Twitter announced Monday that its board of directors has accepted a bid by billionaire Elon Musk to acquire the company. The deal, valued at approximately 44 billion dollars, would award Twitter stockholders 54.20 dollars in cash per share, subject to their approval of the transaction after a vote. The move would take the company private again after nearly nine years since its initial public offering in 2013.
Fashion retailers’ relationship to Twitter
Twitter has not been a top priority for fashion consumers and therefore hasn’t been invested in as significantly by brands compared to Meta-owned platforms Facebook and Instagram. A survey of consumers published in 2021 by the American market research company, the NPD Group, focused on social media’s influence on fashion industry sales and found that 41 percent of consumers preferred Facebook to discover fashion brands, while 35 percent used Instagram. Over half of those surveyed said content on Facebook and Instagram influenced their purchase of products.
Factors contributing to those preferences may be that Twitter has been a more male-dominated platform by about 56 percent, according to Statista findings, and CNBC has reported that men are more averse to shopping online than women. The microblogging social media network also hasn’t been as accommodating to images on the service with unfavorable cropping restrictions on the timeline and file compression issues for both photos and videos that affect their quality. The photo-based Instagram, however, attracts a larger percentage of younger users with the Pew Research Center finding that 71 percent of 18-29 year olds say they’re active on the platform over Twitter’s 40 percent in the same age group. Facebook and Instagram simply cast a wider net with monetizable monthly active users in the billions versus Twitter’s 330 million.
While Twitter has traditionally generated the least amount of traffic for those seeking style inspiration, as the Cotton Lifestyle Monitor concluded, some fashion brands have been warming to the network during the pandemic, particularly those in the luxury sector. Brands like Balenciaga and Hermes innovated with experimental live streamed or virtual experiences of their runway shows on the platform, with Twitter’s marketing page boasting 36.8 million viewers of a Louis Vuitton Fall/Winter 2021 men’s show—a success that may possibly be attributed to the show’s collaboration with K-Pop music sensation BTS. Twitter’s demographics of a higher educated, affluent, majority American audience could be the appeal to those brands as well as the lowest cost per thousand (CPM) advertising rate of any major platform.
How Musk’s takeover might change this new momentum in fashion advertising
Musk muscled his way into this deal by quickly becoming Twitter’s largest shareholder, then seeking board membership before deciding against it and concluding that he could only make all the changes to the platform that he deems necessary by having total control. The board originally looked for ways to resist his actions but relented to avoid litigation.
While Twitter is not a profitable company—reporting a loss of 221 million dollars last year—it is an influential one. Many active Twitter users are important media figures, celebrities, and politicians, with President Barack Obama leading the follower count. The Pew Research Center noted that around half of Twitter’s user base consumes news content regularly and the platform is often referred to as a de facto public square.
Upon the news breaking of the board of directors accepting his offer, the SpaceX founder and Tesla CEO stated, "Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated." Musk, a self-titled "free speech absolutist," has opposed Twitter’s moderation efforts—the ones that attempt to curb disinformation, limit harassment, prevent violence, and maintain a generally hospitable environment for advertisers. It is unclear what his boundaries are or how he will define legal free speech other than his Tweet from Monday: “I hope that even my worst critics remain on Twitter, because that is what free speech means.”
If he allows the platform to become too much of a cesspool, brands may rethink their participation. Companies like Adidas, Levi’s, Patagonia, and the VF Corporation paused Facebook advertising in 2020 as part of the Stop Hate for Profit boycott in response to algorithms continuing to promote hate speech and misinformation. The campaign was short-lived and did not impact Facebook’s advertising profits for that year, according to the New York Times, but Twitter might not fare as well in the same circumstance.
That may not matter to Musk who could do away with advertising completely and lean into a subscription model that Twitter has already been experimenting with. “Everyone who signs up for Twitter Blue (ie pays $3/month) should get an authentication checkmark,” he tweeted. “And no ads. The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive.” Former Twitter CEO Jack Dorsey echoed that sentiment. “Twitter as a company has always been my sole issue and my biggest regret. It has been owned by Wall Street and the ad model. Taking it back from Wall Street is the correct first step,” Dorsey stated on the network he co-founded, calling it, “the closest thing we have to a global consciousness.”
Other potential changes Musk has expressed interest in publicly include creating a more transparent, open-source algorithm, adding an edit feature for published Tweets, and authenticating human users to rid the platform of spam bots.