How are Meta’s Threads ad features impacting Twitter’s revenues?

• Threads is viewed by some advertisers as less controversial and more predictable than Twitter.
• Analysts remain optimistic about Threads’ advertising potential, particularly if it can maintain its user base.
• Brands are already considering allocating budgets for future marketing campaigns on Threads.

Threads, the new social media platform introduced by Meta Platforms as a competitor to Twitter, is viewed by some advertisers as less controversial and more predictable compared to Elon Musk’s platform, according to a report by Reuters.

This perception has led industry analysts to believe that Threads could potentially attract marketing budgets away from other platforms in the long term.

Threads made a significant impact after its launch on July 5, rapidly accumulating 100 million users. This achievement has positioned it as the fastest-growing social media platform and the first true challenger to Twitter‘s dominance in the realm of microblogging.

In response to Threads’ emergence, Elon Musk announced on Sunday that Twitter is planning a rebranding effort, including a possible change to its logo, which may feature an X symbol.

Despite the initial hype surrounding Threads’ launch, research firm Sensor Tower has observed a decline in both downloads and user engagement during the subsequent week.

At present, Threads does not offer advertising opportunities on its platform, but its potential as a formidable competitor to Twitter has caught the attention of marketers and advertisers alike. As the platform continues to evolve and gain momentum, it remains to be seen how its ad features, once introduced, will impact Twitter’s revenues.

Despite a slowdown in downloads and user engagement after its launch, analysts remain optimistic about Threads’ advertising potential, particularly if it can maintain its user base. They project ambitious ad spending targets, with some estimating that the platform could generate annual ad revenue of up to $5 billion, comparable to Twitter’s 2021 earnings.

Analysts from Bernstein believe that Threads’ unprecedented adoption offers Meta promising opportunities for growth, but caution that it’s still early days and that the fate of other upstarts like Clubhouse serves as a reminder of the uncertainty in the social media landscape.

Morningstar analysts foresee Threads potentially contributing between $2 billion and $3 billion to Meta’s annual revenue from 2024 to 2027. On the other hand, Evercore ISI analysts predict that the platform could generate $8 billion in annual revenue by 2025, albeit a small portion compared to Meta’s overall revenue projection of $156 billion that year, according to Refinitiv data.

Brands, hopeful for Threads’ success due to Meta’s financial strength and experience running Instagram and Facebook, are already considering allocating budgets for future marketing campaigns on the platform, expecting it to eventually introduce advertising features. Ad industry executives and analysts see Threads as a lucrative opportunity for brands to reach a growing user base if it continues to thrive under Meta’s guidance.

According to Taylor Michelle Gerard, a senior executive at content marketing firm Blue Hour Studios, some of her clients are contemplating including Threads posts alongside TikTok or Instagram posts as part of sponsored deals with influencers.

“It’s a nice way to work Threads into an existing campaign,” she stated.

Matt Yanofsky, co-founder of Moment Lab, a brand marketing and advertising agency, stated that once Threads ads become available, brands will undoubtedly shift their ad spending away from Twitter.

Matt Yanofsky also mentioned that some of his clients, whose identities he did not disclose, are already evaluating the possibility of allocating a budget for Threads ads later this year.

Meta did not provide any comments regarding the content of this article.

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