Why Meta Reported a Strong First Quarter for 2023

Why Meta Reported a Strong First Quarter for 2023

by Patrick Wool Meta

Meta’s ad business is back on the upswing, and AI is a big reason. On April 26, Meta reported its first increase in sales in nearly a year because of an improvement in its advertising business. This happened because Meta’s short-form video feature, Reels, is gaining more engagement thanks to Meta’s use of AI to target Reels more carefully to its user base. More engagement means more ad revenue. 

What Meta Announced 

Meta reported revenue of $28.6 billion, up 3 percent from a year prior and ahead of expectations of nearly $27.7 billion, according to analysts surveyed by FactSet. That snapped a streak of three quarters in which Meta’s revenue had declined from the year prior (The drop was the only time that has occurred since the company went public in 2012.) The 3 percent increase is an improvement from the 4.5% drop in revenue that the company posted in the final quarter of 2022. This is a notable turnaround for a company that spent the better part of 2022 regrouping after Apple’s consumer privacy controls ate into Meta’s ad revenues.

In his formal comments on the quarter, CEO Mark Zuckerberg attributed the growth largely to the popularity of Reels, which is Meta’s answer to TikTok’s influential short-form videos. He said that Reels are growing quickly on both Facebook and Instagram.

“Reels also continue to become more social with people resharing Reels more than 2 billion times every day, doubling over the last six months,” he said. “Reels are also increasing overall app engagement and we believe that we’re gaining share in short-form video too.”

He also said that more than 3 billion people use at least one of Meta’s apps each day.

Meta daily active users

Zuckerberg attributed the uptake of Reels to the way AI makes more personalized Reels recommendations for Meta users to watch, which, in turn, encourages advertisers to create targeted ads.  

He observed, 

Our investment in recommendations and ranking systems has driven a lot of the results that we’re seeing today across our discovery engine, Reels, and ads. Along with surfacing content from friends and family, now more than 20% of content in your Facebook and Instagram feeds are recommended by AI from people, groups, or accounts that you don’t follow. Across all of Instagram, that’s about 40% of the content that you see. Since we launched Reels, AI recommendations have driven a more than 24% increase in time spent on Instagram.

Our AI work is also improving monetization. Reels monetization efficiency is up over 30% on Instagram and over 40% on Facebook quarter over quarter. Daily revenue from Advantage+ Shopping Campaigns is up 7x in the last six months.

Meta Advantage+ Shopping Campaigns, introduced in 2022, are automated shopping campaigns that use machine learning by dynamically serving your ads to audiences most likely to convert while better utilizing your advertising budget. The product eliminates manual ad creation steps and according to Meta, “automates up to 150 creative combinations at once.”

Why the Meta News Matters

This news matters for two reasons:

Meta’s growth amid a challenging economic climate is also good news for the entire digital advertising industry. It’s a sign that advertisers are willing to continue investing in their brands during economic uncertainty.

What Advertisers Should Do

  • Experiment with products such as Meta Advantage+ Shopping Campaigns to understand how AI is influencing the advertising landscape.
  • Be open to trying other new Meta ad opportunities depending on how you engage with your customers and prospects. For example, Mark Zuckerberg told investors on the April 26 earnings call that Meta is building out business messaging “as the next pillar of our business.” He noted that last quarter its click-to-message ads reached a $10 billion revenue run-rate. Since then, the number of businesses using our other business messaging service — paid messaging on WhatsApp — has grown by 40 percent quarter-over-quarter.

At True Interactive, we advocate for our clients that invest in Meta and other platforms. We will continue to monitor developments and adapt our ad strategies as needed.

Contact True Interactive

To succeed in the ever-changing world of online advertising, contact True Interactive. Read about some of our client work here.

Image source: Alexander Shatov on Unsplash

How Meta Is Rebounding

How Meta Is Rebounding

by Taylor Hart Meta

Meta is back.

The company’s market capitalization lost considerable value in 2022 after failing to meet its financial targets. A costly investment into the emerging metaverse has been ridiculed. But Meta is showing signs of a much brighter 2023.

