease from previous years. In contrast, users spend almost an hour on TikTok. This decline is attributed to the prevalence of harmful content, technical problems, and Twitter’s inability to expand into social video and compete with TikTok.
Engberg noted that “Twitter engagement still heavily relies on the news cycle.” She explained that “The takeover saga caused a spike in time spent in 2022 that has now dissipated, as users have lost interest in Musk’s antics.”
It is likely that Musk will speak at a major marketing conference in Miami on April 18 in an effort to win back major advertisers to Twitter. Musk purchased Twitter for $44 billion, but has since reduced the company’s value by half.