There are strong indications that the microblogging site, X (formerly Twitter) may lose as much as $75 million in advertising revenue by the end of the year as major brands pause their marketing campaigns after its owner, Elon Musk, endorsed an antisemitic conspiracy theory in November.
As of now, the social media platform faces more prospective advertisers fleeing the brand following Musk’s comment after some of the biggest brands for dropping the platform.
On Friday, X said in a statement issued on its platform revealed $11 million in revenue was at risk and that the exact figure fluctuated as some advertisers returned to the platform and others increased spending.
The company said the numbers viewed by The Times were either outdated or represented an internal exercise to evaluate total risk.
Recall that Walt Disney and Warner Bros Discovery suspended advertising on X earlier this month following Musk’s endorsement of an antisemitic post that falsely claimed members of the Jewish community were stoking hatred against white people.
After apologising for his post while speaking at a New York Times DealBook event on Wednesday, Musk unleashed profane insults against advertisers for fleeing the platform and accused the brands of “blackmail.”
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He appeared to single out Walt Disney CEO, Bob Iger, who spoke earlier at the event and said an association with X “was not a positive one for us.”
“Companies need to protect the brands they work for,” said Lou Paskalis, founder of marketing consultancy AJL Advisory and former head of global media at Bank of America. “This isn’t advertisers getting together in a secret clubhouse to support an agenda.”
In a memo to employees on Thursday, which was seen by inside sources, X Chief Executive, Linda Yaccarino said Musk’s interview was “candid and profound,” and encouraged staff to watch it.
She reiterated that X’s mission is to be an open platform without censorship.
“Our principles do not have a price tag, nor will they be compromised ever,” the memo said.
The Tesla chief also acknowledged that an extended boycott by advertisers could bankrupt X, formerly Twitter, but suggested that the public would blame the brands and not him for a potential collapse.
However, Intelligence analyst Jasmine Enberg said: “If anyone is killing X, it’s Elon Musk not advertisers.”
“Should X collapse, an autopsy would reveal a series of platform policy decisions, staffing cuts, tweets and antagonistic comments by Musk that have driven away X’s primary source of revenue,” Enberg said.
An Executive at a major global advert-buying firm, who declined to be named, said only one major client was continuing to advertise on X.
“(Musk) seems to be hellbent on destroying the platform,” the executive said.
X risks not only losing corporate advertisers but also money from political candidates, a revenue stream that reopened after the platform lifted a ban on political adverts.
U.S. political adverts spending in 2024 when a presidential election will be held is expected to reach a record $10.2 billion, according to AdImpact, which tracks political adverts.
Mike Nellis, CEO of Authentic, a digital marketing agency that works with Democratic candidates including U.S. President Joe Biden, said he planned to speak with all his clients about whether or not to spend on X.
“Telling major advertisers and Bob Iger to go F themselves might be the final nail in the coffin,” Nellis said.
X has come under fire for lax content moderation, especially from advertisers who do not want their adverts appearing next to inappropriate content.
Adverts spending on X in the United States from January through October this year declined 64%, compared with the same period in 2022, according to data from media analytics firm Guideline, which tracks advertising spending data from major adverts agencies.
“We believe there is a risk that more companies will stop advertising on X; at least on a short-term basis,” D.A. Davidson & Co. analyst Tom Forte said.
“It is fair to say this makes the company’s subscription efforts more important and potentially means it may need more than half its revenue to come from subscriptions,” he said.
U.S. monthly active users also declined by about 19% since Musk acquired Twitter last year, according to research firm Data.ai.
Apple, IBM, Sony, Disney, Comcast including NBC Universal, and Paramount collectively accounted for 7% of total U.S. adverts spent on X through October this year, Sensor Tower data showed.
At a dinner hosted by the New York Times following the DealBook Summit on Wednesday, guests that included representatives of major brands were “aghast” at witnessing Musk’s expletives against advertisers, said one attendee who declined to be named.
One sentiment seemed to be shared among brand representatives in discussing X: “It’s obvious (Musk) doesn’t want us there and we don’t want to be there,” the attendee said.
X May Lose Up To $75m By Year End
November 25, 2023
US Condemns Elon Musk For Spreading Antisemitic Lie On X
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Elon Musk Launches Profane Attack On X Advertisers
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