The Wall Street Journal recently reported that:

  • The company’s investments into artificial intelligence (AI) have helped Meta improve ad-targeting systems to make better predictions based on less data.
  • Meta’s short-form video product, Reels, is becoming more popular on Meta’s core Facebook and Instagram platforms.
  • The development of ad products based on user data from Meta’s own platforms is easing the blow of Apple’s privacy restrictions. Those restrictions, focusing on ad products that rely on third-party user data, had forced Meta to retool its ad strategy away from third-party user tracking to first-party data (the information that Meta gains from users from its own platforms such as Facebook and Instagram).

Reels Gains Traction

All of these developments are noteworthy. For instance, Reels is Meta’s answer to TikTok, whose dramatic rise, based on short-form videos, has threatened Meta. So, more user engagement with Reels should attract more advertisers.

The Wall Street Journal said that Tom Alison, head of Facebook, wrote in a memo to staff, “Facebook engagement is stronger than people expected. Our internal data indicates that Meta has grown to a meaningful share of short-form video.” And on Facebook alone, Meta can count on a large, engaged user base.

Facebook engagement

Reportedly, Meta has credited improvements to both Facebook’s algorithms and the computing systems on which they run, resulting in a 20 percent gain in time spent in Reels consumption. This is quite a turnaround from summer 2022, when Meta was still struggling to get users to embrace Reels videos.

More Effective Ad Products

Meta suffered a blow in 2021 when Apple introduced privacy controls that resulted in people opting out of having their online behavior tracked while using Apple products. This was a problem because Meta’s ad products rely mostly on tracking people across the web via third-party cookies. The privacy controls have forced Meta to do a better job building ad products based on user behavior on Meta’s own platforms (which Apple’s privacy controls do not affect).

Meta estimated last February that the Apple change would cost it more than $10 billion in lost sales for 2022, equivalent to about 8 percent of its total revenue for 2021. At the time, the news caused Meta’s stock price to plummet.

But Meta is gaining traction with new ad products. For instance, Meta’s broad targeting ad program consists of an automated targeting approach that reportedly produces better results for Facebook and Instagram ads than more refined, more niche audience approaches do. Meta is also developing ads in which users click straight into a messaging conversation with a business.

But ads based on first-party data are only 18 percent of Meta’s revenue, according to The Wall Street Journal. Meta has a lot of work to do.

Key Issues Going Forward

Meta recently reported better-than-expected results in its most recent quarterly earnings announcement. CEO Mark Zuckerberg said 2023 is a “Year of Efficiency,” which means managing spending carefully. Key questions going forward:

  • How well Meta will use AI to recommend Reels content to Facebook and Instagram users. The more targeted the recommendations, the higher the engagement rates. Meta needs people to stay engaged on Reels like they are glued to their TikTok videos. Engagement means advertising revenue from businesses that want to target those users with content.
  • The performance of ad products based on first-party data. Businesses should continue to ask their Meta ad representatives for developments in this area.
  • How well Meta manages its costly investment into the still young metaverse, which remains a sore spot for the company. The metaverse generates no advertising revenue streams to speak of for Meta.

At True Interactive, we advocate for our clients that invest in Meta and other platforms. We will continue to monitor developments and adapt our ad strategies as needed.

Contact True Interactive

To succeed in the ever-changing world of online advertising, contact True Interactive. Read about some of our client work here.

Lead photo credit: https://unsplash.com/@solomin_d

Are Meta’s Problems as Bad As They Seem for Advertisers?

Are Meta’s Problems as Bad As They Seem for Advertisers?

by Héctor Ariza Facebook Instagram Meta

Just when you think things couldn’t possibly get worse for Meta, along comes another disastrous earnings announcement. On October 26, Meta, the parent of Facebook and Instagram, announced third-quarter earnings characterized by declining revenue and profits.

Quarterly revenue was $27.7 billion, down more than 4 percent from a year ago, after Meta posted a 1 percent decrease last quarter. Advertising revenue came in at $27.2 billion, down nearly 4 percent year-over-year (although that figure beat analysts’ estimates of $26.9 billion). Since advertising represents 98.2 percent of the company’s total revenue, the revenue drop is especially worrisome for Meta.

So, what’s causing the meltdown?

