After Elon Musk’s tirade, X faces prospect of more advertisers fleeing

SAN FRANCISCO - Social media company X faces the prospect of more advertisers fleeing and has no clear fix in sight, ad industry experts said, after billionaire owner Elon Musk lashed out at some of the biggest brands for dropping the platform.

Walt Disney and Warner Bros Discovery suspended advertising on X in November following Mr 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 Nov 29, Mr Musk unleashed a profanity-laced tirade against advertisers for fleeing the platform and accused the brands of “blackmail”.

He appeared to single out Walt Disney chief executive Bob Iger, who spoke earlier at the event and said an association with X was “was not a positive one for us”.

“Companies need to protect the brands they work for,” said Mr 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 Nov 30, which was seen by Reuters, X chief executive Linda Yaccarino said Mr 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, Insider 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 Mr Musk that have driven away X’s primary source of revenue,” Ms Enberg said.

An executive at a major global ad-buying firm, who declined to be named, said only one major client was continuing to advertise on X.

“(Mr Musk) seems to be hell-bent 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 ads.

US political ad spending in 2024 – when a presidential election will be held – is expected to reach a record US$10.2 billion (S$13.6 billion), according to AdImpact, which tracks political ads.

Mr Mike Nellis, chief executive of Authentic, a digital marketing agency that works with Democratic candidates including US 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,” Mr Nellis said.

X has come under fire for lax content moderation, especially from advertisers who do not want their ads appearing next to inappropriate content.

Ad spending on X in the United States from January through October 2023 declined 64 per cent, compared with the same period in 2022, according to data from media analytics firm Guideline, which tracks advertising spending data from major ad 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.

US monthly active users also declined by about 19 per cent since Mr Musk acquired Twitter in 2022, according to research firm Data.ai.

Apple, IBM, Sony, Disney, Comcast including NBC Universal, and Paramount collectively accounted for 7 per cent of total US ad spend on X through October, Sensor Tower data showed.

At a dinner hosted by the New York Times following the DealBook Summit on Nov 29, guests that included representatives of major brands were “aghast” at witnessing Mr 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. REUTERS