Elon Musk’s X, previously known as Twitter, risks a substantial decline in ad revenue following the withdrawal of major brands like Apple, Disney, and IBM, amidst concerns over “brand safety.”
TechCrunch reports that Elon Musk’s X/Twitter is currently grappling with a significant reduction in advertising revenue. This decline has been largely attributed to the withdrawal of major brands such as Apple, Disney, and IBM, which have paused their ad spending on the platform. The departure of these advertisers comes in the wake of owner Elon Musk’s controversial endorsement of an allegedly antisemitic post, exacerbating existing concerns about brand safety on the platform.
Before these recent events, X/Twitter’s ad revenue was already under pressure. An October forecast from Insider Intelligence predicted a 54.4 percent year-over-year decline in worldwide ad spending from 2022 to 2023 for the company. This decline is now expected to deepen with the recent pullout of additional advertisers. The move by these big-name brands is likely to inspire other advertisers to follow suit, potentially triggering a further exodus and causing more severe damage to X/Twitter’s ad business.
Advertising has been a critical source of revenue for the platform, accounting for approximately 90 percent of the company’s income. While X has introduced a subscription plan with new features, including paid verification, so far subscriptions have failed to compensate for the loss of ad revenue in the long term.
The impact of these developments extend beyond financial implications. Analysts have noted a probable decrease in the platform’s monthly active users, projecting a drop from 363.7 million in 2023 to 348.6 million by the end of 2024. U.S. users are expected to decline to 51.6 million by 2024, an 8.1 percent decrease from the 56.1 million in 2023.
Breitbart News reported today that Musk is fighting back against what he considered smears by Media Matters, which contributed to advertisers pulling out. Musk has gone on offense by filing a lawsuit against the leftist nonprofit:
In a case filed in the U.S. District Court for the Northern District of Texas, X/Twitter accuses Media Matters of distorting the likelihood of ads appearing next to alleged hate speech on the platform.
“Media Matters knowingly and maliciously manufactured side-by-side images depicting advertisers’ posts on X Corp.’s social media platform beside Neo-Nazi and white-nationalist fringe content and then portrayed these manufactured images as if they were what typical X users experience on the platform,” says X in its complaint.
“Media Matters designed both these images and its resulting media strategy to drive advertisers from the platform and destroy X Corp.”