April 11, 2024

Is Twitter Going Bankrupt? Here's What You Need to Know

In the ever-evolving landscape of social media, platforms rise and fall, and recent events have sparked speculation about the fate of one of the most prominent players: Twitter, now known as X. In the past year concerns about its financial stability have emerged, leading to questions about the potential for X to face bankruptcy in the near future. 

X, like many social media platforms, relies heavily on advertising revenue to sustain its operations and fuel its growth. In years past, advertising has made up about 90% of X’s revenue. However, the platform has faced criticism and pressure from advocacy groups and users over issues such as hate speech, misinformation, and the spread of harmful content. This has largely been due to the platform's allowance of ‘free speech’, which has made it possible for anybody to get away with saying basically anything. 

In response to these concerns, advertisers have initiated boycotts, pulling their ad spending from X in protest against its handling of various issues. These boycotts have only intensified since then, gaining momentum as brands align their values with consumer expectations for responsible advertising practices. X has lost countless huge advertisers such as Disney, Apple, Walmart, and more from their platform.

The withdrawal of these advertisers poses a significant threat to X’s revenue stream.

A decline in ad revenue this big can have far-reaching consequences for its financial health, and its reputation. These persistent struggles and instability have totally eroded trust in X among users and investors. Some say it's already too late to reverse the damage that has been done to the platform. X has already had to do two major layoffs, letting thousands of employees go. 

In order to reverse this, X is going to have to generate more revenue in other ways. Elon Musk, who bought Twitter in April 2022 and changed its name to X, has some ideas. He said in an interview he wants to turn X into ‘the everything app’. He has already added audio and video calls, streaming capabilities, and has plans to even add an online payment processing feature. It will certainly be interesting to see how X will change over the next few months and years - if they are able to stay in business. 

The decline of X over the last couple of years has created a ripple effect in the social media ecosystem, benefiting platforms like Instagram and Facebook.

As advertisers seek alternatives to reach their target audiences, Instagram and Facebook have emerged as the most compelling options, offering a visually engaging format that resonates with users. Features like Instagram Reels, Stories, and Facebook's dynamic ad placements capitalize on the power of visual content and short-form video, capturing users attention and driving higher engagement rates. 

The immersive and interactive nature of these formats not only aligns with evolving consumer preferences but also provides advertisers with innovative ways to connect with audiences in a more authentic and impactful manner. Consequently, Instagram and Facebook have experienced accelerated growth and increased ad revenue, further solidifying their positions as some of the most dominant players in the social media landscape today.

Here at Vivid, we work with many clients who want to advertise and reach new people to grow their business, largely through social media.

We believe that platforms such as Instagram and Facebook are definitely the best places to do this, especially now. These are two of the most dominant social media platforms with the highest number of users, and more users means more people who will see your content. 

Businesses also have to think about their reputation when they choose which platforms to utilize, and places like X, TikTok, or Snapchat might not have the same level of security or safety as Facebook and Instagram do. Most company’s target markets are not on any of these other platforms anyway. Snapchat and TikTok have the lowest average age of users, which are not usually the people who would pay for your product or service. 

In conclusion, the social media world is undergoing a lot of changes right now.

While X navigates through turbulent waters, the broader implications of its struggles extend beyond its own fate, shaping the competitive landscape and driving shifts in user behavior and advertiser preferences. As platforms like Instagram and Facebook capitalize on innovative formats and user-centric experiences to attract both users and advertisers, they underscore the importance of adaptation, resilience, and innovation in the dynamic world of social media.

Amidst uncertainty, one thing remains clear: the ability to evolve, engage, and deliver value to people will ultimately determine the success and sustainability of businesses in this ever-changing digital landscape.