What’s Elon Really up to with Twitter?

One of the great parlor games in tech involves sussing out what Elon Musk plans to do with Twitter. And in particular, what will he do, if anything, with Twitter’s ad-supported business model.

Musk has sprinkled some hints, on Twitter of course, about what his plans are. And we’re not just talking about his plans to lift the ban on Donald Trump

For example, Musk has said Twitter DMs should be encrypted. It’s a bit of a head-scratcher than they aren’t already. And he wants to change the community guidelines to permit more speech. This, of course, has prompted a lot of chatter across the opinion spectrum. 

But when it comes to Twitter’s revenue model, we’ll have to wait and see. One thing is clear, Twitter has underperformed financially. For example, Twitter’s revenue per active user pales against Facebook’s. Our simple math (annual revenue/DAUs) shows Meta generating about $63 per daily active user, almost 3X Twitter’s roughly $23 per daily active user. In Q4 2021, Twitter had 217 million DAUs.

A CMO’s View of Twitter

We did think it would be fun to get a CMO’s perspective on what might happen to Twitter under the coming Elon era. We recently had a chat with Rebecca Biestman, the CMO of Reputation, the big cheese in the reputation management industry. Kind of fitting given Twitter’s role in making, and breaking, reputations.

For starters, Biestman doesn’t think this was a business-driven decision by Musk.

“I think a lot of it has to do with ego and control. And that’s why he does a lot of things in my personal opinion,” Biestman told Localogy Insider. “So why is he doing it? Because he can. It will make him powerful and feel good about himself.”

There’s a good chance Biestman is right, but Musk still has to figure out how to get more value out of Twitter, either as a public or a private company.

Will It Finally Go Subscription?

One avenue often discussed is moving Twitter off ads and into a subscription model. It’s a move longtime Twitter critic Scott Galloway and others have been calling for. Even though Twitter’s ad-supported model has underperformed, a total move to subscription would be disruptive. So if Musk is contemplating this move, it may make sense after taking Twitter private.

Twitter has of course dabbled in subscription via Twitter Blue, which included features like having the ability to pause the posting of a tweet for a defined period of time in order to give the sender a chance to undo a tweet before it is published. This fell well short of the edit feature many Twitter users have called for. The response to Blue was decidedly underwhelming.

Biestman certainly thinks the subscription model is in play because it might help Elon achieve his vision of turning Twitter into a pure free speech platform.

“I think that there is absolutely a chance that Twitter will turn to a subscription model,” she said. “He has alluded to it and a lot of people have talked about it. I think the argument that he will use is that then the platform won’t be corrupted by paid advertising. And it will be just a pure free speech platform. That it will be unconstrained. And that is, I think, what he desires…Whether it’s a freemium model or a pure subscription model, I don’t think we know, and I don’t know if he knows.”

Biestman notes that if Twitter does move off advertising, its role in the marketing mix will be thrown up in the air.

“I think it totally changes the dynamic for marketers, obviously, and for advertisers who use the platform today to be able to reach audiences, prospective customers, current customers, consumers at large,” Biestman said. “So that’ll be a very different dynamic.”

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