By John Ikani
X, previously known as Twitter, is facing a potential advertising revenue setback of up to US$75 million by year-end, as major brands hit pause on their marketing campaigns following Elon Musk’s endorsement of an anti-Semitic conspiracy theory in November.
Internal documents from X’s sales team, recently viewed by The New York Times, shed light on the company’s more precarious situation than initially known.
Concerns about Musk and the platform extend beyond IBM, Apple, and Walt Disney, as over 200 ad units, including those from Airbnb, Amazon, Coca-Cola, and Microsoft, consider or have already halted their ads on the social network.
The documents, tracking the impact of advertising lapses in November, reveal the potential ad revenue loss until the end of 2023 if advertisers don’t return.
X stated on Friday that US$11 million in revenue was at risk, with fluctuating figures as some advertisers return and others increase spending.
These advertising freezes hit during the crucial final quarter, historically X’s strongest, where holiday promotions like Black Friday and Cyber Monday contribute significantly.
In the last quarter of 2021, pre-Musk acquisition, X reported US$1.57 billion in revenue, with nearly 90% from advertising.
Since Musk’s acquisition in 2022, some brands have hesitated to advertise on the platform due to concerns about his behaviour and content moderation decisions, leading to a surge in incendiary content.
US advertising on the platform has dropped nearly 60% in 2023, prompting X’s efforts, led by CEO Linda Yaccarino, to woo back advertisers during the holiday season and compensate for earlier revenue shortfalls in 2023.
However, the internal documents reveal a different story, with over 100 brands fully pausing ads, and dozens more at risk. Many paused after Musk’s November 15 post endorsing an anti-Semitic conspiracy theory.
Brands halting ads range from political campaigns to fast-food chains and tech giants. Airbnb and Uber, for example, stopped campaigns worth over US$1 million and US$800,000, respectively. Other major brands like Jack in the Box, Coca-Cola, and Netflix also paused some campaigns.
Various Microsoft subsidiaries, Amazon units, and a Google subsidiary also stopped advertising, potentially causing a loss of over US$4 million in revenue for X’s fourth quarter. Google and Microsoft declined to comment, while Amazon did not respond.
Despite the challenges, Musk celebrated companies like the National Football League continuing to advertise on X and pledged to donate all revenue related to the war in Gaza to hospitals in Israel and the Red Cross/Crescent in Gaza.
Linda Yaccarino, in an internal meeting, made no mention of Musk’s controversial endorsement but attributed X’s problems to a report by Media Matters, blaming it for declining ad sales.
In an email to X employees on Nov 22, Yaccarino asserted, “Kowtowing to external criticism or pressures is simply not how X will ever operate.”
Musk urged support for the platform, celebrating companies still advertising on X, while Yaccarino added a plea on the platform: “Lean in and help.”