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Twitter has been plagued by falling morale, layoffs and high-profile infighting as Elon Musk grapples with the collapse of the social media company as it battles to retain its $4.5 billion-a-year advertising business.
Company insiders, former employees and advertising industry executives told the Financial Times that CEO Parag Agrawal is fighting hard to keep the company afloat amid a legal battle to keep the company from backing out of its $44bn deal to acquire Twitter.
Agrawal has tried to spend more time with advertisers in recent months to address their growing concerns, several people familiar with his thinking said.
That effort came as the San Francisco-based group cited “uncertainty” over Tesla’s boss’ control and a decline in digital ad spending as among the reasons its revenue fell in the second quarter.
Tensions between employees and Twitter leadership have increased since Musk took over in April. The company laid off 30 percent of its talent acquisition team in early July. That follows a decision in May to implement job cuts and cost-cutting measures. On Tuesday, Twitter said it saw “significantly reduced hiring” and “an increase in our interest rate” in the second quarter.
“Everybody is desperate for leadership,” said one senior Twitter employee, who spoke on condition of anonymity. A Twitter comment read: ‘This guy is awful. [but] He should lead the company. Either way, it looks like Twitter got the loser.
‘radarless’
The outage is hurting Twitter’s main source of revenue: its advertising business.
Some ad executives have warned that the waning interest in allocating digital ad spending to the social media company will cause a messy legal battle against Musk to distract management, hamper product development — and slow down the ranks as key employees move on.
A former Twitter executive said Twitter was “looking a little sleazy.” “It’s hard not to feel a little pity because no one has a choice, and to do what a rich person doesn’t want to do.”
The company’s spending rose 31 percent to $1.52 billion in the three months to the end of June. During that period, more than $33mn was spent on issues related to the Musk buyout, while severance-related costs were around $19mn.
“Twitter is suffering,” said Ed East, CEO of Billion Dollar Boy, a creative agency that advertises brands on social media. “The ongoing Elon Musk saga has created a lot of uncertainty about the platform.”
East added that his company estimated a 14 percent drop in overall creative ad volume on Twitter since May 13 — the day Musk announced he was putting the deal on hold.
Another ad agency executive said he had noticed talent leaving Twitter’s ad sales team in particular, although several of its other ad leaders were still at the company.
Regardless of Musk’s influence on Twitter, advertisers are tightening their belts amid a massive slowdown in digital advertising. Inflation and supply chain problems are hurting companies, as consumers emerge from pandemic lockdowns, spend more time online and earn more at reasonable costs.
Analysts say Twitter’s reputation for a slow pace of product innovation and thin ad offerings makes it even more dangerous compared to competitors like Instagram.
“It has consistently underperformed peers in terms of revenue and users,” said Jasmine Enberg, chief social media analyst at Insider Intelligence. “If he hadn’t been so distracted by the Musk saga, he probably would have addressed these concerns.”
Competitors like Facebook, TikTok and Google will “take over [market] share from Twitter in the next few months,” predicted an ad agency executive. “There will be no new advertising products, people will leave. Others begin to steal business.
He added: “It is a sad indictment of the board and the management.” Got a great discount – [but] The management and the board did not present any opposition vision in the absence of Elon. They had no plans. I personally think Twitter will survive this.
Twitter said the company was “focused on providing priority solutions in areas such as performance marketing, measurement, marketing, brand strategy and more” and remained committed to “brand safety” — making sure ads don’t run alongside toxic content.
Labor violence
On Twitter, the office walls were decorated with neon signs with motivational phrases such as #loveyourjob, and many employees said they were confused by the company’s legal approach — which, if successful, meant it would ultimately be employee-owned. He doesn’t seem to want it.
For those keeping up with Twitter, the group’s share price plunge since Musk went on the offensive may be less of an incentive to stay, as stock is a major part of employee compensation.
“Our outlook is slightly higher than best practice for typical macroeconomic times, but in line with current industry trends,” Twitter said.
One employee added that some employees were so actively disillusioned with management that they were afraid to speak out in public channels like internal Slack message boards — instead moving to discuss the Musk saga in private messages on apps like Signal.
“We get asked about our year-end goals without knowing what kind of situation the company is in. It’s ridiculous,” the person said. “We have failed to properly acknowledge the crisis we are in.”
Additional reporting by Patricia Nilsson in London
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