Elon Musk has threatened a “thermonuclear” lawsuit against the non-profit Media Matters for publishing research that shows ads on X appearing next to pro-Nazi posts.
So what? It’s a tacit admission that X’s business model is under threat.
Before last week – when Musk also drew criticism for endorsing an antisemitic conspiracy that motivated a mass shooting – X’s ad revenue was dropping over 55 per cent year-on-year in each month since he took over. Now some of X’s biggest advertisers have ceased or “paused” ads, including
- Apple
- IBM
- Lions Gate Entertainment
- Disney
- Warner Brothers Discovery
- Paramount Global
- NBCUniversal
- Comcast
- Sony
- Ubisoft
According to Sensor Tower, these companies collectively account for at least 7 per cent of the total US ad spend on X so far this year. In other words, the trickle of concerns about brand safety since Musk took over has now become a deluge.
“Earlier in the year we saw clients withdrawing that had a small spend on the platform… What we’ve seen over the last month or so is our clients with a larger spend withdrawing – it feels like a more intentional and deliberate move,” says Mobbie Nazir, global chief strategy officer at We Are Social.
Advertisers were warned. Early this year, at Musk’s first (and only) meeting with the company’s Influencer Council – made up 118 of X’s biggest advertisers – he told them they would have to separate his personal tweets and actions from the Twitter brand and company.
One CMO replied: “Elon, you realise we can’t do that. We have bosses, and we need to be able to defend our actions, and no one has ever seen a situation where a CEO has a different talk track than the enterprise.”
Many of them stayed anyway, albeit with reduced spending: X has earned an average monthly ad revenue of $69.5 million from 1,900 average monthly advertisers in the last 11 months. Those figures are 42 and 28 per cent lower respectively than in the 11 months before Musk acquired the company.
The instalment of Linda Yaccarino as CEO was supposed to turn things around. In September she claimed 1,500 advertisers had returned to the platform over the past 12 weeks, including brands like AT&T, Visa and Nissan.
Asked to confirm this Nissan said it does not share its go-to-market strategy externally. Visa and AT&T did not respond to requests for comment.
Ticking along. The picture could be worse for X. The platform’s ad reach has actually increased over the last 90 days, adding the equivalent of 1 million new accounts a day, while “blue tick” subscriptions and data sales may also be providing a financial ballast to counter ad revenue losses. X is still the 6th most-visited website globally by most counts.
But visits – the amount of time users spend on X – are down. If the decline persists it could start to have an impact on the advertising which made 90 per cent of Twitter’s revenue last year.
Stay or go? “Advertisers are running out of patience,” says Jake Dubbins, co-founder of the Conscious Advertising Network. “Brand safety wasn’t really a thing ten years ago… but since the advent of digital, programmatic marketing, it’s become an increasing concern.”
CMOs hold an increasingly vexed position. Some may choose to wait until the dust settles on Musk’s comments – hence the phrasing “pause”. For others the bile will be too hard to swallow.
The fact that even the European Commission and the White House have condemned X’s lax approach to hate speech should make executives sit up in their seats.
As the seasoned marketeer Lou Paskalis said last month: “A single incident of this, screenshot and circulated, undoes years of hard work… No amount of advertising benefit would ever displace the potential risk of one incident where your ad shows up next to unsavoury content.”
