The Daily: Advertisers aren't going back to Twitter, Lemon8 takes off, and TikTok's new 'Series' feature

Audio by Jasmine Enberg | Apr 12, 2023

On today's episode, we discuss why advertisers aren't returning to Twitter, what the impact of the new blue check mark will be, and whether folks actually want to pay for social media. "In Other News," we talk about the potential of TikTok's sister app Lemon8 and what to make of TikTok's new "Series" feature. Tune in to the discussion with our analyst Jasmine Enberg.

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Episode Transcript:

Marcus Johnson:

Hey gang, it's Thursday, April 13th. Jasmine and listeners, welcome to the Behind the Numbers daily, an eMarketer podcast made possible by Cint. I'm Marcus. Today I'm joined by one of our principal analysts who covers everything social media for us. She's based out of California and we call her Jasmine Enberg.

Jasmine Enberg:

Hey, Marcus. Hey everyone.

Marcus Johnson:

Hey, Jasmine. Today's fact, we've got another Finnish one.

Jasmine Enberg:

Really?

Marcus Johnson:

There's so many. Yeah. Yeah, yeah. Every time you come on.

Jasmine Enberg:

I'm so happy.

Marcus Johnson:

Until you get sick of them. Just tell me, but-

Jasmine Enberg:

I'll never get sick of them.

Marcus Johnson:

There's so many. So Finnish people consume the most what per capita than any other country?

Jasmine Enberg:

Do you want me to guess?

Marcus Johnson:

Yeah.

Jasmine Enberg:

I mean, I know the answer.

Marcus Johnson:

Ah, man. Do you really?

Jasmine Enberg:

I do.

Marcus Johnson:

Hiphop music. That's not the answer.

Jasmine Enberg:

What? No, that's not the answer.

Marcus Johnson:

I know. I'm kidding. I'm kidding.

Jasmine Enberg:

I was going to say, that does not sound right. Metal music apparently is very popular.

Marcus Johnson:

Fabulous.

Jasmine Enberg:

But it's coffee.

Marcus Johnson:

It is coffee. Yep. They average about, this seems low, but it's also an average, and I think it's a full cup. They average about four cups a day. Norway, Denmark, Iceland, and the Netherlands round out the top five. Sweden, Switzerland, Belgium, Luxembourg and Canada complete the top 10. So you probably would've noticed that nine out of 10 of those countries are Northern European countries.

As of 2022, coffee was the second most imported commodity in the world beat only by oil, and it's the second most popular beverage on the planet behind only water. Is water popular? Feel like it's essential.

Jasmine Enberg:

Yeah.

Marcus Johnson:

You have to drink water.

Jasmine Enberg:

Well ...

Marcus Johnson:

You don't have to drink [inaudible 00:02:27].

Jasmine Enberg:

I've actually had this discussion pretty frequently recently because in the US you have so many different options for water when you go to the supermarket, right?

Marcus Johnson:

There's too many. It's ridiculous.

Jasmine Enberg:

There's so many. I mean, I kind of like it. And I missed it when I was in Finland for a year and a half because there's ...

Marcus Johnson:

Jasmine's like, "One choice. Are you kidding me?"

Jasmine Enberg:

Well, there's two usually. I mean, maybe a little bit more, but it's generally still water or sparkling water.

Marcus Johnson:

Oh my goodness. The two's plenty. That's all you need Finland. Stay strong.

Jasmine Enberg:

I don't know. I kind of like the choices.

Marcus Johnson:

Ugh, America. You don't need a whole aisle for cereal. Okay? It's ridiculous. But I do love it here. Anyway, today's real topic, Twitter's struggles.

In today's episode first is the lead, and we'll cover the latest on Twitter. Then for another news, we'll discuss TikTok alternatives and what to make of the new TikTok series feature.

Jasmine, we're starting with the lead and we're talking Twitter. Why advertisers aren't coming back to Twitter. Elon Musk is still the problem, right? Shirin Ghaffary of Vox, she reminds folks that over half of the social platform's top 1000 advertisers before the acquisition have stopped advertising on Twitter as of February. According to Pathmatics, half of them have stopped. The number of users visiting Twitter's ad portal page was down nearly 20% year-on-year in February as well according to SimilarWeb.

Ms. Ghaffary says, and executives and former Twitter employees are worried about Mr. Musk's ability to stop Twitter from turning into a "free-for-all hellscape". High turnover in the company's sales department, and concerns about the confusion around the company's policies regarding content moderation.

Jasmine, a huge question to start off. Will advertisers go back to Twitter let's say this year?

Jasmine Enberg:

Advertisers won't go back to Twitter as long as Elon Musk is in charge. And ...

