Edition 4 - "Money, Power, Wes Anderson"
Highlights: May 4-11, 2023
We’re back, welcome to Edition 4! A few points of order, I was on holiday last week hence no post last week, I’ve also shifted publication dates to Friday to make life a little easier for me :-o
As a reminder, ALL IMAGES LINK TO TWITTER. Thanks!
Paid subscribers, I welcome your suggestions of things I posted on Twitter which would be fun to explore. Eventually I hope this weekly will become fully user-requested.
This week:
Part 1: Tucker Carlson on Twitter (Free)
Part 2: If you want a picture of the future, imagine Wes Anderson stamping on a human face— forever (Paid)
Part 1: Tucker Carlson on Twitter
Observing the US broadcast media landscape that strikes me is that Fox News makes money whereas channels like CNN and MSNBC and others make less. I suspect part of the reason is because when it comes to reaching leftwing audiences (and extracting their advertising dollars) broadcasters keep trying to slice the pie ever thinner, whereas Fox has a lock on the right. This naturally makes it easier to collect advertising dollars because as Michael Jordan once famously observed “Republicans buy sneakers too”.
This is a longwinded way to my observations about Tucker Carlson taking his show to Twitter after being fired by Fox. As usual, I’m going to avoid the culture war aspects of this story and focus on why I think it makes for an interesting business case. Over to you Tucker…
For Tucker
Firstly, Tucker is a media force commanding a huge audience. Firing him must have been something Fox would only do in extreme circumstances. I’m sure they speculated where he’d end up, I’m not sure they thought Twitter, but there’s a definite logic to the move.
At time of posting, Tucker’s “We’re back” post has racked up nearly 125m views and nearly 875k Likes. Those are staggering numbers - for reference his Fox show typically pulled 2.5m viewers. He will clearly have an audience - solely his audience - on Twitter. With the right kind of monetisation Tucker will become a media force in his own right, just as many print journalists have found on Substack. But herein lies the challenge for Twitter.
For Twitter
Twitter has always been lousy at making money. Always. Before Elon took over, Twitter was projected to make around $4.7bn in ad revenue in 2022. Compare this to Meta’s and Youtube’s ad revenues of $113bn and $30bn respectively in 2022 and you see the difference. Post-Elon, the situation is worse, with projected 2023 ad revenue dropping to around $2.8bn. Twitter is terrible at making money and its failure to make money happens at multiple levels:
Scale - Twitter has around 250m DAUs, which sounds like a lot until you realise that Facebook, Instagram, Youtube, and Tiktok each have more than 1bn DAUs, LinkedIn has around 850m DAUs, and even Snap has over 380m DAUs. If you can’t build scale, it’s hard to make money. Snap suffers similar problems of scale - only bringing in $4.6bn in 2022 (but at least it’s revenues are growing).
Audience Concentration - By its nature, Twitter is something of a social media bearpit. People come to Twitter to be horrified and entertained by their fellow humans (something I addressed in Edition 3). A smaller segment of users come engage in the horrifying and entertaining for themselves. Almost immediately this puts off of a lot of potential users. So although it has hundreds of millions of users, Twitter is more of a big niche than mass market social media platform. Added to this, Twitter has historically a strong liberal (in the American sense) bias, starting with employees and projecting into its userbase. This isn’t necessarily bad (the same thing happens in publishing and broadcast media) but Twitter’s inability to maximise revenues from these audiences means that a smaller more concentrated audience leads to less revenues.
Advertiser Concentration - As an advertiser, I want to advertise where I know I’ll find my target audience. If Twitters users bias liberal, it will attract advertisers who want to reach these users. As with it’s audience, over time this creates a feedback loop. Twitter counts roughly 3,500 advertisers in the US, compare this with Facebook which counts around 37,000 advertisers in the US (they estimate as many as 10m globally across Meta). Again, as with its audience, if Twitter found a way to connect its advertisers to its audience this could be powerful, but it hasn’t, caused by the next problem.
Ads Platform - Facebook, Insta and Youtube have built incredibly good platforms for advertisers. Advertisers on Facebook can build incredibly finely tuned audience segments, increasing the likelihood of reach the right customer. This means advertisers will pay more for ads. Twitter offers nothing of this sophistication. If you wondered at the irrelevance of Twitter ads, this is part of the reason. If you’re running a website that measures audience sourcing, you’ll note that Twitter is poor way to source traffic. There’s no reason for this to be the case, but it’s the case.
You gotta get the money first…
Along with its revenue issues, Twitter’s concentrated audience and advertiser base creates an even bigger problem - its product is held hostage. Ask any business that is swayed by powerful users and customers - it’s really hard to innovate product in a way that displeases them. Twitter under Jack was sloth-like on product and Elon’s biggest fights, from the moment he took over at Twitter, were boycotts he faced from “outraged” users and advertisers.
The high profile users flouncing gets a lot of headlines but is unlikely to hurt Twitter’s bottom line (especially as users seem to have come crawling back). But a much bigger issue is that the loss of relatively few, but major, advertisers nearly halved Twitter’s ad revenue.
Then when you get the money, you get the power…
Yes there’s a political angle to this boycott, but there’s also a business angle. Meta and Youtube are mass market social media platforms with users in the billions they represent the full sweep of humanity. But as we’ve established, Twitter is not. Indeed as a marketer, Twitter’s audience profile looks more like a traditional media outlet like CNN or the New York Times. So as an advertiser I’m buying a specific kind of audience. If Elon has said he’s looking to change the profile of Twitter - you can call it more rightwing, I could say it’s more centrist - that’s going to impact my decision to advertise on Twitter because it’s not the audience I used to buy.
So while there was definitely a lot of political grandstanding by advertisers, there was of course a business logic as well - stop buying ads on Twitter because you won’t get that liberalish audience you were chasing. I guess if you can through in a bit of preening and grandstanding along the way you can look good to your friends or something.
Back to Tucker’s “We’re Back”
So what part does Tucker play in this then? Here’s my thoughts on potential impacts:
More users - Tucker will bring a lot more rightwing non-Twitter users onto Twitter just to see what’s going on.
More mainstream - This should (ironically) pull Twitter’s average user more towards the centre, or at least balance out the leftward lean of Twitter.
More engagement - Next because Tucker is divisive, it will massively increase engagement because his contributions will no doubt stir a lot of conversation and conversation means engagement
More advertisers - Because of all the above, Twitter will become a more attractive prospect for advertisers small and large (but especially the smaller kind that help Meta make so much money. (Oh and FYI, big advertisers have tried to do the same to Facebook over the years, but never succeeded.)
More Tuckers - If other broadcast personalities get sick of the restrictions imposed by their employers, maybe they’ll jump ship to Twitter as well, further increasing Twitter’s appeal and broadening its audience.
The final bit that leaves Twitter to solve is their diabolical ads platform. But at the speed Twitter are currently iterating on product at the moment I wouldn’t bet against this being resolved sooner rather than later.
And ultimately this is part of Elon’s strategy to win. At SpaceX, rapid iteration of product is prioritised, there’s no reason to suggest he’s not doing the same at Twitter.
