The latest advertiser fallout on X, the platform formerly known as Twitter, could end up costing Elon Musk’s company much more than the $11 million in revenue that the company previously estimated could be “at risk” due to backlash over antisemitic content on X.
According to internal X sales team documents reviewed by The New York Times, X may lose “up to $75 million” as more than 100 major brands—including Airbnb, Amazon, Coca-Cola, Google, Microsoft, Netflix, and Uber—have stopped advertising, while “dozens” more are considering pausing ads on the platform.
These sales team documents, The Times reported, “are meant to track the impact of all the advertising lapses” in November. On top of noting which brands have stopped advertising, the documents also flag brands at risk of halting ads. Ultimately, the sales team’s goal is listing “how much ad revenue X employees fear the company could lose through the end of the year if advertisers do not return,” The Times reported.
X told The Times that these documents “were either outdated or represented an internal exercise to evaluate total risk.” The social media company seems to expect that X will recover, as remaining advertisers increase spending on X and some brands that left may return to X before the year’s end.
X reported in July that ad revenue was down 50 percent, and then in October, the spread of Israel/Hamas misinformation helped illustrate why so many brands have remained reluctant to advertise on X all year.
The latest drop in revenue could make for a bleak end of 2023 at a time when, traditionally, X ad revenue is spiking as big brands attempt to reach consumers through the holidays. The Times reported that some brands withdrew millions from the platform. Among the biggest ad revenue drops cited, “various subsidiaries of Microsoft” could trigger losses of more than $4 million, Netflix’s halted ads were “worth nearly $3 million,” and Airbnb paused ads amounting to $1 million.
Recent data provided to The Independent by the market intelligence firm Sensor Tower “suggests that just six of the companies that pulled out” initially—including Apple, IBM, Sony, Comcast, and Paramount—accounted for 7 percent of all US ad spending on the social network.” Sensor Tower also reported that “of the company’s top 100 US advertisers in the days before” Musk purchased the platform, “only 50 were still there as of October 2023” and, perhaps most troubling, “the new top 100 were spending roughly 45 percent less money.”
According to The Independent, advertisers aren’t just afraid of ads appearing next to antisemitic posts, but “must also contend with the risk of their money directly funding extremists” due to X’s recently launched creator revenue-sharing program.
Seemingly major brands pulling out of X has also riled some creators who expected to receive higher payouts than the revenue-sharing they’re getting from smaller brands. Musk responded to an X user who said that some users were “mad” over lower ad revenue-sharing, saying there was “not much we can do if advertisers boycott or reduce spend on our platform.”
Disgruntled users could become an issue for X if the advertiser boycotts continue for much longer. Any X subscribers ultimately unsatisfied with revenue-sharing might not be adequately incentivized enough to continue paying for subscriptions. And X began launching subscriptions partly to reduce its reliance on ad revenue.
X could also shed users or risk reducing user engagement if lower ad quality degrades the user experience, as smaller brands win bids for ad placements abandoned by bigger brands.
X plans path to recovery
Not every major advertiser has pulled out over the latest X controversy—which many industry experts have attributed as much to a post from Elon Musk endorsing an antisemitic conspiracy theory as a Media Matters report on brands’ ads appearing next to antisemitic content that triggered X to file a lawsuit.
CNN noted last week that remaining advertisers include the NFL, Walmart, State Farm, Wendy’s, Office Depot, The New York Times, The Washington Post, The Economist, USAA insurance, Formula 1, and Mondelēz International.
Only the NFL has commented on its decision to stay. Its chief spokesperson, Brian McCarthy, told CNN that the NFL “unequivocally denounces all forms of hate speech and discrimination” and had expressed “concerns directly to X.”
For X, the path to recovery includes offering deals to entice advertisers to come back to the platform or increase spending. One deal that X advertised on Saturday confirmed that any business subscribing to become Verified Organizations “get a $1,000 ad credit every month.”
It seems likely that better deals could be coming soon if X plans to follow its playbook from fall 2022. Last December, when then-Twitter was experiencing its first advertiser blowback after Musk adjusted the platform’s content moderation policies, Twitter offered its “largest advertiser incentive ever”—matching advertiser spends up to $1 million by giving away extra impressions if brands spent a certain amount.
Internally, X seemingly continues to blame the current advertiser exodus exclusively on watchdog groups calling out antisemitic content, which The Washington Post reported has “surged more than 900 percent on the platform.” In an internal meeting with employees at X last week, Yaccarino “made no mention” of Musk’s “endorsement” of an antisemitic post and instead “attributed the company’s problems” to Media Matters, The Times reported. Yaccarino also told employees in an email reviewed by The Times that “kowtowing to external criticism or pressures is simply not how X will ever operate.”
“The people at X are free speech defenders,” Yaccarino said in the email. “We stand in solidarity with those who believe in this fundamental right and the critical checks and balances of a thriving democracy.”
On Monday, Musk visited Israel and met with Prime Minister Benjamin Netanyahu to tour the scene of the Hamas October 7 attack. Musk’s visit appeared to be “aimed at calming the outcry over his endorsement of an antisemitic conspiracy theory on X,” The New York Times reported. In a talk with Netanyahu broadcast on X, Musk said, “it was jarring to see the scene of the massacre.”
