2023-07-08 11:27:53
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Article informationAuthor, Natalie ShermanRole, business reporter Reporting from New York
4 hours ago
Tech billionaires Mark Zuckerberg and Elon Musk have been joking regarding having a cage boxing match. In the business world, the battle has already begun.
Less than 24 hours following Zuckerberg launched an alternative Twitter platform, Threads, he had amassed nearly 30 million subscribers, giving him credibility as a serious competitor in the world of social media.
And that was still a small fraction of the hundreds of millions of Twitter users.
But analysts believe that this is a sign that Zuckerberg’s Meta company has a good chance of attracting a section of its 3 billion app users, ranging from Facebook to Instagram and WhatsApp, to its new app, and bringing advertisers with them.
After all, Zuckerberg, whose meta company generated more than $117 billion in sales last year, has a poor track record when it comes to selling ads, while Musk doesn’t use ads to promote his electric car company, Tesla, and has been looking for alternative ways to fund. Twitter.
Zuckerberg said there would be no ads on Threads initially, giving the company time to improve the app and allowing users to scroll endlessly to read text posts.
“Our approach will be the same as all of our other products: get the product to work first, then see if we can put it on a clear path to reach 1 billion people, and only then start thinking regarding monetization,” he wrote.
But in the end, ads on Threads might add from one to five percent to Meta’s total revenue, generating more than $6 billion in the most optimistic scenario, Justin Patterson, equity research analyst at Quebec Capital Markets, wrote in a recent note. for him.
This is not huge. But it’s not simple either, especially as the company continues to look for ways to combat the toll that Apple’s strict privacy rules have taken on ads.
And Twitter had generated $ 4.5 billion in revenue in 2021, before Musk’s acquisition of it caused some turmoil.
Will the users stay?
On Thursday, Musk was poised to strike back, reportedly threatening legal action once morest Mita for stealing trade secrets.
But frustration with Twitter has left many people hungry for an alternative. Jasmine Enberg, an analyst with Insider Intelligence, said Meta’s promises of a “healthier, kinder place” than Twitter doubled the number of early sign-ups.
“I post optimistic,” wrote “Sex and the City” star Sarah Jessica Parker, one of the celebrities who jumped into Threads, along with Shakira, Oprah and Khloe Kardashian.
The success of Threads, according to analysts, will depend on winning over Twitter power users or people who have never signed up for Twitter in the first place. But they also add that nothing is certain.
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Although the fashion and lifestyle content that makes up the main content on Instagram clearly attracts advertisers, it is not clear that the world needs another platform to consume it.
Zuckerberg also has a complex relationship with news content, which is one of Twitter’s main functions.
He had said that surveys show that users on the platforms he runs want to reduce this type of content. And in Canada, his company is preparing to block local news content, rather than pay local news anchors to get content from them.
And Enberg considered that people who search for news content, and Twitter fans in general, will not abandon it. She says Meta will need to keep the topics on it interesting to keep the momentum going some time following the new product launches.
She added that Zuckerberg, who has been criticized before for copycating other products, was “struggling” with innovation.
organizational risk
Advertisers will also be looking for confidence that they are not spending money on a platform that exposes them to risks associated with issues such as misinformation and privacy.
Under Musk, Twitter has alienated advertisers with abrupt changes in how the site manages content, and has already struggled to turn a profit. It also recently put a new limit on the number of posts a user can see during the day.
Analysts say Meta was indeed one of the beneficiaries of Twitter’s loss.
But Zuckerberg will not come to the negotiating table with a clean slate.
His company has battled with marketers for years over the transparency and accuracy of its data, while its handling of user data and misinformation has drawn widespread criticism.
“Advertisers want a clean, well-lit environment, where content is moderated on agreed terms and conditions, on a consistent basis,” said Lou Pascalis, veteran marketing expert and CEO of AJL Consulting. “In general, social media is a very messy place right now (in terms of ads),” he added.
Meta shares rose 4 percent on Wednesday ahead of the launch of Threads, a sign of investor confidence that Zuckerberg has the ability to make the new app a success.
Pascalis said replicating the way news is spread on Twitter would be difficult, leaving room for both apps to exist together.
And he considered that, on the other hand, the existence of a serious threat to Twitter may be a “wake-up call” for Musk.
“One of the keys will be how long Threads will avoid ads,” Pascalis said. “Whatever that period of time is, that’s the period of time that Twitter has got to get its act right,” he added.
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