Threads Are Predicted To Attract Significant Ads If They Can Defend Users

JAKARTA - Meta's Spreads social media platform is in the spotlight of some advertisers who see it as a less controversial and more predictable choice than Elon Musk's Twitter platform. Analysts say the platform has the potential to attract the marketing budget of advertisers, eventually.

Launched on July 5, Threads became the fastest growing social media platform to reach 100 million users, and is the first serious threat to Twitter's dominant microblogging app. On Sunday, July 23, Musk announced that Twitter would change its brand and change its logo to X.

According to research firm Sensor Tower, Threads experienced a decline in downloads and engagement within a week after its horrendous launch, and for now it has not opened up to advertising.

However, analysts have estimated a high ad spending target - provided that it depends on whether users keep using this platform.

If this app manages to keep users, Threads could achieve annual ad revenue of US$5 billion (Rp745 trillion), the same as Twitter's revenue in 2021, "Bernstein said in a note on July 18.

"The unexpected adoption of Threads now also offers Meta some interesting opportunities to explore," he said. But he also warned that it was too early and other apps like Clubhouse had faded.

Morningstar analysts said on July 11 that Threads could increase Meta's revenues between 2 billion (Rp30 trillion) to US$3 billion (Rp45 trillion) annually between 2024 and 2027. The Evercore ISI analysts estimated on July 9 that Threads could generate annual revenues of US$8 billion (Rp120 trillion) by 2025, a fraction of the US$156 billion (Rp2,338 trillion) revenue estimated by analysts for Meta that year, according to Refinitiv.

With the hope that Threads will thrive - a strong fund from Meta and experience in successfully operating Instagram and Facebook - as well as expectations that the app will introduce advertising eventually, some brands may already consider how much money will be allocated to marketing campaigns in the app, analysts and advertising industry executives say.

Taylor Michelle Gerard, a senior executive at content marketing firm Blue Hour Studios, said some of her clients were considering adding Threads posts along with TikTok or Instagram posts as part of a sponsorship deal with influencers.

"This is a good way to include Threads in existing campaigns," Gerard said.

Once Threads ads are available, the brands will divert their ad spending from Twitter "without hesitation," said Matt Yanosky, co-founder of Moment Lab, a brand marketing and advertising agency.

He said some of his clients, whose names he did not name, had considered whether to increase the budget for this year's Threads ads.

Some advertisers have switched from Twitter due to concerns about the sudden tone of conversation and policy changes since Musk bought the company last year, said Andrew La Fond, a vice president at the R/GA advertising agency, who has worked with Nike.

Twitter did not respond to emails seeking comment. The company said it was not promoting content that might violate its policies and that 99.99% of tweets were from "healthy" content.

The company has acknowledged a decline in advertising sales - last week Musk said their ad sales had fallen 50%, although it was unclear in what time period he was referring to.

In response, Twitter made several approaches to advertisers. Two days after Threads launched, Twitter sent an email to a large advertising purchase company reminding them of the incentives the company has offered advertisers and noting that the company has spent less money on Twitter ads this year, according to an email seen by Reuters.

Threads still has a considerable distance to match Twitter's reach. According to the company's latest public statement, Twitter had nearly 240 million monetizable daily active users in July last year.

Meta boss Mark Zuckerberg has said the company will think of ways to benefit from Threads if there is a clear path to 1 billion users.

Tens of millions of users return to Threads every day, and the team will focus on the rest of this year to "improve basic things and retention," Zuckerberg wrote in Threads last week.

After slowly adopting an AI-friendly hardware and software system for its main business, Meta has invested to increase its AI capacity to increase traffic to Facebook and Instagram as well as increase advertising sales. The company has also narrowed the view of costs for the year following excesses during the pandemic era.

On Wednesday, July 19, when Meta reported results for the April-June period, the company is expected to record an 8% increase in quarterly revenue to US$31.1 billion (Rp466.2 trillion), its best growth in six quarters.