X, the social media platform formerly known as Twitter, is grappling with a potential loss of up to $75 million in advertising revenue by year-end. This comes in the wake of owner Elon Musk’s endorsement of an antisemitic conspiracy theory, prompting dozens of major brands to pause their marketing campaigns.
The internal documents obtained by The New York Times highlight the challenging position of the company, revealing concerns about Musk and the platform that extend beyond notable companies like IBM, Apple, and Disney, which paused their advertising last week.
The documents, originating from X’s sales team, track the impact of the advertising lapses this month, including those by companies already on pause and others at risk of doing so. While X stated that $11 million in revenue was at risk, fluctuating as some advertisers return and others increase spending, the figures viewed by The Times suggest a more dire situation, potentially outdated or representing an internal evaluation of total risk.
This advertising crisis hits during the crucial final quarter of the year, traditionally the social media company’s strongest due to holiday promotions. For context, in the last quarter of 2021, X reported $1.57 billion in revenue, with nearly 90 percent from advertising. Since Musk’s $44 billion acquisition, brands have been cautious about advertising on X, wary of Musk’s behavior and content moderation decisions, leading to a rise in incendiary and hateful content. U.S. advertising on the platform is down nearly 60 percent this year.
Efforts led by chief executive Linda Yaccarino to woo back advertisers during the holiday season to compensate for earlier revenue shortfalls have been challenging. More than 100 brands are shown as having “fully paused” their ads, while dozens are “at risk.” The backlash intensified after Musk’s post on X, claiming an antisemitic conspiracy theory to be “the actual truth.”
Prominent organizations have paused their ads on X, ranging from political campaigns to tech giants. For instance, Airbnb halted over $1 million in advertising, and Uber cut back ads worth over $800,000. Other large brands like Coca-Cola and Netflix have also paused some campaigns, with Netflix’s halted ads valued at nearly $3 million.
This situation has sparked widespread debate and criticism. On the “Meet the Press” program, Republican presidential candidate Chris Christie condemned Musk’s comment as part of an “outrageous type of hate.” The advertising agency Outcast’s vice president, Leesha Anderson, noted that clients have steadily stopped spending on X since Musk took over, opting for alternatives like LinkedIn and TikTok.
In an internal meeting, Ms. Yaccarino maintained a defiant stance, attributing the company’s problems to a report by Media Matters, which showed ads on X appearing next to white nationalist and Nazi content. X subsequently sued Media Matters, alleging manipulation of algorithms. Despite these challenges, Musk has celebrated advertisers who have remained on X, including the National Football League, and announced that ad revenue related to the war in Gaza would be donated to hospitals in Israel and the Red Cross/Crescent in Gaza.
This complex situation at X illustrates the critical intersection of corporate leadership, social responsibility, and the dynamic nature of digital advertising in today’s market. As the platform navigates through this turmoil, the broader implications for social media advertising and content moderation remain a topic of intense scrutiny and discussion in the tech and business communities.
