In a recent development, social media company X, previously known as Twitter, is bracing itself for a potential advertising revenue loss of up to $75 million by the end of the year. This backlash comes as numerous prominent brands have decided to pause their marketing campaigns on the platform, and the New York Times reported on the significant impact this could have on X, which Elon Musk owns.
The catalyst for this backlash was Musk’s controversial support of an antisemitic post on the platform last week. As a result, companies such as Walt Disney and Warner Bros. Discovery have decided to halt their advertisements on X, leading to concerns over the financial stability of the platform.
In response to these issues, X is bringing legal action against the liberal media watchdog Media Matters. The company asserts that Media Matters engaged in defamation by releasing a report arguing that advertisements for prominent brands such as Oracle and Apple were displayed alongside content promoting the Nazi party and Adolf Hitler. This legal action intensifies the existing tension surrounding X.
Internal documents obtained by The New York Times reveal that over 200 ad units from companies like Airbnb, Coca-Cola, Amazon, and Microsoft have either paused or are considering pausing their ads on X. This exodus of advertisers has put the platform’s revenue at risk with X estimating that $11 million is currently in jeopardy. However, the exact figure is subject to change as some advertisers return to the platform and others increase their spending.
Despite these challenges, X has not provided an official comment responding to the situation, leaving many industry observers curious about the company’s next move.
This decline in advertising revenue is not X’s first setback since Musk acquired the platform in October 2022. Civil rights groups have criticized the decrease in content moderation, resulting in a significant rise in what some would call hate speech on X. Consequently, the platform’s U.S. ad revenue has consistently experienced a year-over-year decline of at least 55 percent each month since Musk acquired the platform.
The future of X remains uncertain as it navigates these turbulent waters. With significant losses in advertising revenue and growing concerns about hate speech on the platform, X will need to address these issues promptly and effectively if it hopes to regain the trust of advertisers and users alike.