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Elon Musk courts Twitter advertisers as he seeks new streams of revenue

Twitter’s new owner is in New York to meet with executives, but even if he can keep them on the site, he’ll need more revenue sources to pay off the massive debt he incurred buying the company

Elon Musk, seen at a Tesla event in 2019, last week posted an open letter to advertisers promising that Twitter wouldn’t become a “free-for-all hellscape.” (Frederic J. Brown/AFP/Getty Images)

Less than a week into Elon Musk’s ownership of Twitter, the advertisers that provide most of the company’s revenue are getting antsy.

Industry leaders were encouraged last week when Musk tweeted an open letter to advertisers promising the site wouldn’t become a “free-for-all hellscape,” said an executive from one of the biggest advertising agencies.

But then on Sunday the billionaire boosted a conspiracy theory about the attack on House Speaker Nancy Pelosi’s husband, Paul. That gave rise to doubts among advertisers, who are hypersensitive to the type of content that might show up next to their ads, said the executive, who spoke on the condition of anonymity to share internal details.

“Actions speak so much louder than words,” the executive said. Musk has meetings scheduled with advertising leaders this week in New York, where they plan to ask him about how he will change the platform. Meanwhile, advertising trade groups and ad agencies are threatening to pump the brakes. Two of the biggest ad agencies, IPG and Havas Media, told their clients to pause spending on Twitter while they wait to see how the site changes, according to the Wall Street Journal.

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And on Monday, a trade group established by major advertisers to push tech platforms to keep harmful content off their sites posted a letter to Musk asking that he stick to the commitments Twitter’s previous leaders made to work with the industry.

“Platforms should be safe for all, and suitable for advertisers,” Robert Rakowitz, head of the Global Alliance for Responsible Media, said in the letter. “For advertisers this is non-negotiable — and we expect Twitter to uphold its commitments.”

At a Twitter investors conference in New York on Nov. 4, Elon Musk said pressure on advertisers from unnamed activists was “an attack on the First Amendment.” (Video: Reuters)

Spokespeople for Havas and IPG did not respond to requests for comment. Twitter did not immediately respond to a request for comment.

Musk closed on his $44 billion deal to acquire Twitter last week, cementing a deal that has been on-again, off-again for months. At the time of the closing, some analysts put the value at roughly half that figure, saying he overpaid. But investors have lined up to join Musk in taking the company private, gambling that the tech mogul and Tesla and SpaceX CEO has the vision to transform the social media company.

Now, he has to deliver, shoring up Twitter’s revenue and finding new ways to make money. Twitter now owes roughly $1 billion a year in interest payments on the debt Musk accrued when buying it. Musk is expected to cut costs through layoffs and other methods. But he also needs advertisers to stay on the site, while also finding new ways to make money.

Musk took some of those actions Tuesday. Chief Marketing Officer Leslie Berland, one of the highest-paid C-suite officers in the company, left the company Tuesday, as did JP Maheu, the head of ad sales in the United States, according to people familiar with the situation who spoke on the condition of anonymity to discuss sensitive matters. Twitter’s advertising chief, Sarah Personette, tweeted Tuesday that she had resigned her post last week.

Twitter wants to charge for verification. Here’s what you need to know.

The Twitter boss himself has said ads won’t be enough to meet his aggressive growth targets. While Musk was pitching the acquisition to co-investors, he committed to diversifying the company’s business and rapidly increasing revenue and profit. He painted Twitter as a dysfunctional company that had missed clear opportunities for new revenue streams and growth opportunities.

Over the weekend, Musk ordered employees to merge the company’s current paid tier — known as Twitter Blue — with the verification program, according to people familiar with the situation who spoke on the condition of anonymity to discuss internal matters.

On Tuesday, he appeared to confirm the plan, tweeting, “Power to the people! Blue for $8/month.”

Minutes later he tweeted out that the new paid product would also include the ability to post longer videos and audio clips, fewer ads, and having one’s tweets appear more prominently in search results and replies to other tweets. Public figures will have another tag as well, he said.

On Oct. 27, Elon Musk completed his purchase of Twitter and began taking control of the social media company, firing several key executives. (Video: Jonathan Baran/The Washington Post)

Before Musk announced the plan, novelist Stephen King lambasted the idea of paying to keep the blue check mark Twitter uses to show it has verified users’ real identity, tweeting to his almost 7 million followers on Monday that the platform “should pay me.”

“If that gets instituted, I’m gone like Enron,” he said, alluding to the energy company that collapsed in scandal and filed for bankruptcy.

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Musk responded, suggesting that charging for verification would help the site make a profit and appearing to negotiate with King. He tweeted: “We need to pay the bills somehow! Twitter cannot rely entirely on advertisers. How about $8?” King didn’t reply.

The blue verification badge signifies that an account is “authentic, notable, and active,” according to Twitter, and the check mark is generally held by public figures in government, news and entertainment.

Making users pay for premium features is a common business strategy in the tech world. LinkedIn charges users for the ability to send messages to other people on the platform, a tool used by sales people and recruiters. Dating apps charge their users to have their profiles appear at the top of other people’s feeds, increasing the number of people who see them.

But Twitter began verifying its users years ago as a way to build trust in the platform. The site doesn’t require people to use their real name, so it’s easy to impersonate another account and try to trick people into thinking a famous person or journalist said something they didn’t. Verification helps stop that by giving people more assurance that someone claiming to be a politician, news source or famous actor really is who they say they are.

King was one of many Twitter users who said making well-known figures pay for verification was a bad idea. Other social media sites, such as YouTube and even Facebook and TikTok, pay their most popular users to keep them there. The idea is that encouraging content creators to stay on the site brings more users and then allows the company to charge more for ads.

Musk has said he wants to begin paying content creators and said in a tweet on Tuesday that charging for verification and other features would bring in new money to do just that.

Before Musk announced his plans, tech investor and longtime Musk associate Jason Calacanis, who has been working with Musk to enact his plans at Twitter, asked his followers about what they would pay for a check mark. More than 80 percent of respondents said they would not pay. Musk responded to Calacanis’s poll, saying: “Interesting.”

Echoing Musk’s rationale, Calacanis tweeted that “having many more people verified on Twitter, while removing the bot armies, is the quickest path to making the platform safer & more usable for everyone.”

Musk formally took over as Twitter CEO after last week firing several of Twitter’s executives, including CEO Parag Agrawal.

Over the weekend, The Washington Post reported that members of Musk’s inner circle, alongside Twitter’s remaining senior executives, conducted detailed discussions about the site’s approach to content moderation and spam as well as plans for a first round of layoffs for some 25 percent of the workforce.

A financial filing on Monday also showed that Twitter co-founder Jack Dorsey rolled over his Twitter shares into the company, making him one of Musk’s investors.

Since taking over the platform, Musk has also said that he has plans to form a “content moderation council” of experts with “widely diverse viewpoints.” He added that no major content decisions or account reinstatements would happen before that council convenes.

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It comes amid speculation over whether Musk will permit former president Donald Trump, a once-prolific tweeter, to return to the site. Trump was banned after the Jan. 6, 2021, attack on the U.S. Capitol, with Twitter citing the “risk of further incitement of violence.” The rebuke also meant that Trump’s tweets mostly disappeared from the site, removing the catalogue of his thoughts.

“If I had a dollar for every time someone asked me if Trump is coming back on this platform, Twitter would be minting money!” Musk tweeted this week.

Elizabeth Dwoskin, Faiz Siddiqui and Will Oremus contributed to this report.

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