X staring at potential second round of advertiser exodus after Elon Musk’s rant
Elon Musk launched into a profanity-laden diatribe against fleeing advertisers, accusing brands of blackmail, with apparent criticism directed at Walt Disney CEO Bob Iger in particular.
Ad industry experts warn of impending turmoil for social media company X as more advertisers consider deserting the platform, following a cascade of events triggered by its billionaire owner Elon Musk's recent actions, as per a Reuters report.
Walt Disney and Warner Bros. Discovery took decisive steps earlier this month by halting their advertising efforts on X. The move came in response to Musk endorsing an antisemitic post. The backlash was followed by Musk apologising.
However, when speaking about the incident at the New York Times DealBook event, Musk first expressed regret for his post, before launching into a profanity-laden diatribe against fleeing advertisers. He accused the brands of "blackmail," with apparent criticism directed at Walt Disney CEO Bob Iger, who earlier commented that partnering with X had not been a positive association for their brand.
Industry Voices and X's Response
Industry experts, including Lou Paskalis, founder of AJL Advisory, told Reuters the necessity for companies to safeguard their brand image amid advertisers leaving X. However, X's CEO Linda Yaccarino, in a memo to employees, commended Musk's interview as "candid and profound." She reinforced X's commitment to being an open platform without censorship, asserting that their principles were non-negotiable, as per the report.
Further, despite acknowledging the potential bankruptcy risk for X due to an extended advertiser boycott, Musk insinuated that public blame would fall on the brands rather than on him. But analysts, notably Jasmine Enberg from Insider Intelligence, pointed fingers at Musk, attributing X's possible demise to his actions, policy decisions, and confrontational remarks, the report said.
The platform faces the alarming reality of losing not just corporate advertisers but also potential revenue from political candidates, a stream that re-emerged after X lifted its ban on political ads. Mike Nellis, CEO of Authentic, told Reuters there are plans to discuss advertising strategies with clients amid the escalating tensions.
Decline in Ad Spending and User Base
Recent data from media analytics firm Guideline indicates a staggering 64 percent decline in ad spending on X in the United States from January to October this year compared to the same period in 2022. Furthermore, US monthly active users decreased by about 19 percent since Musk's acquisition of the platform last year, according to research firm Data.ai.
Experts like Tom Forte from DA Davidson & Co foresee the potential halt in ad spending, necessitating a greater reliance on subscription-based revenue for the company's survival. Notably, major corporations such as Apple, IBM, Sony, Disney, Comcast (including NBC Universal), and Paramount collectively constituted 7 percent of the total US ad spend on X until October this year, as indicated by Sensor Tower data.
Attendees at a New York Times-hosted dinner following the DealBook Summit were taken aback by Musk's explicit language against advertisers, the report added. Representatives from major brands expressed a shared sentiment that X might not be a welcoming environment given Musk's apparent stance, it added.
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First Published:1 Dec 2023, 07:10 AM IST
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