Even before big brands like Apple, Disney and IBM halted ad spending on X after Elon Musk approved an anti-Semitic post, the company formerly known as Twitter had seen its revenue hit hard by concerns for brand safety. According to an October forecast from Insider Intelligence, the X ad business was on track for a 54.4% year-over-year decline in global ad spending from 2022 to 2023. With the additional pullbacks from advertisers, this decline may be even more important, analysts now believe.
X is facing a potential loss of significant ad spend as several advertisers have stopped or halted their ad campaigns on X after owner Elon Musk boosted anti-Semitic conspiracy theories on the platform. Among the brands that have since stopped advertising on X are Apple, Comcast/NBCU, Disney, Warner Bros., IBM, Paramount, Lionsgate and the European Commission.
While X has yet to prove itself as the hub for fast-breaking news — as this weekend’s OpenAI drama proved — the nature of its business still depends on advertising, which makes up the bulk of its revenue. As Twitter, ads accounted for around 90% of the company’s revenue, with API licensing fees and subscriptions also contributing to the company’s performance. But Musk’s plan to beef up X’s subscription program with a new set of features, including paid verification, hasn’t proven successful enough to deal with a large advertiser exodus in the long term. That doesn’t necessarily mean X will shut down — it’s owned and operated by a billionaire, after all — it just means it will need new sources of funding at some point.
He warns Insider Intelligence analyst Jasmine Enberg, the latest advertiser exits could now trigger a further exodus.
“The damage to X’s advertising business will be severe,” he predicts. “A flight of big-name advertisers will inspire other advertisers to follow suit, and there’s already a long queue of less vocal advertisers that have pulled spending.”
While brands generally understand the risk of running ads on user-generated content, they typically aren’t in such a situation, he also points out.
“Advertisers are accustomed to dealing with brand safety issues on social media, particularly during times of political and social tension or war. But they’re not used to a platform owner amplifying misinformation and hate speech and encouraging conspiracy theorists,” notes Enberg. “The impact of Musk’s words is a significant social risk. “Twitter’s influence has always been greater than its user base and ad revenue, and while the platform’s cultural relevance has waned, Musk and X are still an important part of the public conversation,” he adds.
The allegations against Musk arrive along with a report from Media issues, which showed how ads appeared next to posts praising Nazi ideology. However, an X executive, Joe Benarroch, pushed back on Media Matters’ reports.
Benarroch, who joined X from NBCU shortly after CEO Linda Yaccariono, has acted as the company’s spokesman at times as Musk’s previous layoffs decimated the company’s communications department. He claimed in a post on X that Media Matters used 3 accounts and then continuously rescheduled posts to see 13x the number of ads served, compared to the median. In other words, it says that a typical user wouldn’t have the same experience when it comes to ad placement.
However, X was on the decline even before these recent disasters. Before that, X’s ad revenue was already forecast to drop 54.4% from 2022 to 2023 — a significant drop for the platform Musk has now been running for about a year so far. And Musk himself said in September that US ad revenue then fell by 60%, citing pressure from the Anti-Defamation League which accused the owner of anti-Semitism. (Musk, in turn, threatened to sue the ADL).
Insider Intelligence’s figures are in the same vein — its forecast predicts that X’s ad revenue in the US was expected to drop nearly 55% year-over-year and 54.4% globally. And this, we should note, was calculated before these latest advertiser departures.
Analysts also estimated that X’s monthly active users would have fallen 4.1% to 348.6 million by the end of 2024, from 363.7 million in 2023 and a high of 373.6 million in 2022. (Musk took Twitter in late October 2022. ) US users are also set to decline, the company predicts — to 51.6 million by 2024, down 8.1% from 56.1 million in 2023 and a high of 58.9 million in 2022 .
Enberg further suggests that Yaccarino’s efforts to reassure advertisers of X’s brand safety efforts won’t work, given that it’s being undermined by Elon Musk himself. Forbes recently reported that top advertising executives were pressuring Yaccarino to resign, suggesting that her own reputation was now at risk as a result of Musk’s actions. So far, those requests have fallen on deaf ears, it seems, as Yaccarino has posted on X to support free speech and the company’s vision.
“What we do at X matters and has everyone’s attention. I believe deeply in our vision, our team and our community,” she wrote in a post on X on Monday morning. “I am also deeply committed to the truth, and there is no other team on earth that works as hard as the teams at X. When you are this consistent, there will be critics and manufactured distractions, but we are steadfast in our mission,” the post read.
Insider Intelligence has yet to calculate the impact of recent advertiser exits on its forecast, but says it will in its next update.
