Meta's Threads could lure ads from Twitter but it's early days, analysts
say
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[July 24, 2023] By
Akash Sriram, Samrhitha A and Sheila Dang
(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.
![](http://archives.lincolndailynews.com/2023/Jul/24/images/ads/current/ldn_sda_KAREN_012823.png)
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.
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![](../images/072423PIX/busine27.jpg)
Meta Threads and Twitter app logos are
seen in this illustration taken, July 6, 2023. REUTERS/Dado Ruvic/Illustration/File
Photo
![](http://archives.lincolndailynews.com/2023/Jul/24/images/ads/current/graue_lda_GREYTRUCKpreowned_070323.jpg)
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.
![](http://archives.lincolndailynews.com/2023/Jul/24/images/ads/current/castlemanor_sda_FINANCIAL_2017.png)
"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)
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