Marcus Johnson:

Wow.

Jasmine Enberg:

I think the Vox article hit the nail on the head. I believe the sub headline was something like Elon Musk is the problem, and that's very similar to what I've been saying from day one. Advertisers don't trust Musk and they also, many of them don't want to be associated with him given a lot of his continued antics on the platform.

Marcus Johnson:

Yes.

Jasmine Enberg:

That said, there's different types of advertisers and big brands, which are the ones that have been pulling their spending and big numbers are much more risk averse than small advertisers. And we have seen that some small and lesser known advertisers are spending on the platform, but it's nowhere near the levels that the big brands were spending prior to Musk.

Marcus Johnson:

Yeah. Yeah. Now advertisers, they're worried about hitching their wagon to Mr. Musk's brand. You can't separate the two. So if you're advertising on Twitter, there's also this concern that you're affiliating the brand, your company with Musk himself as he continues to post offensive tweets, one mocking a disabled Twitter employee.

And it's a long way back though, Jasmine, talking about advertisers going back to Twitter this year. A few numbers for you. September to October of last year, the top 10 Twitter advertisers spent just over $70 million according to Sensor Tower. In the past two months, that number dropped to 7 million. From 70 to seven, a 90% decline. This was noted by Aisha Counts and Kurt Wagner of Bloomberg. You also pointed this out on your new research, your new report on Twitter and what folks should expect for the rest of the year when it comes to the platform.

Some other numbers, Jasmine. Twitter reported a drop of about 40% in revenues in December. Note Standard Media Index. Another one. Twitter revenue has fallen by 50% since October because ad dollars dried up. Mr. Musk even admitted to that one.

So numbers haven't just gone slightly in the wrong direction. They've gone very in the wrong direction. But it's important to point out though, Jasmine, Twitter's business was kind of stagnating before Mr. Musk took over. It hadn't booked an annual profit since 2019 and it posted a loss for eight years in the past 10. Mark Maurer of Wall Street Journal was pointing that out. So it wasn't in great shape before. Musk seems to have made it worse, at least for now.

Jasmine Enberg:

Sure. I mean, that's absolutely true. A lot of Twitter's issues predate Musk. He's exacerbated them when it comes to content moderation as well as ad performance. But I'll give you one other big number from our brand new ad revenue forecast for Twitter. By the end of 2023, Twitter will have erased all about $40 million worth of its ad growth since 2019, which means that Twitter's ad business will be the smallest it's been in the past four years. So to put that another way, Twitter's ad business is roughly the same size that it was four years ago. Think about that.

Marcus Johnson:

Wow. Wow. I thought you were going to mention the number of Twitter's worldwide ad revenues because you talk about them and what we're expecting from them this year.

Jasmine Enberg:

Yes.

Marcus Johnson:

That's also a heck of a drop.

Jasmine Enberg:

It is a heck of a drop. It's about a 28% drop in worldwide ad revenues, which is huge.

Marcus Johnson:

Yes. And they fell last year too, 7% according to our forecast. So down 7% last year, down nearly 30%, 28, what Jasmine said, nearly 30% this year. That's Twitter's worldwide ad revenues according to our numbers.

And Twitter needs advertisers, Jasmine, a lot more than advertisers need Twitter. And the way Twitter's behaved, Elon Musk in large part, is that they can just flip the switch and have money coming in from other places, and it really hasn't shown its ability to do that thus far.

And what I mean by advertisers don't need Twitter as much as Twitter needs advertisers. Our estimates show that Twitter isn't in the top 15 companies by US digital ad revenues. So if you went down the list of the top US digital ad revenues by company, you get to 15 companies before you would reach Twitter. It's behind Pinterest, it's behind Roku, it's behind Snapchat, and it's just 0.6% of the market. It's more on par with Yelp and Instacart than it is with Facebook or Google.

Jasmine Enberg:

Twitter has never been an essential part of most advertisers strategies. Right?

Marcus Johnson:

Right.

Jasmine Enberg:

I wrote about this back in November 2022 for Barron's actually, that for most advertisers, it was a really easy decision to turn off the switch once Musk had taken over the platform and began behaving the way that he did. And they're not coming back because they still don't trust him. They don't want to be associated with him. And Musk's personal brand is now synonymous with Twitter's corporate image, and that's really what's holding them back.

Marcus Johnson:

Yes. And there are other places they can spend those dollars.

Jasmine Enberg:

Absolutely.

Marcus Johnson:

The Vox article is citing advertisers saying, "There are other places I can spend my money without having to worry that I'll be attacked by Elon or my clients will be, or that he will say something that will force me to turn off my ads." The reason it feels like Twitter is a significant player is because it has an outsized influence in shaping the global conversation, news, culture, politics.