Weakening Demand

The biggest factor: diminishing demand for ad products caused by market uncertainty. In a call with investors, CFO Dave Wehner cited “weak advertising demand, which we believe continues to be impacted by the uncertain and volatile macroeconomic landscape.” CEO Mark Zuckerberg added that “. . . it’s not clear that the economy has stabilized yet so we’re planning our budget somewhat more conservatively.” As a result, Meta predicted that ad revenues will be $30 billion to $32.5 billion for the fourth quarter, below analysts’ expectations of $32.2 billion. (That level would represent another decline from a year ago, when total revenue was $33.67 billion.)

The TikTok Factor

The company, like Google, also faces rising competition from TikTok, whose popular short-form videos have generated a sharp increase in advertising revenue. According to Statista, TikTok generated $4 billion in advertising revenue in 2021, a figure that is expected to double by 2024 and triple by 2026. Digiday reported recently that ad agencies are shifting content creation from Instagram and YouTube to TikTok. In April, Insider Intelligence predicted that TikTok’s ad revenue will grow 184 percent to nearly $6 billion in 2023 (that amount tops Twitter and Snap combined).

To fight TikTok, Meta has given priority to the development and growth of Reels, its short-form video format on Facebook and Instagram. Meta is now seeing 140 billion Reels plays across Facebook and Instagram each day, which is a 50 percent increase from six months ago, according to Zuckerberg.

But Reels doesn’t monetize as effectively as the company’s other types of content. So, as Meta pivots toward showing more short-form video, Meta is taking a quarterly revenue headwind of more than $500 million, Zuckerberg told investors. Meta expects to get to a more neutral place with this shift within the next 12 to 18 months.

“As Reels grows, we’re displacing revenue from higher-monetized surfaces,” Zuckerberg told investors. “That’s clearly the right thing to do.”

The Apple Factor

Meta continues to grapple with the fall-out of Apple’s privacy controls, known as App Tracking Transparency (ATT). Meta said its average ad price decreased 18 percent on the year, as it adjusts to Apple’s changes that make it harder for Meta to track users and serve them personalized advertising. In the same quarter last year, the average price per ad climbed 22 percent.

But Meta also said that the blow to ad revenue caused by ATT is diminishing. Per CFO Dave Wehner, “Consistent with our expectations, the headwind to year-over-year growth from Apple’s ATT changes diminished in Q3 as we lapped the first full quarter post the launch of iOS14.5.”

But Apple isn’t done punishing Meta. Apple recently changed its App Store terms to take a portion of social-media advertising revenue. The policy change requires users and advertisers to make an in-app purchase when they pay to boost posts in apps like TikTok and Meta’s Instagram. Apple takes a commission of as much as 30 percent on in-app purchases, meaning a company like Meta would lose a portion of its ad revenue to the iPhone maker.

The company also faced stiff criticism from investors over its continued push into the metaverse, which has cost the company billions of dollars. Although the company’s metaverse investments technically do not affect its ad revenue – they’re more of a drain on profits than anything else – they have raised concerns that Meta is taking its eye off its core social media growth engine in the web 2.0 world.

The Good News

But on the bright side, Meta reported that:

  • Daily Active Users (DAUs) for the quarter were: 1.98 billion versus 1.98 billion expected, according to StreetAccount. That was up from 1.97 billion three months ago. 
  • Monthly Active Users (MAUs): 2.96 billion versus 2.94 billion expected, according to StreetAccount

Meta said Instagram now claims more than 2 billion monthly active users, while WhatsApp’s user base has surpassed 2 billion daily active users, with North America being the messaging app’s fastest-growing region.

What This Means for Advertisers

So, what does all this mean for advertisers? Well, now might be an opportune time to advertise on Meta, with its user base being strong and average ad prices decreasing. The company is rolling out new ad products to improve the monetization of Reels, and a new “Performance 5” framework, which is a set of five data-proven tactics that can help to improve advertising performance on Meta platforms amid tighter privacy controls. For instance, broad targeting consists of an automated targeting approach that reportedly produces better results for Facebook and Instagram ads than more refined, more niche audience approaches.

Meta, like its competitors, faces some difficult times amid economic uncertainty. But businesses that are taking the long view with their advertising efforts may turn out to be the winners so long as they don’t push the brakes on their online advertising efforts.

