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Elon Musk, who despises the advertising profession, has a talent for creating catchy slogans. The world’s wealthiest man was questioned about his thoughts on companies removing advertisements from X, the social network he purchased last year while it was still known as Twitter, at a New York Times event on November 29. “Go fuck yourself if somebody is trying to blackmail me,” he said. The “GFY” strategy, as he called it, could be second nature to billionaires. But it’s daring for a business that relied on advertisements for around 90% of its income last year. Apple and Disney are among the companies that have removed their advertisements from X, which existence Mr. Musk previously used as proof that X was a safe haven for businesses.
The presence of obscene content on the internet worries advertisers. With the firing of 80% of X’s employees, including several moderators, by Mr. Musk, more hate seems to be getting past the security measures. A watchdog group called Media Matters for America revealed last month that advertisements for companies like IBM had shown alongside posts endorsing Adolf Hitler.
Compared to traditional media, social networks have more freedom to urge advertising to go away. Social networks can have millions of little customers, but the majority of an American TV network’s ad income comes from less than 100 large ones. According to analytics firm Sensor Tower, a year ago, Facebook’s 100 largest advertisers accounted for 45% of its domestic revenues. revenues were not significantly impacted by the boycott of the company in 2020, which was supported by over 600 companies, including major players like Unilever and Starbucks. However, X depends on large-scale marketing campaigns and lacks Facebook’s sophisticated ad-targeting infrastructure. When Mr. Musk acquired Twitter in October 2022, 70% of US ad sales came from its top 100 clients.
According to Sensor Tower, half of them have since departed X. Walmart announced its demise on December 1st, citing subpar results from its advertisements on X. It has had a serious effect. Mr. Musk said in September that X’s US advertising sales had decreased by 60%. The culture warfare that Elon Musk is waging might not affect advertisers in other areas as much. However, X is remarkably dependent on America. If the majority of Meta, the parent business of Facebook, is made overseas, before Mr. Musk purchased the firm, 56% of Twitter’s income came from the United States. Prior to GFY, Insider Intelligence, an additional research organisation, predicted that X’s global ad sales would decrease by almost 50% this year.
Admen and “woke” businesses are treated rudely, according to Mr. Musk’s supporters, which makes X’s everyday users happy. X still has over five times as many as Threads, Meta’s more recent competitor. However, according to Sensor Tower, the X app is being downloaded less often than it was a year ago, and it has lost 15% of its monthly user base.
Some analysts attribute this to the removal of bots and fraudulent users. Nevertheless, X has to find new methods to monetize its users in order to offset the diminishing ad revenue. X Premium is one option; it costs $3 to $16 a month and provides additional features and fewer advertisements. There don’t seem to be many takers thus far: According to Sensor Tower, X has sold $60 million worth of memberships in the last 12 months, which is the same as 1% of the yearly ad revenue made prior to Musk. Mr. Musk has stated that X will become a “everything app” that can manage calls, payments, and other functions. Even optimists, though, acknowledge that it would take years.
Up until then, the plan is to bring in a plethora of little marketers to replace the major ones who are leaving. With an eye towards a long tail of clients akin to Facebook, X is reportedly developing its ad technology for smaller businesses. There’s not a moment to waste. Additional declines in ad revenue would call for a rescue from investors or perhaps from Mr. Musk. It will be a challenge for X’s staff to draw in sponsors more quickly than their boss turns them away.
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