San Francisco: U.S. President Donald Trump unleashed fury at Twitter Inc. this week for fact-checking him and putting a warning label on a message that seemed to invoke violence. But that anger has been channeled through his favorite medium — Twitter itself — which is likely to be good for the company’s business, despite Trump’s harangue.
“Look at how much he uses Twitter,” said Rich Greenfield, an analyst at Lightshed Partners. “Advertisers want to be where eyeballs are, and people are turning to Twitter for this news.”
For years the San Francisco-based company has been under pressure to enforce its content rules against Trump. This week, for the first time, the social network took action in two separate instances. First, it appended a fact-check label to two Trump posts that said mail-in voting would lead to fraud. Then, on Friday, Twitter added a warning filter to other tweets for violating its rules against promoting violence. The actions prompted retaliation from Trump, including more angry tweets and an executive order calling for social media regulations to change.
Attention is Twitter’s most valuable asset. Though the company may be facing serious questions about its approach to troublesome content, its revenue comes from the ads it can slot between users’ posts — the more posts, the more slots Twitter can make money from. During busier news cycles, such as elections and sports events, and even the coronavirus pandemic, new users tend to sign up and spend more time on their feeds. Trump has made Twitter more essential, since much of what the president says shows up on Twitter first.
Chief Executive Officer Jack Dorsey’s job was threatened earlier this year — not by Trump, but by Elliott Management, an activist investor that called for changes including boosting usage of the product, which is a fraction of Facebook’s size. The company in March reached an agreement with Elliott that set ambitious targets for daily active users, accelerated revenue growth and greater market share in digital advertising. Those goals seemed even tougher in late March, when Twitter slashed its quarterly sales forecast and warned of a loss because marketers were spending less during the economic slowdown caused by the Covid-19 outbreak.
The summer Olympics and professional sports leagues may not be giving users a reason to tune in to Twitter right now, but Trump’s tussle with the company is its own kind of must-watch contest.
“My guess is that the controversy spurs engagement, or at least doesn’t reduce engagement,” said Mark Mahaney, an analyst at RBC Capital Markets.
What’s more, advertisers may appreciate Twitter taking a stronger position on misinformation and harmful content, even if the violator is the president. Advertisers don’t want their content to run alongside anything that could hurt the perception of their products — a value known as “brand safety.”
“Advertisers care about brand safety and truth, and from what I’ve seen, most brands support the actions that Twitter is taking,” said Pete Stein, CEO of Huge, an agency that represents brands including McDonald’s Corp. and Vanguard.
That’s also set up a clearer contrast between the company and its social-media peers, most of which have been under fire for lax enforcement against offensive or inappropriate content. Twitter is the first to take action on Trump’s posts. On Facebook Inc.’s main app and Instagram, where Trump made the same posts, the messages remain online with no additional context from the company. Facebook has similar content policies, but CEO Mark Zuckerberg has decided his company should be especially hesitant to weigh in or take action on posts from political leaders. – Bloomberg
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