(Reuters) – Threads, Meta Platform’s broadside to Twitter, is seen by some advertisers as less contentious and more predictable than Elon Musk’s platform, and analysts say it could lure away marketing budgets – eventually.
Launched on July 5, Threads became the fastest-growing social media platform to hit 100 million users, the apparent first serious threat to the dominant microblogging Twitter app. On Sunday, Musk said Twitter would rebrand and change its logo to an X.
Threads saw a drop-off in downloads and engagement in the week following its buzzy debut, according to research firm Sensor Tower, and for now is not open to ads.
But analysts have forecast lofty ad spending targets – with the caveat that they depend on whether users stick on.
If the app manages to retain users, Threads could achieve $5 billion in annual ad revenue, equaling what Twitter earned in 2021, Bernstein said in a note on July 18.
“The unprecedented adoption of … Threads now also offers Meta some material greenshoots to get excited about,” they said, while cautioning that it was still early days and other upstarts like Clubhouse had fizzled out.
Morningstar analysts said on July 11 that Threads could add between $2 billion and $3 billion to Meta’s revenue every year between 2024 and 2027. Evercore ISI analysts estimated on July 9 that Threads could generate $8 billion in annual revenue by 2025, a small portion of the $156 billion revenue analysts expect for Meta that year, according to Refinitiv.
In the hope that Threads will flourish – thanks to Meta’s deep pockets and experience with successfully running Instagram and Facebook – and expectation it will introduce advertising eventually, some brands may already be considering how much money to set aside for future marketing campaigns on the app, analysts and ad industry executives said.
Taylor Michelle Gerard, a senior executive at content marketing firm Blue Hour Studios, said some of her clients are considering adding a Threads post along with TikTok or Instagram posts as part of sponsored deals with influencers.
“It’s a nice way to work Threads into an existing campaign,” she said.
Once Threads ads are available, brands will move their ad spending over from Twitter “without question,” said Matt Yanofsky, co-founder of Moment Lab, a brand marketing and advertising agency.
He said some of his clients, who he did not name, are already examining whether to add a budget for Threads ads later this year.
Meta did not comment for this article.
EARLY DAYS
Some advertisers have already moved away from Twitter due to concerns about the tone of discourse and abrupt changes in policies since Musk bought the firm last year, said Andrew La Fond, a vice president at ad agency R/GA, which has worked with Nike.
Twitter did not respond to an email seeking comment. It has said it does not promote content that may violate its policies and that 99.99% of tweet impressions, or views, are of “healthy” content.
It has acknowledged falling ad sales – last week Musk said they had dropped 50%, although it was unclear what time-frame he was referring to.
In response, it has done some advertiser outreach. Two days after Threads launched, Twitter emailed a major ad-buying firm reminding them of the incentives that the company was offering to advertisers and noting the firm had spent less on Twitter ads this year, according to the email viewed by Reuters.
Threads still has a long way to go before it equals Twitter’s reach, though. Twitter had nearly 240 million monetizable daily active users as of July last year, according to the company’s last public disclosure.
Meta boss Mark Zuckerberg has said the company would only think about monetizing Threads once there was a clear path to 1 billion users.
Tens of millions of users come back to Threads daily, and the team will focus the rest of the year on “improving the basics and retention,” Zuckerberg posted on Threads last week.
After being slow to adopt AI-friendly hardware and software systems for its main business, Meta has invested to upgrade its AI capacity to boost traffic to Facebook and Instagram and increase ad sales. It has also narrowed its cost outlook for the year after pandemic-era excesses.
On Wednesday, when Meta reports results for the April-June period, the company is expected to post an 8% increase in quarterly revenue to $31.1 billion, its best growth in six quarters.
Threads does not yet support direct messaging, hashtags or keyword searches, which limits its appeal to advertisers and its utility as a place for following real-time events like users frequently do on Twitter.
Nonetheless, many brands are experimenting on Threads, which has “made social media feel fun again,” said Liz Bartges, director of brand engagement at communications agency FerebeeLane.
“We’re reliving the glory days of Twitter,” she said about Threads. “I’m excited to see where it could go.”
(Reporting by Akash Sriram and Samrhitha Arunasalam in Bengaluru and Sheila Dang in Dallas; Editing by Sayantani Ghosh and Rosalba O’Brien)
Credit: The Star : Tech Feed