Jasmine Enberg:

I would also argue is starting to fade. Twitter isn't the center of the cultural zeitgeist the way that it was when it first launched, and for several years after that. The social media landscape has changed. And I believe that there is a space for text-based communication, absolutely. But it's not as important as it was even just a few years ago.

Marcus Johnson:

Yeah, that's a great point. Jasmine, not everyone is out on Twitter, though. Recently, Mark Read, who runs the largest media agency in the world, WPP. So he thought Twitter seems to be a lot more stable than it had been a few months prior, going on to say, I think clients want to start to look about how they can come back onto Twitter.

Any sense of where advertisers are in terms of re-engaging with the platform? Are they still taking away as the approach? Are we seeing some of the bigger advertisers starting to take a second look at Twitter at this point, or is it still too early?

Jasmine Enberg:

I think they're starting to ask the questions, right? But what we've seen is that a lot of big agencies have yet to advise their clients to end their pause. Some big advertisers, Amazon and Apple have reportedly started resending, but for most advertisers, they're still holding back.

Marcus Johnson:

I mentioned earlier that it seemed as though Twitter thought that it would be able to make money from other channels, not through just advertising quite quickly. It makes about 85% to 90% of its dollars from advertising, and one way it makes money not from advertising is through subscriptions. And Jasmine, you recently wrote that the legacy blue check marks were being phased out on April 1st. Folks who want a blue check mark on Twitter will now have to pay $7 a month or $1,000 a month if you're a company. So it's gone from, so Twitter Blue, you now will have to pay for the subscription and you get the blue check mark as part of that subscription service.

Jasmine, what do you expect the impact of this to be?

Jasmine Enberg:

So it was really fascinating because right before he started phasing out the blue check marks, I said that most people wouldn't care enough to start paying for them. And what actually happened was that people who had been legacy verified cared that other users knew that they were not paying. And so the blue check mark has really become, and I read this in a Bloomberg article, I thought it was so brilliantly stated, but the blue check mark has become Elon Musk's fan club. And that fan club is not as big as Elon Musk wants us to believe. So there's really no way that Twitter Blue or subscription revenue is ever going to make up for the ad revenue losses that Twitter has incurred.

Marcus Johnson:

It's certainly not as big as he he'd like you to believe or that they want it to be. Ms. Ghaffary of Vox saying the new version of Twitter Blue had a disastrous initial rollout, and so far still doesn't have nearly enough subscribers to make a meaningful impact on the company's bottom and line, saying, as of mid-January, Twitter reported less than 200,000 subscribers of Twitter Blue, or 0.2% of its total, 0.2. And then in terms of money made, Jagmeet Singh and Ingrid Lunden of TechCrunch were pointing out the new Twitter Blue has made just $11 million on mobile in the first three months. According to Sensor Tower, $11 million would be less than 1% of what it made in Q2 last year, Q2 being the last time we had reported figures from Twitter.

Jasmine Enberg:

The problem is that Elon Musk fundamentally doesn't understand what that blue check mark is for. It was for credibility and for authority, and now it stands for clout and support of Elon Musk. So you're seeing that there are a lot of organizations, a lot of users that absolutely will not pay for that.

Marcus Johnson:

Yeah. Is this a sign, Jasmine, that people don't want to pay for social media subscriptions or that people don't want to pay for Twitter Blue?

Jasmine Enberg:

So no, it's not a sign that people don't want to pay for social media subscriptions. I think there's a lot of value in charging loyal users for access to certain features. I think the approach to Twitter Blue has been wrong. The platform for it is perhaps wrong. And again, the problem here is that Twitter Blue is associated with Elon Musk.

If you look at Snapchat Plus or even Meta Verified, those offer a real value exchange to a specific subset of users, and we're seeing them start to really gain traction. Passive users of social media are never going to pay for it, but really engaged users and especially content creators who want to build their audiences and be taken seriously, they're more likely to spend $10, $15 a month for access to those services.

Marcus Johnson:

And they're still so new.

Jasmine Enberg:

Yeah.

Marcus Johnson:

A lot of people probably don't know about them. I wonder how many people know that Netflix has an ads tier because it's still so new, or Disney Plus for that matter. And there was some research to back that up, Morning Consult finding that most folks don't know these social media subscriptions exist as of March. Three in four folks, three in four either knew nothing about them or had no opinion towards Meta Verified, Twitter Blue, Snapchat Plus, Reddit Premium, or Tumblr Ad-Free. Even if they did know about them, three in four adults said they would not pay to use any social media platform. That was from Morning Consult as well. More than half said absolutely not. But because they don't know about them, a lot of folks, I wonder how many folks know what these things actually offer. And there's always going to be some initial hesitation when these things get rolled out.