Contact True Interactive

To succeed with social media advertising, contact True Interactive. We have extensive experience helping businesses succeed on social media.

How Meta Is Defending Its Advertising Turf

How Meta Is Defending Its Advertising Turf

by Jessica Skopek Meta

Meta, the second-largest online advertising platform in the world, faces numerous challenges ranging from stricter privacy controls to the emergence of new competitors such as Amazon Ads and TikTok. Meta, like the market leader Google, is defending its position the best way it knows how: rolling out new ad products.

On October 3, Meta announced new ways for advertisers to reach the company’s user base, which encompass brands such as Instagram, Facebook, and Messenger. They include:

  • Post-loop ads on Facebook Reels. The skippable video ads, ranging from four to 10 seconds in length, play at the conclusion of a Reel, followed by the original Reel resuming and looping again. (Instagram Reels already have ads.)
  • Image carousel ads for Facebook Reels. These are horizontally scrollable and can include anywhere from two to 10 image ads. They appear at the bottom of Reels content.
  • Ads in creators’ profile feeds. These are aimed at giving creators another monetization option and will allow them to earn extra income from ads within the content they already have in their profile. This ad format is being tested with a small number of creators in the United States. A Meta spokesperson told Adweek that company will make it clear that creators are not affiliated with the ads that appear in their profile feeds.

Meta also announced new spaces available for advertisers on both the Explore page of Instagram, within Facebook Reels and on creators pages.

But wait – there’s more! Instagram also launched a series of ad formats. For instance, Instagram  is developing an open beta of augmented reality ads in feed and Stories. This makes it possible for brands to provide an immersive AR ad experience and encourage people to interact via their surroundings.

Instagram is also offering new multiadvertiser ads that use machine learning to serve ads from other businesses under an ad that may be of interest to the user. In theory these will help advertisers be discovered by Instagram users who are already in a shopping mindset. The new option is only enabled for direct-response objectives. Advertisers will have to opt in, with the opportunity to opt out whenever they choose.

The most interesting take-away from Meta’s new ad formats is the way Meta is trying to monetize the value of Reels for creators and Meta. For in-Reel Facebook ads, creators would get 55 percent of the revenue, while Meta would get 45 percent. The more consumers see Reels, the less time they spend in the legacy parts of the platform like the main feed.

In a July earnings call, CEO Mark Zuckerberg said, “We saw a more than 30% increase in the time that people spent engaging with Reels across Facebook and Instagram.” If creators of Reels can make money from their participation on these platforms, they could start to win back some of the audience Meta has been losing to TikTok.

Will Meta succeed? One concern advertisers shared with Adweek is that too many ad formats could create saturation. If users feel like their experience is cluttered with too many ads, their engagement with Meta platforms will decline.

But if monetizing Reels makes Meta a more attractive destination for creators, the format could provide a credible alternative to TikTok. For now, businesses should work with their agency partners to evaluate these ad products against where their audiences are most likely engaging with their brands. If you are already achieving strong results by advertising on TikTok, for instance, Meta’s new formats might not be necessary unless you aim to court Meta’s relatively older audience (compared to TikTok). But if you’re already looking for ways to reach Meta’s audience, and you’ve been using Meta as an ad platform, these formats may hold more appeal.

Contact True Interactive

To succeed with social media advertising, contact True Interactive. We have extensive experience helping businesses succeed on social media.

How Apple Will Grow Its Advertising Business

How Apple Will Grow Its Advertising Business

by Tim Colucci Apple

Apple changed the advertising industry when the company launched an important privacy control in 2021, Application Tracking Transparency (ATT).  ATT asks iPhone users to decide whether apps can track them across other applications and websites. After the introduction of ATT, 62 percent of iPhone users opted out.

This has created a problem for advertisers and ad tech platforms such as Meta that rely on the ability to track user behavior across the web in order to serve up targeted ads to them. Without tracking user behavior via third-party cookies, their ads are less personalized. Meta said that ATT would cost the firm $10 billion in revenue in 2022. Apple, for its part, justified the new privacy control as taking a stand for consumer privacy.

