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Wednesday, February 21, 2024

Fallout Deepens as Advertisers Remain Wary of Elon Musk’s X Amidst Controversies

Advertisers signaled their reluctance to resume spending on X, the social media platform previously known as Twitter, after Elon Musk, its owner, lashed out at brands using offensive language and urged them not to invest in advertising on the platform. Several marketing agencies disclosed that brands under their representation were standing firm against advertising on X, while some suggested advertisers halt their posts on the platform indefinitely. Advertisers, previously hesitant due to recent controversies surrounding X, are now more likely to make temporary spending pauses permanent.

Elon Musk’s repeated criticisms and alienation of advertisers since acquiring X last year have intensified. At one point, Musk even threatened a “thermonuclear name & shame” against advertisers who paused their spending, expressing concerns about his plans to loosen content moderation rules on X. Over 200 advertisers had halted spending on X in recent weeks after Musk endorsed an antisemitic conspiracy theory, leading to ads appearing alongside pro-Nazi posts. X, primarily reliant on advertising revenue, faces the risk of losing up to $75 million this quarter as brands distance themselves.

The situation escalated when, during the DealBook Summit in New York, Musk made inflammatory comments against advertisers. While apologizing for a previous antisemitic post, he accused advertisers of attempting to “blackmail” him. Singling out Bob A. Iger, Disney’s CEO, Musk explicitly urged, “Don’t advertise,” using an expletive multiple times to emphasize his point. Hours later, Linda Yaccarino, X’s CEO, attempted damage control by emphasizing Musk’s apology for antisemitism and urging advertisers to return. However, the call for a return to X faced skepticism from advertisers.

Ruben Schreurs, Chief Strategy Officer at Ebiquity, suggested that Yaccarino’s appeal aimed to align brands with X’s views on free speech but doubted its effectiveness. Many advertisers, according to Schreurs, were more inclined to terminate advertising on X unless there was a leadership change or a shift in control at the company.

Some marketers are advising brands to abandon X entirely. Tom Hespos, a media planning executive and consultant, recommended to a client to not only halt spending on X but also withdraw from posting on the platform. The current sentiment, he argued, does not align with a good conscience.

Musk’s rejection of advertisers has posed significant challenges for Yaccarino, an advertising industry veteran, in stabilizing X’s revenue. The last quarter of the year, historically lucrative for X, with major advertisers launching campaigns for Black Friday and holiday shopping, faces uncertainty due to the advertiser boycott.

Prominent brands like Apple, Disney, and IBM, which were significant spenders on X, have recently halted their campaigns. Meanwhile, some brands, including the National Football League and The New York Times’s sports site, The Athletic, have chosen to remain on the platform.

At the DealBook Summit, Musk acknowledged that an extended advertiser boycott could potentially bankrupt X. However, he anticipated that the blame for failure would be attributed to brands rather than himself, emphasizing that he would not pander.

Musk’s dismissiveness towards advertiser concerns has contributed to brands perceiving him as a risky partner. Steve Boehler, the founder of marketing management consultancy Mercer Island Group, noted that Musk’s comments reflect a significant level of uncertainty regarding X’s platform and his collaboration with advertisers. Boehler emphasized the personal aspect of business dealings, stating that businesses are full of people who appreciate being treated well and with dignity.

The future relationship between Musk’s X and advertisers remains uncertain, with brands carefully weighing the reputational risks and the controversial statements made by the platform’s owner.

David Faber
I am a Business Journalist of The National Era
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