Twitter US ad sales plunged 59%, and internal forecasts are grim, NYT reports

Twitter's US advertising revenue plunged 59 percent year over year during a recent five-week period, The New York Times reported today. The firm's US ad "revenue for the five weeks from April 1 to the first week of May was $88 million, down 59 percent from a year earlier, according to an internal presentation obtained by The New York Times."

Owner Elon Musk said in an April BBC interview: "I think almost all advertisers have come back or said they are going to come back." But internal projections are grim, according to the NYT report. One internal forecast cited by the NYT predicted that Twitter's US ad revenue in June "will be down at least 56 percent each week compared with a year ago."

Twitter "has regularly fallen short of its US weekly sales projections, sometimes by as much as 30 percent," and that "performance is unlikely to improve anytime soon, according to the documents and seven current and former Twitter employees," the NYT reported. "Twitter's ad sales staff is concerned that advertisers may be spooked by a rise in hate speech and pornography on the social network, as well as more ads featuring online gambling and marijuana products, the people said."

Ad revenue crucial despite subscription push

While Musk bought Twitter for $44 billion, he told employees in March that its value was $20 billion. A new analysis by Fidelity suggests the now-private company's value has dropped further, to $15 billion.

Musk set a goal of making half of Twitter's revenue subscription-based, but his revamped Twitter Blue subscription service got off to a slow start. As the NYT report said, reversing the decline in advertising "is crucial because ads have long made up 90 percent of the company's revenue."

The NYT also said it talked to six ad agency executives who "said their clients continued to limit spending on the platform. They cited confusion over Mr. Musk's changes to the service, inconsistent support from Twitter, and concerns about the persistent presence of misleading and toxic content on the platform."

One of the incidents cited by ad executives was the spread of an AI-generated image that falsely suggested there had been a large explosion at the Pentagon.

Senators question Twitter’s FTC compliance

Meanwhile, four Democratic US senators questioned Twitter over whether it is complying with privacy and security obligations from a settlement with the Federal Trade Commission. "Last week, Twitter's head of trust and safety, Ella Irwin, and Twitter's head of brand safety and advertising quality, A.J. Brown, resigned," the Friday letter said. "These departures, following a string of high-profile resignations from Twitter's lead privacy, information security, and compliance officers, raise concerns about Twitter's ability to comply with its legal obligations."

The letter was sent to Musk and incoming Twitter CEO Linda Yaccarino by Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), Ed Markey (D-Mass.), and Mazie Hirono (D-Hawaii). Yaccarino, who reportedly starts at Twitter today, was previously head of NBCUniversal's advertising sales and has hired one of her top executives from NBC, Joe Benarroch, for a senior business operations role at Twitter.

The FTC is already investigating Twitter, reportedly focusing on its compliance with conditions in a May 2022 settlement with the agency in which Twitter agreed to pay a $150 million penalty for targeting ads at users with phone numbers and email addresses collected from those users when they enabled two-factor authentication. Twitter was already subject to a 2011 settlement that prohibited the company from misrepresenting its privacy and security practices. FTC Chair Lina Khan told Twitter in a January 27 letter that she was "troubled by Twitter's delays and the obstacles that these delays are creating for the FTC's investigation."

While a House Republican objected to the FTC investigation, the Democratic senators' letter said that "Mr. Musk's behavior reveals an apparent indifference towards Twitter's longstanding legal obligations." The senators asked a series of questions regarding Twitter's compliance with FTC obligations, requesting answers by June 18. "Regardless of his personal wealth, Mr. Musk is not exempt from the law, and neither is the company he purchased," they wrote.