At X staff meetings, executives talk up return of advertisers

SAN FRANCISCO – Leaders at Mr Elon Musk’s social media company, X, told employees this week that 65 per cent of advertisers had returned to the platform since January, according to recordings of all-hands meetings obtained by The New York Times, and that smaller companies now made up the bulk of its revenue.

The executives, including Ms Linda Yaccarino, who was appointed to run X in 2023, admitted that the company continued to face challenges as it rebuilt its beleaguered advertising business. They did not provide updated sales figures, according to three people in attendance on June 12 and 13, who noted that the return of advertisers did not necessarily reflect an increase in revenue.

The meetings took place as Mr Musk, who acquired the company for US$44 billion (S$59.5 billion) in 2022, faced a Tesla shareholder vote on June 13 on his pay package, worth more than US$45 billion. Some investors at Tesla, which accounts for the bulk of Mr Musk’s wealth, have expressed concern that he has been distracted by X. Later in the day, the company announced that shareholders had approved his compensation.

Since Mr Musk took over the social media company, which was formerly called Twitter, the billionaire has cut 75 per cent of staff, restored hundreds of banned accounts and remade the platform to allow most speech, without consequences. In November, he told advertisers not to spend on X, dismissing them using an expletive during an interview at the Times’ DealBook conference.

Still, Ms Yaccarino painted a rosier picture this week as she spoke with employees, promoting the increase in advertising by small and medium-sized businesses on the platform. She and Mr Musk are expected to continue to make their case to brands in meetings next week, as the two executives head for the Cannes Lions festival, an ad industry summit.

“Hundreds of client meetings will happen, and many moments will take place where we get to showcase X,” she said. The recordings were verified by employees at the meetings.

“Our customers are cheering us on, and they’re excited and in awe of all the progress that we’re making,” Ms Yaccarino added.

While X’s ability to attract small and medium-sized businesses would be a win, those advertisers are unlikely to replace the Fortune 500 companies that have significant ad budgets, said Ms Jasmine Enberg, an analyst with eMarketer who covers X.

“There’s still a healthy dose of scepticism and concerns among big brands, which tend to be more risk averse, about advertising on the platform,” she added. “There’s the risk of the content there and of retaliation from Elon Musk.”

X lost about 52 per cent of its United States advertising revenue in 2023, with total earnings falling to about US$1.13 billion, according to estimates by eMarketer. The firm predicts an additional 2.5 per cent drop in 2024, to US$1.1 billion.

Mr Musk did not respond to a request for comment. X declined to comment.

Ms Yaccarino, a long-time television executive who worked at NBCUniversal before joining X in June 2023, told workers that she planned to transform the company into a “video-first” platform that competed with YouTube and TikTok.

“We know the importance of turning around the business in the US,” Ms Monique Pintarelli, an advertising executive at X, said during one meeting, according to a recording. “We are making tremendous progress in driving reactivations across the US, with a 65 per cent increase in active advertisers back on the platform since January.”

Ms Pintarelli noted that the shift of X’s current advertisers to smaller businesses was a distinct change from Twitter’s historical reliance on major brands for most of its revenue.

A pivot away from top brands could protect X from some of the volatility it has faced since Mr Musk’s takeover. Hate speech and violent content have surged on the platform, according to researchers. Marketers for household names like Apple and Disney have been skittish about the potential for their brands to appear next to that content.

“We are also working hard to make sure that we’re building a business that is a lot more resilient for the future, one that’s less reliant solely on Fortune 500 companies,” Ms Pintarelli said. NYTIMES