Twitter was once a necessity for major brands. Under Elon Musk, it's now "high risk."

Twitter was once the place where major brands promoted new products, responded to customer complaints and honed their image. But after less than three weeks of ownership under Elon Musk, the social media service is now viewed as "high risk" by one major advertising company — and other big brands are continuing to bail.

Luxury fashion brand Balenciaga deleted its Twitter account this week, the latest high-profile company to retreat from the social media service amid a litany of problems under Musk's leadership. Eli Lilly has withdrawn its advertising from Twitter after a fake account tweeted that it was making its insulin products free, according to the Washington Post. That fake tweet caused Eli Lilly's stock to drop and placed renewed focus on the high price of insulin.

And the world's biggest media buyer, Group M, is now warning its clients that advertising on Twitter is "high risk," officials at Group M confirmed. Group M works with brands like Google, Ford and Coca-Cola on buying ads across media services, representing 1 in every 3 ads globally.

The arc of Twitter's transformation since Elon Musk bought the company on October 27 is playing out as a cautionary tale of how hubris and quick decisions can undermine a company's core business — in this case, advertising. Musk wants to boost the service's subscription revenue, but Twitter nevertheless relies on advertising for 90% of its sales. And so far, his leadership is risking Twitter's $4.5 billion in annual advertising revenue from big brand names like Eli Lilly, Oreo and General Motors. 

"Corporate America is very, very nervous," said Eric Yaverbaum, CEO of Ericho Communications and a brand and public relations expert. "They are talking about this behind closed doors: 'How do we handle this? Do we want to be participatory?'"

Twitter has become the "wild, wild West," he added. 

A number of major advertisers have paused or pulled their advertising revenue from Twitter amid confusion over Musk's plans for the service's blue check marks —which once denoted that an account was verified — and a rise in hate speech.

Playbill, a news outlet and guide for the Broadway theater community and theatergoers, on Friday said it left Twitter because the social media platform has "greatly expanded its tolerance for hate, negativity, and misinformation." 

Advertisers including Oreo-maker Mondelez, Allianz, Audi, General Mills, GM, United Airlines and Pfizer have paused their ads on the platform, leading to a major cash crunch for the company. 

One of the most damaging Twitter-related brand snafus occurred on November 10, when an account pretending to be the corporate account of Eli Lilly — complete with a newly purchased blue "verified" checkmark — tweeted: "We are excited to announce insulin is free now."

Eli Lilly: "Working to correct this situation"

The fake Eli Lilly account looked real enough that the spoof tweet is credited with causing the company's stock to drop 4.5%. 

At the heart of the problem sits Musk's new business plan for creating more subscription revenue: Transform its current free "blue checks," which signify an account's authenticity, into a payment-based service available to anyone.

That opened the door to pranksters and scammers to paying $8 a month to place the "verified" blue check next to a fake Twitter handle and then masquerade as another person or brand. Along with the Eli Lilly spoof, fake accounts popped up to mimic Tesla, Lockheed Martin and Nestle, among others.

Following the fake insulin tweet, the actual Eli Lilly account issued a clarification: "We apologize to those who have been served a misleading message from a fake Lilly account. Our official Twitter account is @LillyPad."

Executives at Eli Lilly then halted all Twitter ad campaigns, according to the Washington Post. Asked by CBS MoneyWatch if it has suspended advertising on Twitter, the drugmaker said, "In recent days, fake/parody Twitter accounts for Lilly have communicated false information and we continue working to correct this situation."

Musk, for his part, has vowed to improve the situation. On Sunday, he tweeted, "Twitter will enable organizations to identify which other Twitter accounts are actually associated with them."

Musk: Activists destroying "free speech"

Musk, meanwhile, is blaming activists who he says are scaring off advertisers as he moves fast to put his imprint on the social media platform. 

"Extremely messed up! They're trying to destroy free speech in America," Musk said in a November 4 tweet. 

But brands are pulling back from Twitter due to concerns about damage to their credibility on a platform where imposters and hate speech are on the rise. Musk's whiplash business decisions are also worrying to brands that prize stability and predictability. As for free speech, the First Amendment only applies to the government's control over speech. Private businesses are at liberty to make their own decisions about how and where to spend their advertising dollars.

"Elon has nobody to blame but himself at the moment," noted Yaverbaum. "The rules change by the day, and that's not what brands want."

Group M, the world's largest media buyer, said in an internal document that several things would have to change at Twitter for a reversal of its "high risk" label, according to Digiday, which published the document. Twitter would need to rehire IT security, privacy, trust and safety senior staff, as well as establish internal checks and balances, it noted.

It also wants "full transparency" about development plans for content moderation, community guidelines and anything that impacts brand safety or user security. It also wants a commitment to content moderation and enforcing rules against fake accounts. 

It's not too late for Twitter to stabilize itself and convince advertisers to return, Yaverbaum noted. "There are a lot of people just holding on because they love Twitter," he said.

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