Twitter’s Advertising Exodus Accelerates, Despite Outreach From Elon Musk

Twitter has entered the period of the year when it normally begins negotiating long-term contracts with its largest advertisers, deals that generate more than 30% of its U.S. ad revenue, according to people familiar with the company’s finances.

Many of those discussions haven’t taken place or have paused because of uncertainty surrounding the company and the disarray in its ad sales department following the departure of several top executives since the takeover, advertisers and ad buyers said.

Even if Mr. Musk repairs the dynamic with Madison Avenue, it will be hard to bring advertisers back quickly, since many have begun to shift the ad spending they pulled to other places, such as ByteDance Ltd.’s TikTok,

Alphabet Inc.’s

Google, and

Meta Platforms Inc.’s

Instagram, according to advertising executives and buyers.

One large consumer packaged-goods company, which is planning to be dark on Twitter throughout at least the first quarter, is shifting roughly $10 million dollars to TikTok, streaming services and Google, said a person close to the company.

Many ad executives don’t expect the same quick ad rebound that Meta’s Facebook experienced in 2020 when many brands boycotted the platform for a month over concerns about hate speech and misinformation. Many companies found they couldn’t resist coming back to Facebook, because the return on investment from advertising—in the form of sales—was so pronounced.

“With Twitter, there just isn’t the same co-dependency” that exists between advertisers and Facebook, said

Shiv Singh,

chief marketing officer at online lender

LendingTree Inc.

Twitter didn’t respond to a request for comment.

Chipotle Mexican Grill Inc.

said this week that it had paused its Twitter ad spending, joining a growing list of brands that includes

General Mills Inc.,

General Motors Co.

, Oreo maker

Mondelez International Inc.

and

United Airlines Holdings Inc.

Some ad agencies have had dozens of brands halt their spending over the past week, some of the buyers said.

“We have pulled back on our paid and owned content on Twitter while we gain a better understanding on the direction of the platform under its new leadership,” said

Laurie Schalow,

Chipotle’s chief corporate affairs officer.

Advertisers are concerned about instability at Twitter, with the loss of top leadership after layoffs and resignations, and the risk that their brands could wind up to next to objectionable posts, given Mr. Musk’s stated desire to scale back content moderation.

Mr. Musk has sought to calm advertisers’ jitters in a series of video calls and meetings with major brands and agencies. The ad slump is a serious problem as he tries to make the math work on the Twitter transaction, which was financed by some $13 billion in debt. Advertising provided 89% of Twitter’s $5.08 billion revenue in 2021.

Mr. Musk said last week that Twitter had suffered a “massive drop in revenue.” He told Twitter employees in an all-hands staff meeting Thursday that he wasn’t sure how much financial runway the social-media company still had and that bankruptcy wasn’t out of the question.

Some Madison Avenue executives say Mr. Musk might be able to turn the company around. “It will take a few months to resolve it but he will eventually have an attractive proposition, given his track record,” said

Mark Penn,

chief executive of ad firm

Stagwell Group

LLC.

Twitter, according to people familiar with the company’s finances, is approaching its biggest revenue day of the year—Super Bowl, which will take place on Feb. 12.

Advertisers are unnerved and confused about the impact of Mr. Musk’s plans on their brands, ad buyers said. After Twitter’s rollout of verification badges for any user paying $7.99 a month for its Twitter Blue program, an account spoofing the pharmaceutical company

Eli Lilly

& Co. sent a fake tweet that said insulin would be free. Twitter appears to have rolled back the verification program for Twitter Blue users.

An Eli Lilly spokeswoman said, “We are deeply committed to ensuring patients and customers receive accurate information about our medicines. In recent days, fake/parody Twitter accounts for Lilly have communicated false information and we’re working to correct this situation.”

Ad buyers, whose relationship with Twitter is closely tied to the ad-sales executives at the company, are concerned that many of their top contacts there have departed. There was widespread confusion in the ad industry Thursday over the employment status of

Robin Wheeler,

Twitter’s vice president of U.S. client solutions, who had joined Mr. Musk’s calls with advertisers in recent days.

Ms. Wheeler had resigned but decided to pause her departure to determine whether the company will uphold its commitments to data privacy and fulfill its regulatory requirements, The Wall Street Journal reported.

Ad giant

Omnicom

OMC 3.20%

Group Inc., whose agencies buy ads on behalf of blue-chip companies, on Friday recommended that its clients pause their Twitter ad spending until further notice, according to a memo reviewed by the Journal. Other major ad companies have taken a similar stance. The memo said that in recent days there has been a “succession of events that have potential serious implications for advertisers” and “the risk to our clients’ brand safety has risen sharply” to a level that is unacceptable. The Verge technology-news website earlier reported on Omnicom’s memo.

Twitter’s leverage has diminished as the digital ad marketplace has expanded over the past few years, with advertisers getting many more options on where to spend their dollars. That includes a surge in ad-supported streaming video platforms, the rapid emergence of TikTok and ad businesses operated by major retailers.

Advertising executives at companies face pressure to spend their remaining budgets for the year given they are under pressure to meet yearly sales goals amid the economic uncertainty. Brands that return money to their CFOs risk getting smaller budgets next year, some ad buyers and advertisers said.

“Brands on pause are not parking those dollars, they are spending them,” said

Ben Jankowski,

a former head of global media at

Mastercard Inc. Companies

have “brands that they have to support. No one is sitting holding advertising money,” he added.

