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huge, deep-pocked advertisers such as IBM do not really care about ROI or benefit, but rather just want to spread awareness, like about IBM and its Watson program. however, those are also the type of advertisers most averse to risk and may not wish to be associated with Elon
Yes, agree. But given that Twitter laid off 75-90% of staff and also stopped paying bills, costs must be down hugely. Therefore, if they still aren't making money, the price of ads has also fallen off a cliff.
Let's say that, pre-Elon, they got $1 per unit of hand-wavy awareness campaigns. It's possible that now they get $0.10 per unit of actual measurable performance ads. The loss of the hand-wavy shit really hurts because ads don't really work.
Related:
https://archive.is/yBS9E
"When Big Brands Stopped Spending On Digital Ads, Nothing Happened. Why?"
Trigger warning: Boomer-tier mainstream media
Is it known whether the loans are fixed rate? If they aren't, costs are presumably also going up as the Federal Reserve keeps raising interest rates to fight inflation.
Most LBO debt (which this is) is floating rate.
LBOs need to have optional principal payments because they don't know if the company will make enough free cash flow to make principal payments on the debt. Fixed rate debt with a prepayment option is a nightmare for banks to price and risk manage (see SVB passim, or the S&L crisis for an earlier example - LBO debt would be even worse than mortgages because there isn't the huge volume of historical prepayment data) so it tends to be expensive. And private equity firms have the necessary skills and market access to manage their own interest rate risk with derivatives. Most (but by no means all) LBO loan covenants require the borrower to buy an interest rate cap which protects itself (and thus indirectly the lenders) from big interest rate rise.
To be fair, Musk-owned Twitter is exactly the sort of organisation that would "forget" to buy the cap, and it turned out to be a working assumption among Musk-aligned right-wing VCs that they were bailout-eligible.
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I think most "big" loans are fixed rate. You want the cost/cashflow to be predictable.
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marketing for these big companies seems like a billion dollar red queen's race. obviously some advertising needs to exist, but it feels like a massive human inefficiency that there are ads everywhere.
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