X Faces Potential Second Round of Advertiser Exodus Following Elon Musk’s Controversial Comments
Industry experts predict further challenges for social media platform X as a potential second wave of advertisers considers pulling away from the platform, prompted by recent actions from its owner, Elon Musk, according to a report by Reuters.
Earlier this month, Walt Disney and Warner Bros. Discovery suspended their advertising on X after Musk endorsed an antisemitic post, sparking public outcry. Musk later apologized for his actions but created additional controversy during a New York Times DealBook event when he expressed regret for the post before launching into a profanity-laden critique of departing advertisers, accusing them of “blackmail.”
Ad industry professionals, including Lou Paskalis, founder of AJL Advisory, emphasized the importance for companies to protect their brand image amidst the exodus from X. In contrast, X’s CEO Linda Yaccarino praised Musk’s interview in a memo to employees, describing it as “candid and profound.” Yaccarino reinforced X’s commitment to an open platform without censorship, asserting non-negotiable principles.
Despite acknowledging the potential bankruptcy risk for X due to an extended advertiser boycott, Musk shifted blame onto the brands rather than himself. Analysts, such as Jasmine Enberg from Insider Intelligence, attributed X’s possible demise to Musk’s actions, policy decisions, and confrontational remarks.
X not only faces the prospect of losing corporate advertisers but also potential revenue from political candidates, a stream that returned after X lifted its ban on political ads. Mike Nellis, CEO of Authentic, mentioned plans to discuss advertising strategies with clients amid escalating tensions.
Recent data from media analytics firm Guideline indicates a substantial 64 percent decline in ad spending on X in the United States from January to October this year compared to the same period in 2022. Additionally, US monthly active users have decreased by about 19 percent since Musk’s acquisition of the platform last year, according to research firm Data.ai.
Experts foresee a potential halt in ad spending, leading to a greater reliance on subscription-based revenue for X’s survival. Notably, major corporations, including Apple, IBM, Sony, Disney, Comcast (including NBC Universal), and Paramount, collectively constituted 7 percent of the total US ad spend on X until October this year, according to Sensor Tower data.
Attendees at a New York Times-hosted dinner following the DealBook Summit expressed surprise at Musk’s explicit language against advertisers, with representatives from major brands sharing a sentiment that X might not be a welcoming environment given Musk’s apparent stance.