Well, we now know Apple had something else in mind with ATT: taking a stand for Apple’s advertising business.

As Bloomberg reported recently, Apple is now earning $4 billion in revenue annually by selling ads on its devices, and the company plans to grow that amount aggressively. Granted, $4 billion is a far cry from the $209 billion that Google pulled down from advertising in 2021, but Apple’s newfound focus on ads sure casts its consumer privacy push in a different light.

How Does Apple Earn Ad Revenue?

Apple makes money selling ads on spaces that people see all the time on their iPhones and connected TVs as they navigate their screens to download apps, read the news, and watch content. Those include:

  • The App Store, as shown here:

Apple Ads

  • Apple’s own News and Stocks apps.

The additional ad revenue will come from:

  • The Today tab (the home page of the home page of the App Store, which includes content ranging from App of the Day to Game of the Day).
  • The You Might Also Like section of the App Store (this is found at the bottom of the App Store).
  • Third-party app download pages.

Does ATT Apply to Apple?

How will Apple sell targeted ads? By collecting first-party data, meaning the information that users of Apple devices cough up to Apple whenever they use the App Store, News and Stock apps, and so on. And, by the way, Apple will not make it easy for users to opt out of having their data tracked. You can disable the ad personalization feature, but you have to look for it under Apple Advertising in the settings app’s Privacy & Security menu. There is no pop-up menu asking you if you’d like to have tracking disabled as is the case with ATT, as shown below:privacy noticeBut shouldn’t ATT also apply to Apple? Not in Apple’s view. According to Bloomberg:

You may ask then, why don’t Apple apps have to ask permission to track users via a pop-up message? That’s what happens with other apps under ATT.

The reason, Apple says, is that the system “does not follow you across apps and websites owned by other companies.” That’s what ATT is designed to prevent. If a third-party app doesn’t track across outside apps and websites, it also doesn’t need to show a pop-up.

The “we are exempt from our own policy” rationale is how Google justifies its plans to kill third-party cookies on the Chrome browser. Google apps such as YouTube are exempt because technically they collect first-party data, not third-party data.

It’s easy to connect the dots and see what’s going on here: by attacking third-party cookie tracking, Apple bolsters its own ad program, which relies on first-party data collection.

Apple’s ad business is far too small to threaten the lead enjoyed by Amazon, Google, and Meta. But Apple has the muscle and money to grow its business quickly. ATT was a declaration of war.

What Advertisers Should Do

  • Understand the big picture. There is no going back: tech firms such as Apple and Google are undercutting the value of third-party cookies. Accept the reality that as third-party cookies crumble and technology companies enact privacy controls, your ads will be less targeted than they were. This does not mean you should stop advertising online. Online advertising remains the most efficient and cost-effective way to reach your audience. At the same time, first-party data is more valuable than ever to advertisers as a means to creating targeted ads. Consider ad platforms such as Amazon Advertising and Walmart Connect, which give businesses entrée to a vast base of customers who search and shop on Amazon and Walmart. True Interactive offers services on both platforms in addition to our longstanding work on Google, Bing, and other platforms. Learn more about our services with Amazon Ads here and Walmart here. Apple and Google cannot undercut what these companies are doing.

True Interactive can help you navigate the ever changing world of consumer privacy and advertising.

Contact True Interactive

To succeed with online advertising, contact True Interactive. Read about some of our client work here.

Lead image source: https://pixabay.com/photos/apple-inc-mac-apple-store-store-508812/

 

 

 

The Most Popular Social Media Apps for Teens

The Most Popular Social Media Apps for Teens

by Patrick Wool Social media

How are teens spending their time on social media these days? This is an important question for advertisers. That’s because teens spend money. They talk about their favorite brands with each other. Their preferences influence the popular cultural trends that advertisers need to understand in order to stay relevant. And if advertisers play their cards right, they can, in turn, influence teen behavior.

A new survey of Americans aged 13-17 from Pew Research Center reports some eye-opening findings about where and how teens are spending their time online. Key findings:

  • YouTube reigns. 95 percent of teens use YouTube, followed by TikTok, Instagram, Snapchat, and Facebook.

