Elon Musk is making automakers uncomfortable on Twitter
Automakers in Detroit and in other parts of the world are cringing.
On Monday, Election Day eve, new Twitter owner and billionaire Elon Musk tweeted a series of jokes (now deleted) that seemed to allude to masturbation. Not an ideal business landscape for mainstream auto advertisers selling six-figure vehicles.
General Motors was among the first to state publicly last week it was reevaluating the role of Twitter in its advertising strategy. MediaTracking MediaRadar had GM spending $1.7 million a month on the social media site's ads, which is not atypical for an automotive advertising buy.
Volkswagen Group on Friday recommended its various brands pause Twitter advertising, along with the REI outdoor recreation retailer and Carlsberg Group beer and beverage brands.
But while Musk has vowed "a thermonuclear name and shame" campaign against advertisers who pull out, there has been little focus on the uniquely uncomfortable position he has created for automakers and auto dealers, who spend huge dollars on advertising in everything from social media to TV to movie theaters.
This is not just an issue for U. S. automakers. This is an issue for all automakers foreign and domestic.
In the short time since the Tesla CEO purchased Twitter on Oct. 27 for $44 billion, he has stoked debate about charging a mandatory fee to users while also emphasizing that Twitter advertising revenue has plummeted.
Advertising revenue has declined significantly from May through September, ever since he began talking about the controversial acquisition, according to MediaRadar data cited by the New York Times.
To date, advertising executives have said their concerns are about a basic business strategy that Musk has failed to acknowledge, which is protecting a brand image. Luxury products, for example, can't protect their brands if they're advertised in the context of a seedy and controversial debate. It's widely viewed as tarnishing the brand. This is why, for example, Lincoln established partnerships with upscale boutique hotels including the Detroit Foundation Hotel, the Omni Frisco Hotel in Texas and Dream Hollywood Hotel in Los Angeles – not the Super 8.
Musk continues to say that companies who want to reach customers must advertise on Twitter, which claims more than 200 million users who could be viewed as potential customers. Corporate executives wonder whether Musk understands the core principles of advertising as someone who does so little advertising for his auto company Tesla.
Even Ford CEO Jim Farley has said he's inspired to cut his advertising budget based on Tesla's model.
Just not safe right now
Twitter gets stickier and more complicated for advertisers with each passing day.
Marketing executives at companies representing various industries, including automotive, had a call with Musk on Thursday that did little to inspire confidence or assurance that the landscape would be safe for business investment. He doesn't seem to publicly acknowledge or understand the difficult position of his advertisers.
No one wants ads appearing along anti-Semitic posts or violent language because the optics are bad unless for some strange reason that's the demographic a company is specifically targeting. This is not about political correctness. This is about basic business strategy. The issue isn't inherently about free speech or freedom but about crafting a brand or product that connects with the most consumers and avoids situations that alienate people.
Behind the scenes, ad agencies sometimes request TV shows make tweaks for content. In a theoretical example, the Washington Apple Commission doesn't want either Rachel or Ross of "Friends" eating an apple while they're having a huge fight that leaves Rachel in tears. The commission may pay for a bowl of apples to be displayed to look pretty on the living room table throughout the show, however.
Product placement, and advertising overall, work to avoid negative associations.
Lou Paskalis, a respected brand marketer and president of MMA Global, tweeted last week, "I think we are seeing a tale of two Elon’s. The Elon that I met on a group call on Thursday was charming, measured and seemed to understand the important role advertisers play in Twitter’s financial viability. Subsequent to that we’ve seen a very mercurial and reactive Elon."
Paskalis had his account blocked by Musk after asking a series of pointed questions.
Watching what appears to be erratic behavior is "spooking" advertisers, especially automotive.
The auto industry is facing dynamic changes, brutal cost spikes and supply chain disruption. Billions of dollars are needed to move iconic companies from gasoline-powered internal combustion engines to battery electric. Wall Street is watching how every penny is spent and monitoring perceived waste closely.
While GM had been advertising on Twitter recently, Ford had not. But all companies use the site to interact with customers and consumers in general. Ford's Farley and Tesla's Musk have exchanged praise and jabs online.
Auto company executives note Musk can be charming privately while he presents a more combative tone publicly. But public and private personas need to be more closely aligned in business to instill confidence.
Auto companies, along with others, are in an evaluation period. People behind the scenes in key decision-making positions say they're genuinely worried about standards and how things will unfold. They took note when Musk re-tweeted and then deleted misinformation about the recent violent attack on the husband of House Speaker Nancy Pelosi.
Protecting iconic brands
This isn't about politics for automakers. They are required to get along with all political interests. Politicians come and go but automakers stick around a lot longer. Ford is 119 years old, GM is 114 and BMW is 106.
Despite the talk of being fair to everybody and having high standards, Musk doesn't appear to be practicing what he's preaching to global marketing executives. He has had fun as someone with 114.8 million Twitter followers, now labeling his official title "Twitter Complaint Hotline Operator."
He leaves some advertisers wondering whether he takes seriously what's at stake.
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While advertisers have privately and publicly expressed being nervous, auto companies have another challenge.
Advertisers share their data with Twitter. So when Twitter is headed by the CEO of Tesla, a competitor has access to the advertising strategy of his competitors – who they're targeting, when products are launching, and how much is spent.
While Musk was calm and gracious on the call last week with marketing executives, some are still talking about the alarm he generated by failing to offer clear answers to basic questions.
Elon saying he doesn't care about data is not OK
He indicated on the call he didn't care about anybody's data except Tesla's, but companies set up processes, protocols and firewalls to protect data. Musk's explanation was simply unsatisfactory. Advertisers, especially car companies and car dealers, don't want to take somebody's word for it. That's not how business works, especially when competitor companies are forking over millions of dollars.
Not only is there no firewall with Twitter, Musk has shipped his Tesla software engineers to work there.
There's clearly intermingling. And that adds to concerns of people controlling ad dollars.
Auto executives aren't trying to be difficult or unpleasant or pressure Musk. They want assurances that don't currently exist. Nothing has been put in place to offer comfort to people investing billions in new products.
So, like it or not Elon Musk, a lot of big money is in a wait-and-see mode.
Decision-makers in the auto industry look to Jeff Bezos and the Washington Post as an example. The billionaire acquired the newspaper founded in 1877 and put a team in charge to run it. He doesn't control editorial decisions or investigations. The Post is not perceived to be a vanity project for Bezos. He's fairly hands-off.
Threats won't work
But Musk can't seem to help himself, and that scares business people with money. It's one thing to behave erratically as a billionaire while playing with your own money on projects including the impressive SpaceX.
But when Musk is directly impacting the business decisions of others, well, it's a different story.
There is no way to dry up ad dollars faster than trying to punish companies. Folks say they rarely want to talk on the record about Musk, fearing they'll become targets, and that's just exhausting.
Business is business. Automakers, and car dealers, advertising for more than a century, can survive without advertising on Twitter.
Google and Facebook have been widely used and viewed as effective tools for reaching consumers.
Kara Swisher, a widely respected technology podcaster with 1.4 million followers on her @karaswisher account, tweeted Friday that chief marketing officers paused and/or shifted their budgets during the Musk call because of uncertainty.
Musk has to convince advertisers Twitter is a good place to do business, not a weird vanity project.
At the moment, he has a long way to go.
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Contact Phoebe Wall Howard: 313-618-1034 or email@example.com. Follow her on Twitter @phoebesaid