Twitter ad business could surge as advertisers pin hope on Musk

SAN FRANCISCO: Elon Musk’s $44 billion deal to take Twitter Inc private could mark the end of the social media platform’s advertising business, many in the ad industry have worried.

But in the weeks since April 25 when the Tesla chief executive announced the deal, Madison Avenue’s attitude to Musk’s upcoming version of Twitter is evolving. Optimism is taking hold and is playing out in two ways.

Some ad buyers are hoping to extract better deals from a company undergoing a massive transition. Others are betting that Musk, who has dribbled new product ideas daily on Twitter, can deliver what Twitter has fallen short on, launch new products more quickly, according to advertising executives who spoke with Reuters.

The belief is that Musk’s push for faster product development will attract more new users who will become the foundation for a better marketing environment.

The view is a shift from the ad industry’s dim outlook after Musk appeared to dump cold water on Twitter’s $5 billion ad business, tweeting that it should be a forum for free speech and questioning the platform’s reliance on ads for revenue.

According to slides Musk presented to investors, he expects Twitter to reach 931 million users by 2028 from 229 million in the most recent quarter, and ad revenue to more than double to $12 billion, representing about 45% of its total revenue in the same time frame, the New York Times reported.

Despite Musk’s repeated statements on minimizing content censorship on the platform, he appeared in a video on Monday with European Union industry chief Thierry Breton to discuss the upcoming Digital Services Act, which will require platforms to curb illegal content.

In the short term, some ad agencies are already advising clients to take a fresh look at doing business with Twitter. One ad agency executive who declined to be named said they expected negotiations to begin in the coming months to strike lower ad prices on behalf of some clients, as Twitter may be more flexible during the period before Musk closes his takeover deal..