Social Media Apps

  • Only 32 percent use Facebook, compared to 71 percent in 2014-15. Not only is there a smaller share of teenage Facebook users than there was in 2014-15, teens who do use Facebook are also relatively less frequent users of the platform compared to the other platforms covered in this survey. Just 7 percent of teen Facebook users say they are on the site or app almost constantly (representing 2 percent of all teens). Still, about six-in-ten teen Facebook users (57 percent) visit the platform daily.

Leading Social Sites

  • Many teens are always on. 46 percent of teens say they’re on the internet “almost constantly,” up from 24 percent in 2014-2015.  Roughy one in five teens are almost constantly on YouTube, which leads all platforms.

Social Media Usage

  • The vast majority of teens have access to digital devices, such as smartphones (95 percent), desktop or laptop computers (90 percent) and gaming consoles (80 percent). Since 2014-15, there has been a 22 percentage point rise in the share of teens who report having access to a smartphone (95 percent now and 73 percent then). While teens’ access to smartphones has increased over roughly the past eight years, their access to other digital technologies, such as desktop or laptop computers or gaming consoles, has remained statistically unchanged.
  • More affluent teens are particularly likely to have access to all three devices. Fully 76 percent of teens that live in households that make at least $75,000 a year say they have or have access to a smartphone, a gaming console and a desktop or laptop computer, compared with smaller shares of teens from households that make less than $30,000 or teens from households making $30,000 to $74,999 a year who say they have access to all three (60 percent and 69 percent of teens, respectively).
  • U.S. teens living in households that make $75,000 or more annually are 12 points more likely to have access to gaming consoles and 15 points more likely to have access to a desktop or laptop computer than teens from households with incomes under $30,000.
  • Habits vary by demographic. Teen boys are more likely than teen girls to say they use YouTube, Twitch and Reddit. Teen girls are more likely than teen boys to use TikTok, Instagram and Snapchat. Higher shares of Black and Hispanic teens report using TikTok, Instagram, Twitter and WhatsApp compared with white teens.

Implications for Brands

  • Short-form content on TikTok is popular, but so is longer-form content on YouTube. Within just a few years, TikTok has famously rocketed to popularity by featuring videos that are about 30 seconds in length (often shorter). But YouTube’s popularity demonstrates that teens also like more in-depth video content, as Mashable points out. Longer-form content lends itself to content marketing, such as “how to” topics and podcasts, as noted here. On the other hand, shorter-form TikTok videos lend themselves to catchy, engaging micro-moments. To use a television analogy, TikTok is the place for 30-second spots, and YouTube for advertorials. As one influencer on LinkedIn wrote, “If digital media is hunger, TikTok feels like McDonalds, and YouTube feels like [insert fairly decent quality restaurant]. TikTok gives you dopamine hits. It’s addicting, you can become consumed by it, but it doesn’t mean you’re satisfied with the quality. Each swipe is, ‘okay, now what’s next.’ Before you know it, it’s an hour. YouTube, even with most videos watched being through recommendations, provides a deeper connection with the viewer. If you watch a video for >1min, you’re truly invested. This also means that creators will build more meaningful viewer connections through YouTube. All data shows that Gen Z appreciates the quality and connections of YouTube.”
  • Teens are not all the same. Variances exist by income level and demographic, as noted above. It’s important to understand the differences depending on your audience. In addition to the statistics cited above, we also noticed the popularity of gaming consoles among more affluent teens. And overall, Hispanic (47 percent) and Black teens (45 percent) are more likely than white teens (26 percent) to say they use at least one of the five most popular social media online platforms almost constantly. And teen girls are most likely to be social media loyal than teen boys: teen girls are more likely than teen boys to express it would be difficult to give up social media (58 percent versus 49 percent). All of these nuances influence any company that wants to launch a credible multi-cultural marketing strategy.
  • Facebook still matters, but Instagram does even more. Even though it’s less popular among teens than it was in 2014-15, it’s still more popular with teens than Twitter, Twitch, WhatsApp, Reddit, and Tumblr. As teens get older, they may very well spend more time on Facebook. And Facebook the platform still enjoys widespread usage among adults, as seen in other recent Center studies. However, it’s clear that among Meta’s brands, Instagram is more important for reaching teens, especially as Instagram morphs into a social selling site.

