After Elon Musk's 'F' word outburst, what's next for X?
What's the story
Social media platform X might lose more advertisers because of Elon Musk's recent outburst against major brands, as per a Reuters report.
Walt Disney and Warner Bros Discovery had already stopped advertising on X when Musk backed a so-called 'antisemitic' post.
The billionaire later apologized but went on to lash out at those advertisers who left X, accusing them of "blackmail," and throwing in the 'F' word.
Insights
Musk's support for a tweet led advertisers to withdraw ads
Earlier this month, Musk backed a tweet asserting that Jewish people have a "dialectical hatred" toward white people.
"Jewish communities have been pushing the exact kind of dialectical hatred against whites that they claim to want people to stop using against them," a user wrote on X.
The content of this post is commonly associated with white supremacist conspiracy theories.
Musk responded to this post by saying, "You have said the actual truth." And that's probably what infuriated the advertisers.
Insights
Musk targeted Disney's Bob Iger in his outburst
He seemed to single out Walt Disney CEO Bob Iger in his outburst against the advertisers.
At the New York Times DealBook event, speaking about why they pulled their ads from X, Iger explained that an association with X was "not a positive one for us."
At the same event a day later, Musk in response exclaimed, "Go. F***. Yourself. Is that clear? Hey Bob, if you're in the audience, that's how I feel."
What Next?
Ad spending decline and potential impact on political ads
Ad spending on X in the United States has dropped by 64% from January to October this year compared to the same timeframe in 2022, as per media analytics firm Guideline.
The platform also risks losing revenue from political candidates, with US political ad spending predicted to hit a record $10.2 billion in 2024.
Mike Nellis, CEO of digital marketing agency Authentic, intends to discuss with clients whether to advertise on X.
Insights
Why are advertisers leaving X?
Advertisers are unhappy with X due to its loose content moderation, as they don't want their ads to appear alongside inappropriate content.
Major brands like Apple, IBM, Sony, Disney, Comcast, and Paramount made up 7% of total US ad spend on X through October this year.
At the DealBook summit, representatives from these brands expressed their disappointment at Musk's remarks and shared a common sentiment, "It's obvious (Musk) doesn't want us there and we don't want to be there."
Details
Advertisers prioritize brand protection
On Musk's tirade, marketing expert Lou Paskalis said, "Companies need to protect the brands they work for."
"This isn't advertisers getting together in a secret clubhouse to support an agenda," Paskalis added.
On the other hand, X CEO Linda Yaccarino, in a memo to employees, defended the platform's commitment to remaining open and uncensored.
Insider Intelligence analyst Jasmine Enberg suggested that if X fails, it would be due to Musk's actions, not the advertisers.
Insights
How many advertisers left on X? Just one?
An executive at a major global ad-buying firm, who declined to be named, said only one major client was continuing to advertise on X.
"(Musk) seems to be hell bent on destroying the platform," the executive said.
Mike Nellis, CEO of Authentic, a digital marketing agency that works with Democratic candidates including US President Joe Biden, said, "Telling major advertisers and Bob Iger to go F themselves might be the final nail in the coffin."
Insights
Will more companies pull their ads from X?
DA Davidson & Co analyst Tom Forte stated, "We believe there is a risk that more companies will stop advertising on X; at least on a short-term basis."
He also noted, "It is fair to say this makes the company's subscription efforts more important and potentially means it may need more than half its revenue to come from subscriptions."
Furthermore, research from Data.ai reveals a decline of approximately 19% in US monthly active users since Musk acquired Twitter last year.