Return of Advertisers to X: A Transactional Perspective Post-Musk’s Acquisition
After Elon Musk acquired Twitter and rebranded it as X, many advertisers abandoned the platform due to the surge in harmful and hateful content that Musk permitted. Although the situation regarding the content remains unchanged—if not deteriorating—advertisers are returning, according to Bloomberg. This resurgence appears motivated by the potential to curry favor with the Trump administration through their advertising investments.
Significant Growth in Advertising Revenue for X
Bloomberg reports, citing Emarketer data, that X is projected to earn €1.24 billion in U.S. advertising sales in 2024, indicating a remarkable 17.5% increase from the previous year. Furthermore, global ad revenues are expected to reach €2.09 billion by 2025, showing a 16.5% growth. However, it’s important to note that these figures are still significantly below the €4.16 billion in ad revenue generated in 2021, the last year before Musk’s takeover influenced the platform.
The Role of Musk’s Position in Advertising Dynamics
The rebound in ad sales seems to correlate with Musk’s influential role connected to the Trump administration—a dynamic that poses both opportunities and risks for brands. On one hand, the administration’s transactional nature suggests that monetary investments could yield favorable outcomes. Conversely, the administration can be vindictive, particularly Musk, who often marginalizes critics and utilizes power to enforce compliance.
Pressure on Brands to Increase Ad Spending
Earlier this year, the Wall Street Journal reported that X CEO Linda Yaccarino warned brands that a lack of advertising spending might attract government scrutiny. This pressure seems to be effective; for example, Interpublic Group, currently in the process of merging with Omnicom Group, has opted for a substantial ad investment in X, likely influenced by potential challenges from the Trump administration, as noted by the WSJ.
Content Quality and User Experience Concerns
The increase in advertising expenditures appears largely driven by the notion of favor trading. The platform’s content has not improved since the initial advertiser boycotts began. A recent study published in PLOS One revealed that hate speech escalated by 50% after Musk’s acquisition, with no significant decline in bots and inauthentic accounts that Musk previously identified as a major issue. Meanwhile, user engagement has decreased by 22% since Election Day, as competitors such as Threads and Bluesky see increased user activity.
Advertising in Controversial Contexts
It seems that some brands deem it worthwhile to advertise next to posts denying the Holocaust and promoting white supremacy if such placements could foster goodwill with the administration by supporting the interests of the president’s “first buddy.”
FAQ: Understanding the Advertising Landscape on X
Why are brands returning to X despite the content issues?
Many brands are resuming their advertising on X as they believe financial support could yield favorable outcomes with the Trump administration, despite ongoing concerns about harmful content on the platform.
What are the projected advertising revenues for X this year?
X is projected to generate approximately €1.24 billion in U.S. advertising sales for 2024, which is a 17.5% increase from the previous year.
How has content quality changed on X after Musk’s takeover?
Content quality has reportedly declined, with studies indicating a 50% increase in hate speech post-acquisition and minimal improvement in the reduction of bots or inauthentic accounts.
What kind of scrutiny might advertisers face by pulling back on ad spending?
Advertisers may face increased scrutiny from the government if they reduce their spending on X, as suggested by X’s CEO, Linda Yaccarino, to brands earlier this year.
Which competitors are gaining users while X is losing them?
Threads and Bluesky are gaining user activity while X has seen a 22% decline in engagement since Election Day, indicating a shift in user preference among social media platforms.