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Ilan Mask’s private takeover of Twitter could increase advertising revenue for YouTube, Snap, parent group Facebook Meta and TikTok, analysts at several Wall Street firms said in recent notes to investors.
Twitter, which announced it accepted Mask’s bid on Monday, relied heavily on ad sales, which totaled $ 1.41 billion, which is the lion’s share of its revenue in the last quarter.
But Musk can take advantage of the campaign in two ways that could potentially pull out promotional dollars. The open CEO of Tesla and SpaceX argued that freedom of speech is crucial to the platform, which could mean less moderation of content. Brands that do not want their content to potentially appear next to misinformation or hate speech may cut their costs, JMP analysts said in a note Tuesday.
“With ~ 85% of Twitter’s revenue generated through brand advertising, and because freedom of speech is a priority for Mr. Mask, advertisers can shift budgets to other channels given the brand’s security concerns,” write JMP analysts. It could help YouTube, Snap, Meta and TikTok, the company said.
Content moderation is not what Madison Avenue has been about in the past. As part of StopHateForProfit vs. Facebook in July 2020, major advertisers from Unilever to Starbucks announced various spending breaks. In 2017, brands such as Coca-Cola and Microsoft stopped spending on YouTube advertising due to improper placement of ads next to extremist content.
Musk also seems to have been interested in creating a campaign subscription model that would include less advertising.
“Everyone who subscribes to Twitter Blue (i.e. pays $ 3 a month) should get an authentication tick,” Musk said on a remote tweet. “And no advertising. The ability of corporations to dictate policy is greatly enhanced when Twitter relies on advertising money to survive. ”
This will potentially benefit smaller players such as Pinterest and Snap, MKM analysts wrote in a note on Tuesday.
In addition, Evercore analysts said Monday that there is a “clear opportunity” for marketers to move their companies to platforms such as Reddit, Google, Meta, Snap and TikTok.
Stifel analysts echoed these sentiments. “If Twitter were completely out of the advertising industry, we would see this as a small positive for the rest of our coverage, as about $ 7 billion in Twitter advertising dollars is likely on its way to generation in 2023, going to other platforms,” Steeffel said. said in a note Monday. These advertising budgets are likely to move to other platforms such as Snap, Pinterest and TikTok, the firm said.
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