Brand trust; is Twitter losing it?

24 November 2022
Brand trust; is Twitter losing it?

Gareth Edwards, a US-based technology strategist, has a theory he calls the ‘trust thermocline.’ A thermocline is a transition layer in a body of water between the surface, where the temperature is relatively warm, and the water below, where the temperature suddenly plummets. 

His theory is that a successful enterprise can trade on its brand awareness and goodwill to maximise profit and commercial gain by raising prices whilst also diluting product or service quality until, suddenly, a tipping point is reached, and customers abandon the brand en masse. From this point onwards, it becomes impossible to restore trust, and the brand is degraded forever in the minds of consumers.
As Edwards says: “The greater the role emotional engagement plays in the product, the bigger the risk of a catastrophic loss of trust.”

Elon’s thermocline?

If Edwards is looking for a perfect brand trust thermocline case study, one could be unfolding before our eyes.
Elon Musk’s $44 billion Twitter acquisition has been described as ‘one of the most overpaid tech acquisitions in history’. His purchase of the company has saddled it with $13 billion in debt, resulting in $1 billion in annual interest payments. These financial obligations must be weighing heavily on Musk right now, as he has warned about the very real danger of bankruptcy.
Perhaps because of this pressure to perform, Musk has gone in all guns blazing, removing the management team; initiating mass redundancies (followed by selected rehiring); botching the implementation of the subscription model and user verification (Twitter Blue); and pivoting towards a complete liberalisation of speech whilst removing appropriate safeguards – allowing far right politicians and activist groups, along with Donald Trump, back onto the platform. Meanwhile, an increasingly political Musk openly encouraged users to vote Republican on the eve of the mid-term elections.
Chaos ensued, with reports of fraud and extreme tweets returning to the platform. A fraudulent Eli Lilly account posted that their insulin drug was now available without charge, causing the stock price to fall six per cent and wiping billions of dollars from its market cap. Meanwhile, more and more reports of ‘dumb’ automated content mediation has locked accounts of astronomers and ornithologists. And all this while the Federal Trade Commission plans a return visit (it previously fined Twitter $150 million for misuse of targeted advertising practices) and other regulators place Twitter in their cross-hairs.

Ultimatums to employees to accept an “extremely hardcore” culture or leave seems to have backfired, resulting in “a mass exodus” from the toxic work environment, according to a former Twitter executive. There may be too few employees left with management now “scrambling” to convince talent to stay. 

It is not difficult to understand why employees and users have reacted with incredulity when such chaos is unleashed, but advertisers have also reacted pulling or pausing campaigns, which will damage Twitter’s revenues. The legal cases won’t be cheap to settle, either.

Meanwhile competitor platforms are benefitting. Mastodon and others have reported surging user figures. Founded in 2016, Mastodon is an opensource, decentralised social network which has now reached over 1 million active users, one-third of which signed up in the first week of November. On 27 October alone, the day Elon Musk finalised the Twitter deal, the non-profit social network gained 70,000 users.

Does Musk have a strategy? As a visionary business owner with a dream to colonise space, he has an unparalleled track record of founding start-ups with innovative value propositions. Tesla disrupted the auto industry with a business model closer to software development than the automotive industry and, after a shaky start, has been a spectacular success.

SpaceX promises the privatisation of space travel and logistics (and perhaps even the future salvation of mankind). The Boring Company envisages an ultra-high-speed public transportation system in which passengers travel in autonomous electric pods at 600+ miles per hour, which will work on earth and on heavenly bodies. Neuralink wants to insert chips in humans to create a brain-computer interface. Together, these entities form a highly impressive portfolio – and all align with Musk’s dream of establishing humanity as a multi-planet species. But Twitter?

So where does Twitter fit in Musk’s masterplan?

On completing the purchase of Twitter, Musk said: “the reason I acquired Twitter is because it is important to the future of civilisation to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner, without resorting to violence. There is currently a great danger that social media will splinter into far right and far left echo chambers that generate more hate and divide our society.”

While this is another ambitious goal, it is debatable whether Twitter can ever perform the role of a “global town square”, which is by definition local, and therefore has questionable inter-planetary use. With the genie of unrestrained earth-bound speech already released, and more than half its staff fired - today, the entire Brussels team, responsible for complying with the EU's new Digital Services Act and disinformation code, was axed, fuelling further concerns about compliance and online safety, Twitter seems closer to realising the “free-for-all hellscape” he said he wanted to avoid.

One lens to view this all through is brand. Musk has achieved his considerable success by founding ‘build it and they will come’ start-ups he can control through his vision, sheer willpower and determination; finding ways to stay around until the market proves him right. While this has worked repeatedly, he has never acquired - at huge expense - an established brand with existing loyal users, whose emotional relationship with the brand has been key to its value.  

Twitter continues to lose some of its most active ‘heavy tweeters’, who account for less than 10% of monthly overall users but generate 90% of all tweets and half of global revenue. Advertisers remain wary, but the World Cup has, apparently, set a new record with Musk claiming 20,000 Tweets a second during some matches. Should Twitter fail, Musk may lose more than his evangelical halo; the reputational fallout and financial leverage could blowback on Tesla, SpaceX and other enterprises in his empire. 

This poses several questions. How will an entrepreneur with a distaste for governance (remember his run-in with the SEC) revitalise a content platform, increasingly in the crosshairs of the regulators? The EU will certainly make its feelings known. Why did he think Twitter was worth $44bn if he’s going fire most of the staff and is indifferent to users leaving? Does he think his Tesla and SpaceX engineers can write better code and master the nuances of automated content moderation? Or is it that the temptation to become the earth’s most powerful unregulated media baron more alluring than keeping focused on his dream of establishing civilisation on Mars? 

It will take time to find out, and the world will be watching.

What’s the moral of the story?

Building a consumer brand is hard; destroying one is easy (as P&O Ferries proved earlier in the year). 

Twitter’s value, you must assume, is in its real-time engagement with its active users, many of whom are hugely influential. Musk obviously doesn’t think much of its employees or tech. But, by disenfranchising users with botched policy changes, fickle personal opinions, exposing the company to numerous lawsuits, alienating advertisers and regulators and exposing users to extreme unmoderated views, he risks a brand trust meltdown.

To avoid this, he must recognise the value of Twitter’s users and advertisers, quickly implement user experience enhancements and steer clear of the “hellscape” by revolutionising nuanced automated content moderation. A tall order, but one that would reassure users and advertisers - and the world will hail him as the genius his mother believes him to be. 

If not, Twitter could be Musk’s Icarus moment, when the gravitational attraction of becoming a billionaire media baron burns brighter than his life-long vision, but then burns everything up.

Peter Matthews
Founder & CEO

David Gilbert
Head of Brand Consulting