Write to Suzanne Vranica at [email protected] and Patience Haggin at [email protected]

Twitter has entered the period of the year when it normally begins negotiating long-term contracts with its largest advertisers, deals that generate more than 30% of its U.S. ad revenue, according to people familiar with the company’s finances.

Many of those discussions haven’t taken place or have paused because of uncertainty surrounding the company and the disarray in its ad sales department following the departure of several top executives since the takeover, advertisers and ad buyers said.

Even if Mr. Musk repairs the dynamic with Madison Avenue, it will be hard to bring advertisers back quickly, since many have begun to shift the ad spending they pulled to other places, such as ByteDance Ltd.’s TikTok,

Alphabet Inc.’s

Google, and

Meta Platforms Inc.’s

Instagram, according to advertising executives and buyers.

One large consumer packaged-goods company, which is planning to be dark on Twitter throughout at least the first quarter, is shifting roughly $10 million dollars to TikTok, streaming services and Google, said a person close to the company.

Many ad executives don’t expect the same quick ad rebound that Meta’s Facebook experienced in 2020 when many brands boycotted the platform for a month over concerns about hate speech and misinformation. Many companies found they couldn’t resist coming back to Facebook, because the return on investment from advertising—in the form of sales—was so pronounced.

“With Twitter, there just isn’t the same co-dependency” that exists between advertisers and Facebook, said

Shiv Singh,

chief marketing officer at online lender

LendingTree Inc.

Twitter didn’t respond to a request for comment.

Chipotle Mexican Grill Inc.

said this week that it had paused its Twitter ad spending, joining a growing list of brands that includes

General Mills Inc.,

General Motors Co.

, Oreo maker

Mondelez International Inc.

and

United Airlines Holdings Inc.

Some ad agencies have had dozens of brands halt their spending over the past week, some of the buyers said.

“We have pulled back on our paid and owned content on Twitter while we gain a better understanding on the direction of the platform under its new leadership,” said

Laurie Schalow,

Chipotle’s chief corporate affairs officer.

Advertisers are concerned about instability at Twitter, with the loss of top leadership after layoffs and resignations, and the risk that their brands could wind up to next to objectionable posts, given Mr. Musk’s stated desire to scale back content moderation.

Mr. Musk has sought to calm advertisers’ jitters in a series of video calls and meetings with major brands and agencies. The ad slump is a serious problem as he tries to make the math work on the Twitter transaction, which was financed by some $13 billion in debt. Advertising provided 89% of Twitter’s $5.08 billion revenue in 2021.

Mr. Musk said last week that Twitter had suffered a “massive drop in revenue.” He told Twitter employees in an all-hands staff meeting Thursday that he wasn’t sure how much financial runway the social-media company still had and that bankruptcy wasn’t out of the question.

Some Madison Avenue executives say Mr. Musk might be able to turn the company around. “It will take a few months to resolve it but he will eventually have an attractive proposition, given his track record,” said

Mark Penn,

chief executive of ad firm

Stagwell Group

LLC.

Twitter, according to people familiar with the company’s finances, is approaching its biggest revenue day of the year—Super Bowl, which will take place on Feb. 12.

Advertisers are unnerved and confused about the impact of Mr. Musk’s plans on their brands, ad buyers said. After Twitter’s rollout of verification badges for any user paying $7.99 a month for its Twitter Blue program, an account spoofing the pharmaceutical company

Eli Lilly

& Co. sent a fake tweet that said insulin would be free. Twitter appears to have rolled back the verification program for Twitter Blue users.

An Eli Lilly spokeswoman said, “We are deeply committed to ensuring patients and customers receive accurate information about our medicines. In recent days, fake/parody Twitter accounts for Lilly have communicated false information and we’re working to correct this situation.”

Ad buyers, whose relationship with Twitter is closely tied to the ad-sales executives at the company, are concerned that many of their top contacts there have departed. There was widespread confusion in the ad industry Thursday over the employment status of

Robin Wheeler,

Twitter’s vice president of U.S. client solutions, who had joined Mr. Musk’s calls with advertisers in recent days.

Ms. Wheeler had resigned but decided to pause her departure to determine whether the company will uphold its commitments to data privacy and fulfill its regulatory requirements, The Wall Street Journal reported.

Ad giant

Omnicom

OMC 3.20%

Group Inc., whose agencies buy ads on behalf of blue-chip companies, on Friday recommended that its clients pause their Twitter ad spending until further notice, according to a memo reviewed by the Journal. Other major ad companies have taken a similar stance. The memo said that in recent days there has been a “succession of events that have potential serious implications for advertisers” and “the risk to our clients’ brand safety has risen sharply” to a level that is unacceptable. The Verge technology-news website earlier reported on Omnicom’s memo.

Twitter’s leverage has diminished as the digital ad marketplace has expanded over the past few years, with advertisers getting many more options on where to spend their dollars. That includes a surge in ad-supported streaming video platforms, the rapid emergence of TikTok and ad businesses operated by major retailers.

Advertising executives at companies face pressure to spend their remaining budgets for the year given they are under pressure to meet yearly sales goals amid the economic uncertainty. Brands that return money to their CFOs risk getting smaller budgets next year, some ad buyers and advertisers said.

“Brands on pause are not parking those dollars, they are spending them,” said

Ben Jankowski,

a former head of global media at

Mastercard Inc. Companies

have “brands that they have to support. No one is sitting holding advertising money,” he added.

Write to Suzanne Vranica at [email protected] and Patience Haggin at [email protected]