After Elon Musk's antics on Twitter, advertisers may think twice for now

What is going on at Twitter? Twitter is in chaos after Elon Musk laid off thousands of workers and promises more changes are coming. ABC's Reena Roy reports.

Hours before news broke on Thursday that he had completed his US$44 billion acquisition of Twitter, Elon Musk wrote an open letter to advertisers stressing that he doesn't want the platform to become a "free-for-all hellscape."

But that attempt at reassuring the advertising industry, which makes up the vast majority of Twitter's business, was quickly overshadowed by Musk's first days as the new owner of the platform. Some industry experts are now predicting an advertiser exodus could be coming sooner than expected.

Within the first 24 hours of his ownership, there were several reports that racist comments, hate speech and other objectionable content had increased significantly on Twitter as users tested Musk's promise that he would allow "free speech" on the platform. Then over the weekend, Musk was widely criticized for tweeting (then deleting without providing a reason) a link to a fringe conspiracy theory about the violent attack on Paul Pelosi, husband of House Speaker Nancy Pelosi.

"I think advertisers are bracing to leave," said Claire Atkin, co-founder of the adtech watchdog Check My Ads. "It's very possibly a seismic shift for marketers and advertisers."

After months of uncertainty about Musk's pending acquisition, advertisers must now confront questions around how Musk will change the platform, which is already an also-ran in the digital ad space despite its outsized political influence. Musk, known as both an innovative entrepreneur and an erratic figure, has promised to rethink Twitter's content moderation policies and undo permanent bans of controversial figures, including former U.S. president Donald Trump.

Brands have long been sensitive to the types of content their ads run against, an issue made more complicated by social media. Most marketers bristle at the thought of having their ads run alongside toxic content such as hate speech, pornography or misinformation. And if Twitter continues to struggle with an uptick in such content – or if Musk updates Twitter's policies to explicitly allow some of it – companies may cease advertising there for fear of risks to their brands, or because they're reaching a smaller audience if regular users also depart.

"If you think about the money, investment and care, real care and attention that goes into connecting with consumers, and then to have your ad be published next to lies … it goes against everything a brand wants to do," Atkin said.

Musk, who has previously tweeted "I hate advertising" and indicated he wants to make the platform less reliant on it, is also confronting the reality that about 90% of Twitter's revenue comes from advertising. In addition to the open letter to advertisers, Musk's team spent Monday "meeting with the marketing and advertising community" in New York, according to Jason Calacanis, a member of Musk's inner circle.

In public and private conversations with advertisers, Twitter has also stressed that its content policies have not changed following the acquisition, and Musk has said they won't change until a new content moderation council is appointed (apparently to replace the company's existing Trust and Safety council).

But Musk may face an uphill battle. Twitter's digital advertising business is much smaller than those of Meta, Google and Amazon, and doesn't have growth and user demographics of TikTok. And many brands have already reduced digital ad spending in recent months amid the economic downturn. It may not take much for brands to cut back more.

General Motors, which competes with Musk's Tesla, said on Friday it would pause paying for advertising on Twitter while it evaluates "Twitter's new direction." CNN on Monday reached out to more than a dozen other brands that advertise on Twitter, most of which did not respond. Toyota, another Tesla competitor, told CNN that it is "in discussions with key stakeholders and monitoring the situation" on Twitter. Ben & Jerry's said that "at this point we have not considered taking any action."

On Monday, advertising giant Interpublic Group advised clients to pause advertising on Twitter for the next week as it awaits more clarity on the platform's plans for trust and safety and its capacity to carry out those plans under new owner Elon Musk, a person familiar with the situation told CNN. The guidance was sent via an internal memo to IPG employees who work with clients in its Mediabrands ad-buying arm, which include major consumer brands including Coca-Cola, Johnson & Johnson, Spotify, Unilever and more.

Also on Monday, the Global Alliance of Responsible Media, a leading consortium of advertisers and platforms, including Twitter, published an open letter to Musk, encouraging him to ensure Twitter continues to align with the group's standards, which designate hate speech, violence, harassment and insensitive treatment of debated social issues as "not appropriate for any advertising support." In response to the letter, Musk said in a tweet, "Twitter's commitment to brand safety is unchanged," and Twitter Chief Customer Officer Sarah Personette added that the company takes seriously brand safety and its partnership with the organization. (Personette tweeted on Tuesday that she resigned from the company last week.)

Also on Monday, Angelo Carusone, CEO of media watchdog Media Matters for America, tweeted calling on major Twitter advertisers "to be putting pressure on Twitter right now" to better address the increase in hate and other toxic content. On Tuesday, a group of more than 40 civil society organizations, including Media Matters, the NAACP, GLAAD and the Center for Countering Digital Hate, sent an open letter to Twitter's top advertisers calling on them to halt advertising on the platform if Musk cuts back on content moderation.

"Advertisers are very sensitive to the changing landscape of social media," said Atkin, adding that the question for Twitter is now "whether Elon Musk can continue to broker trust with advertisers or if he's going to continue to sow uncertainty and fear."

In response to a request for comment on this story, a Twitter representative pointed CNN to the earlier tweets by Musk and Personette and Musk's letter to advertisers, as well as a tweet by Twitter Head of Safety and Integrity Yoel Roth noting that the Platform's policies hadn't changed, although it was facing an uptick in hate content from mostly non-human accounts.

In a separate tweet thread Monday, Roth said that the company had since Saturday "been focused on addressing the surge in hateful conduct on Twitter." He added: "We've made measurable progress, removing more than 1500 accounts and reducing impressions on this content to nearly zero."

'A reasonable time to rethink things'

One advertising executive told CNN on Monday that dozens of their clients had reached out in recent days for guidance on the situation.

"It seems like a reasonable time for advertisers to rethink things," said David Karpf, associate professor in the School of Media and Public Affairs at George Washington University. "I think advertisers are going to look at this and say, is the weak Twitter advertising product becoming a better or worse investment? And it's going to be the same or a little worse … advertisers certainly aren't going to start spending more on Twitter any time soon."

There is precedent for advertisers stepping away from platforms because of hateful content. In 2020, dozens of brands publicly signed on to the #StopHateForProfit advertiser boycott of Facebook, which called out the platform for its "repeated failure to meaningfully address the vast proliferation of hate on its platforms."

But when it comes to Twitter, brands may have to tread carefully to avoid backlash. After GM announced its Twitter advertising pause, some users on the platform, including some right-leaning political figures, have called for a boycott of the automaker.

Because Musk has positioned himself as a "free speech" maximalist, and one with strong support among many Conservative politicians, brands risk being framed as anti-free speech if they exit the platform. But brands also risk appearing to implicitly endorse hate speech and other harmful content if they stay, meaning that many may decide to quietly pause their advertising on the site without a formal announcement.

"Advertisers are finding it hard to weigh in publicly on what is kind of an unwinnable position to take," the advertising executive told CNN.