Elon Musk’s Twitter challenges mount amid advertising squeeze

New data underscores the mammoth task billionaire Elon Musk faces in turning around the social media company he bought for a whopping $66bn.

Twitter owner and chief executive Elon Musk is facing an increasingly uphill battle to monetise his 450 million active Twitter users, with new data showing that less than 5 per cent of users who visit the ‘Twitter Blue’ web page actually sign up for the service.

Mr Musk last month announced a shake-up of his social media platform’s paid ‘Twitter Blue’ feature, including that from April 15 only verified subscribers will have posts recommended to other users and be allowed to vote in polls. The service costs individual Australian users $13 a month or $135 annually.

Data from web analytics outfit Similarweb and provided to The Australian has underscored the challenges Mr Musk faces in drumming up interest in the service, however, and poses fresh questions about the extent to which it can generate revenue for the firm he bought for a whopping $US44bn ($66bn) in late 2022.

In March, visits to Twitter Blue’s pricing and benefits page reached 2.6m – up 5.7 per cent from a month earlier – yet only 4.5 per cent of those people signed up for the service in March, totalling 116,000 sign-ups, Similarweb’s statististcs show.

The analysis is based on desktop web traffic to twitter.com and does not include signups through a mobile app or bulk purchases, such as those Twitter has been pushing on publishers who want their reporters to be verified.

Elon Musk is facing an increasingly uphill battle to monetise his 450 million active Twitter users. Picture: Marlena Sloss/Bloomberg

David Carr, senior insights manager at Similarweb, said that it’s unclear whether enough users will want to pay for verification for it to be a significant revenue generator for Twitter.

Twitter is no longer a public company and therefore doesn’t publish its financial data, but reports suggest the company remains in the grip of an advertising squeeze, with the social media platform hit by an estimated 40 per cent drop in revenue after more than 500 clients paused their spending, including marquee brands like Audi and Pfizer.

“Although Twitter is no longer a public company, its monthly revenue from advertising is still estimated to be in the hundreds of millions of dollars,” Mr Carr said.

“Even if every one of the approximately 116,000 signups we estimate Twitter secured in March was for an $US84 one-year commitment, that would translate into about $US9.8m.

“Twitter would have to continue to expand that pool of subscribers and win their continued renewals to make a significant transition away from the ad-supported business model Musk inherited.”

Mr Musk last month announced that from April 1 legacy verified users would have their blue ticks removed unless they paid a monthly fee for Twitter Blue, but most of those blue ticks remain, at least for now.

“The mass disappearance of blue checks that was expected to happen over the weekend failed to materialise, with the notable exception of Musk ordering the checkmark for the New York Times removed,” Mr Carr said.

“Instead, other odd changes like the replacement of the Twitter bird logo with the Dogecoin “doge” left some observers wondering if Musk was trying to degrade the Twitter experience for everyone but paying customers.”

Twitter was unable to be contacted for comment.

Mr Musk is reportedly considering a number of options to deal with Twitter’s near-$US13bn debt burden, including selling more of his Tesla shares or putting Twitter into bankruptcy protection.

The controversial executive said late last year Twitter was grappling with a “negative cashflow situation of $US3bn a year” but added that cost-cutting efforts, including mass lay-offs at the company, could help it “roughly” reach cashflow break-even. He added in March that Twitter was “not on the fast lane to bankruptcy any more.”