Twitter India Faces 90% Net Profit Decline Amid Ad Revenue Slump: What Went Wrong?

Twitter, now rebranded as X under Elon Musk’s leadership, has seen significant financial turbulence in India. The tech giant, once a major player in the digital advertising space, has witnessed a staggering 90% decline in net profit, driven largely by a sharp drop in ad revenue. For a company that relies heavily on advertising dollars, this decline raises questions about its future in one of the world’s fastest-growing digital markets.

This article delves into the factors contributing to Twitter India’s dramatic fall, exploring what went wrong and how the company might recover.

The Numbers Speak: A 90% Profit Decline

Twitter India’s financial report for the fiscal year 2024 paints a bleak picture. The social media giant reported a 90% decline in net profit, a significant departure from previous years when India was considered one of its most lucrative markets. According to recent filings, this plunge is attributed largely to a severe drop in advertising revenue, which has historically been the platform’s primary income source.

Though many tech companies have been facing headwinds globally, the magnitude of Twitter India’s revenue decline is striking. With the rebranding to X, spearheaded by Elon Musk, the company’s new direction may not yet resonate with Indian advertisers, leaving a significant gap in its earnings.

The Musk Factor: Leadership Shifts and Strategy Changes

Since Elon Musk took over Twitter and rebranded it to X, the platform has undergone major changes. These have included workforce reductions, policy adjustments, and shifts in monetization strategies, which have left advertisers uncertain about their place on the platform. The tech billionaire’s vision for X is ambitious, aiming to turn it into an “everything app,” but the path to that vision has been rocky.

In India, Musk’s leadership overhaul resulted in widespread layoffs, with several key executives and sales teams losing their jobs. The reduction in staff and local management may have contributed to weakened advertiser relations. This loss of local expertise is significant, as understanding regional nuances is crucial to sustaining advertising revenue in a country as diverse as India.

Advertising Woes: Where Did It All Go Wrong?

Ad revenue accounts for the bulk of X’s earnings, making the 90% profit drop even more alarming. Several factors are responsible for this collapse. First, Musk’s controversial approach to content moderation has alienated many advertisers who are increasingly cautious about brand safety. For advertisers, the threat of being associated with misinformation or controversial content has driven them away from the platform, opting instead for safer digital advertising spaces like Meta or Google.

Moreover, Twitter India’s reduced local sales team post-layoff has made it harder to retain existing advertisers and attract new clients. When companies face such disruptions, continuity in relationships with advertisers is crucial. Unfortunately, X has failed to maintain this, causing advertising revenue to dry up at a worrying pace.

Competition Heats Up: Meta and Google Dominate

The Indian digital advertising landscape is fiercely competitive, and Twitter (X) is losing ground to tech giants like Meta (parent company of Facebook and Instagram) and Google. Both platforms offer extensive reach, sophisticated ad targeting, and proven ROI for advertisers. For brands in India, Meta’s dominance, particularly on Instagram, has proven too lucrative to ignore.

Google, too, has continued to innovate with its search ads, YouTube promotions, and Google Ads platform, making it a preferred choice for marketers. These competitors have been quick to fill the void left by Twitter’s ad revenue decline, further squeezing X‘s potential in India.

Economic Downturn and Global Digital Ad Trends

India’s economy, while resilient, has not been immune to global trends, especially in digital advertising. Globally, companies are slashing their marketing budgets in response to economic uncertainty, inflation, and geopolitical tensions. In this climate, X’s ad products are less attractive, particularly without a clear and stable brand proposition under Elon Musk’s leadership.

Globally, digital ad revenue has faced a slowdown as businesses tighten their belts. In India, where the digital ecosystem is growing but still price-sensitive, X is struggling to compete with other platforms that offer more targeted and reliable returns on investment for advertisers.

Layoffs and Operational Challenges in India

One of the immediate impacts of Musk’s acquisition of Twitter was a global wave of layoffs. India was no exception. The layoffs in Twitter India’s teams have had a cascading effect on its operations. Without a fully staffed team, customer service, ad sales, and technical support functions have taken a hit, making it harder for advertisers to feel confident in placing their budgets with X.

The reduction in workforce has also led to delayed responses and slower service for businesses, further straining relationships with advertisers. As a result, many Indian companies that once used Twitter as a key platform to reach consumers are now diverting their advertising spend elsewhere.

The Rise of Subscription Models and User Monetization

While X is struggling with ad revenue, Musk has pivoted toward other monetization strategies, particularly subscription models like X Premium. This approach has had mixed results in India, where users are not accustomed to paying for social media platforms.

Though monetization through subscriptions offers a potential revenue stream, it has yet to gain significant traction in India. The country’s digital users, while massive in number, are often price-sensitive. Convincing them to pay for a service they once used for free presents a considerable challenge.

Content Moderation Controversies Hurt Credibility

Another major issue haunting X under Musk’s reign is content moderation, or the perceived lack thereof. Musk’s more lenient approach to free speech, paired with mass layoffs in moderation teams, has raised concerns about the platform’s ability to filter out harmful content. In India, this has become especially problematic, given the country’s strict regulations around misinformation and online hate speech.

This has created an atmosphere where advertisers worry about brand safety. No brand wants their ads to appear alongside hate speech or extremist content. Without strong content controls, advertisers have become hesitant to invest in X as a reliable platform.

The Road Ahead: Can X Rebound in India?

Twitter (X)’s future in India remains uncertain. Rebuilding trust with advertisers and ensuring a safer, more moderated space for brands could help the company regain lost ground. Yet, that will require a strategic pivot, clear communication, and a willingness to invest in local talent and relationships.

As the digital marketing landscape in India continues to evolve, X will need to compete on all fronts—innovation, user base growth, and most importantly, advertiser trust. While the 90% net profit drop is a stark wake-up call, the company still has the potential to recover if it can recalibrate its approach and rebuild its reputation.

Will X Survive the Indian Market?

The decline of Twitter India’s net profit highlights how critical advertising revenue is to its survival, especially in a market as vast and diverse as India. With fierce competition from Meta and Google, operational challenges from layoffs, and a turbulent shift under Musk’s leadership, X finds itself in a precarious position.

To regain its footing, the company must re-engage with advertisers, offer stronger content moderation, and perhaps rethink its business model. India’s digital landscape is evolving rapidly, and there’s little room for error if X plans to stay relevant.