Contact True Interactive

We deliver results for clients across all ad formats, including social media, video, and mobile. To learn how we can help you, contact us.

Photo by Rami Al-zayat on Unsplash

What’s Next for Advertisers on Twitter with Elon Musk as an Owner?

What’s Next for Advertisers on Twitter with Elon Musk as an Owner?

by Kurt Anagnostopoulos Twitter

Will advertisers leave Twitter under Elon Musk’s ownership? That question is getting bandied about a lot these days. That’s because of widespread speculation that Musk will relax Twitter’s content moderation policies. This, in turn, could conceivably create brand safety issues by making controversial content more prevalent on the app, which has nearly 400 million monthly active users. For example, Advertising Age reported that “Marketers are worried that Musk will reopen the floodgates on uncivil behavior on the platform.” Ad agencies consulted by Ad Age said that their clients are increasingly asking about the risks of staying on Twitter. Here’s what I think will happen:

  • Some advertisers will flee Twitter and never return.
  • Some advertisers will put Twitter advertising on pause but eventually return to Twitter.
  • Most advertisers will do nothing.

The fact of the matter is this: advertisers have shown by their actions that they have a higher tolerance for social media controversy than news media reports might have you believe. We have seen time and again controversies erupt on platforms such as Facebook, Instagram, Twitter, and YouTube. Most recently, Facebook became the target of widespread public scorn after whistle blower Frances Haugen, an ex-Facebook employee, shared internal documents that showed Facebook executives knowingly allowed its algorithm to publish harmful and divisive content on users’ news feeds.

The resulting expose, published in The Wall Street Journal, also sparked speculation that advertisers would leave Facebook. Some did. But most did not. Why? Because the fact that a publisher and aggregator of news content (which is what Facebook does) knowingly shares divisive information was not exactly shocking news to advertisers. Mainstream news media have been attracting audiences by publishing divisive content for decades, long before the internet existed. And they’re doing so today. As a result, advertisers have a higher tolerance for conflict than Facebook’s critics did.

What really hurt Facebook was Apple. Facebook’s parent, Meta, disclosed recently that the company would suffer a $10 billion revenue hit in 2022 because of the impact of Apple’s iPhone privacy controls launched in 2021. Meta’s stock tanked dramatically so as a result. Why? Because privacy controls would likely make ad targeting more difficult on Facebook. It was ad targeting, not a Wall Street Journal expose about the company’s culture, governance, and content policies, that hurt Facebook.

The real concern among advertisers is not whether controversial content will appear on Twitter. The fact is that controversial content already does appear on Twitter. Advertisers are more concerned that their ads could appear alongside controversial content. This is more of an issue with how an app manages its algorithm. YouTube, for instance, landed in hot water recently because advertisers’ content was appearing alongside hate speech, but most advertisers understood then (and understand now) that it’s impossible to stamp out hate speech completely. Many more also understand that controversial content is not necessarily hate speech. These realities are part of being a brand on social media – and they always have been.

Twitter has been down this road before, too, such as when a major hack involving a crypto currency scam embarrassed the platform and cast a spotlight on how easy it is for bad actors to exploit Twitter to commit crimes. Or when the proliferation of trolls and bots threatened Twitter’s reputation. Advertisers were concerned, to be sure, but for the most part they reacted by pressuring Twitter to improve its algorithm as opposed to demanding wide-scale changes in how Twitter operates fundamentally.

My advice to advertisers is:

  • Keep advertising on Twitter if you are satisfied with your results so far.
  • Monitor brand safety closely, but that’s true whether you are advertising on Twitter or any other social media app.
  • Watch where your audience goes. There is a very real possibility that ongoing controversy at Twitter could cause a drop in users. The question is whether your audience will leave Twitter. It’s a question. It’s not a certainty. Work with your agency partner to keep tabs on the situation, but don’t make assumptions based on news headlines.

True Interactive monitors developments on social media all the time as part of being a well-informed partner to our clients. Keep watching this blog for updates.

Contact True Interactive

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Twitter image by Alexander Shatov on Unsplash

Elon Musk image by https://pixabay.com/illustrations/elon-musk-space-elon-spacex-tesla-6222396/