A Lesson In Stakeholder Management With Twitter & Elon Musk

Adrian Lee
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The CEO Association: Twitter and Elon Musk

Every stakeholder contributes in some way to the company's success, and a failure in stakeholder management inevitably contributes to a business's demise. Users through the product, investors through the market, advertisers through channels, and employees on the back end.

Twitter's been through a wild ride lately, and it all comes down to one man: Elon Musk.

As the new CEO, he's been shaking things up and turning heads with his bold moves, but not everyone is thrilled. In fact, many advertisers are now jumping ship and taking their money with them.

The inherent, public nature of Twitter provided an unparalleled insight into the never-ending BeReal of the advertising engine. With a new leader seemingly determined to leverage public perception & participation in running every aspect of the company, publicity is at an all-time high.  

And any publicity is good publicity, right?

Nope. Not even close.

Here's the deal. Twitter makes most of its money from advertising (surprise). In FY21, 89% of revenue came from advertising services. The rest came from data licensing and other sources. So when we talk about advertisers starting to pull out, it's a big deal for the company. 

And that's exactly what's happening. Since Musk took over, many advertisers are no longer spending on the platform at the same rate as before. According to Pathmatics, 70% of Twitter's top 100 spenders weren't spending as of the week ending 18 December.

Why are they leaving? It all comes down to Musk's controversial reputation and love for public rule-making. Advertisers want to avoid being associated with him and his tweets, which can be unpredictable and divisive, and the inflow of controversial, unmoderated content.

Want to advertise pet food? It's now side-by-side with the iconic poo emoji directed at the prior CEO of Twitter. How about some children's cereal, paired with a public dismissal of Twitter employees?

It's a tough pill to swallow for Twitter, which has always been a popular platform for marketers looking to reach a highly influential and engaged audience, at the centre of monetizable cultural events. But with Musk at the helm, it's become impossible to separate the company from the CEO.

Musk isn't even doing anything unexpected. His unpopular antics at Twitter were equally worshipped during his time at Tesla. The difference is, Tesla didn't depend on ads, while Twitter was built on them. A controversial and unadvertisable CEO, now the face of an advertising platform, is a recipe for disaster.

So what can we learn from this? 

Controversial CEOs are nothing new, but Musk has differentiated himself from the rest by taking a viable, proven business and sabotaging it in a public manner. It doesn't help that he seems to have cracked the 'un-shakeable genius' persona built at Tesla. 

This is a case study of the importance of stakeholder management at the highest level. Advertisers, investors, employees and users all have a stake in the company's success, and leaders who ignore that fact do so at their peril. It remains to be seen how Twitter will turn out, but with revenue now down 40% year-over-year, it could look better.

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