Jasmine Enberg:

But again, it's not intended for the average user. That survey was among all adults, and I believe they-

Marcus Johnson:

Good point-

Jasmine Enberg:

... had a subset for content creators. And if you actually look at those figures, and I don't have them offhand, but the percentage of content creators who were willing to pay for Meta Verified was actually significantly higher.

Marcus Johnson:

I think it was two-thirds, I think it was as high as over 60. I think it was 66%. So this is a really good point.

How will paywalls change social media? This is an interesting point from Scott Rosenberg of Axios saying that the more Twitter erects subscription barriers, the less it will serve as the global town square Musk has envisioned. When verified just means someone paid a small fee, the door is open much wider to misinformation, hoaxes and frauds.

So yeah, I thought it was an interesting thought there. That's what we've got time for the first half time, of course, for the halftime report.

Jasmine, your takeaway from the first half.

Jasmine Enberg:

So I guess the big thing that I would say is that Twitter isn't going to disappear in 2023. We are expecting it to remain alive, not well but alive. But in order for it to be able to start to reverse the damage that has been done in the past six months, it really needs to unravel Musk's personal brand from its corporate image. It's the only way that it'll be able to regain advertiser trust and bring back enough ad dollars.

Marcus Johnson:

Yeah. Speaking of damage that has been done, a few folks noting that Mr. Musk reportedly valuing the company at $20 billion, less than half the 44 billion he paid for it. And they'll have to start Jasmine by turning around these user declines. Last year, Twitter had 59 million US users. We expect Twitter to lose 4 million users in America this year, 5 million more next year. So we've got to stem the bleeding there first.

Your brand new report's called Twitter: Six Months After Musk. Is it a viable platform for brands and advertisers? What happens next? Link to that is in the show notes, so you can head to insiderintelligence.com.

All right, time for the second half of the show. Today in other news. Tiktok's ban backup plan and TikTok launches a series feature.

TikTok ban backup plan. ByteDance-owned Instagram rival, Lemon8, describes itself as a lifestyle community, and it recently hit the US App Store's Top 10 notes Sarah Perez of TechCrunch. Up until now, it had never cracked the top 200. According to Apptopia's data, Lemon8 debuted on both iOS and Android in March 2020 and has since gained 16 million global downloads. Japan being its top market accounting for nearly 40% of its total installs. Apptopia doesn't have a figure for its US installs, but was able to estimate that the app currently has over 4 million monthly active users.

Jasmine, what do you make of Lemon8?

Jasmine Enberg:

Well, it's getting a lot of buzz right now, partly because it's true, it is climbing in the App Stores, but I think mostly because it's owned by ByteDance. There's a lot of new apps that are coming out. Expect there will be even more new apps coming out this year. And not every one of them is worth paying attention to. But if Lemon8 does take off, I do think that it will be subject to a lot of the same scrutiny that TikTok has been subject to. So its staying power isn't only going to be determined by user adoption and its ability to monetize, but also if it can escape those regulatory hurdles that TikTok is dealing with right now.

Marcus Johnson:

Excellent point. Story two, TikTok launches series feature, which lets creators sell premium episodes for up to 20 minutes each writes Todd Spangler of Variety. Available initially to select creators, the series feature lets users post collections of premium content behind a paywall that viewers can buy. Each series can include up to 80, 8-0 videos each up to 20 minutes long. The regular max length of a TikTok video is 10 minutes.

Jasmine, what's the significance of this premium episode series feature?

Jasmine Enberg:

I think all of the social platforms, TikTok included, are looking for more sustainable ways to help creators monetize, right? Creator funds have been criticized really heavily in the media. Creators have not received large payouts from that, and this is one of the ways that TikTok is trying to incentivize creators to create more content for the platform. I'm not 100% sure on how it works, but TikTok could potentially take a cut of those revenues and it would help its business as well.

We did predict that a lot of the creator monetization streams from the social platforms this year would tend towards subscriptions and paywalled content, and this is exactly in line with that.

Marcus Johnson:

Yep. That's all we've got time for, unfortunately. Jasmine, thank you so much as always for hanging out.

Jasmine Enberg:

Thank you, Marcus. Thank you everyone.

Marcus Johnson:

And thank you to Victoria who edits the show, James who copyedits it, Stuart who runs the team. And thanks to everyone listening in. We'll see you tomorrow hopefully for the Behind The Numbers weekly listen. That's eMarketer podcast made possible by Cint.