Elon Musk’s recent comments at the DealBook Summit have deeply affected advertisers, with many stating that they have no intention of returning to X, the social media company previously known as Twitter. Musk’s expletive-laden criticism of brands and his dismissive attitude towards advertisers who halted their spending have further strained the relationship between X and its advertising partners. Industry experts suggest that the temporary spending freezes seen in recent weeks may become permanent as advertisers perceive no value in returning to the platform. With the potential loss of up to $75 million this quarter, X faces significant challenges in maintaining its revenue stream.
Advertisers Will Not Return to X After Musk’s Comments
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Background
Elon Musk, the owner of X, recently criticized advertisers with expletives at The New York Times’s DealBook Summit. The incident has had a significant impact on advertisers’ willingness to return to X, with many marketing agencies reporting that brands are standing firm against advertising on the platform. Temporary spending pauses by advertisers are likely to become permanent freezes due to Musk’s comments.
Impact on Advertisers
Advertisers have no incentive to return to X after Musk’s derogatory comments towards them. The reputational risk associated with advertising on the platform outweighs any potential advertising value. Lou Paskalis, founder and CEO of AJL Advisory, stated that advertisers are not planning to come back to X due to these factors.
Musk’s History with Advertisers
Musk has a history of repeatedly criticizing and alienating advertisers since acquiring X. He threatened a “thermonuclear name & shame” against advertisers who paused their spending on the platform due to concerns about his plans to loosen content moderation rules. Brands are also concerned about Musk’s intentions to loosen content moderation, as it may affect their brand image and advertising placement.
Temporary Spending Pauses Becoming Permanent Freezes
Advisers have recommended that advertisers stop posting on X altogether. The temporary spending pauses that advertisers have enacted are likely to turn into permanent freezes, given Musk’s dismissive and offensive comments towards advertisers. This is a significant blow for X, as it will further reduce its advertising revenue.
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Risk of Revenue Loss for X
More than 200 advertisers have halted their spending on X, putting the platform at risk of losing up to $75 million this quarter. With advertisers refusing to return due to the reputational risk and Musk’s offensive remarks, X’s revenue will continue to suffer.
Musk’s Incendiary Comments at DealBook Summit
Musk’s incendiary comments against advertisers at the DealBook Summit worsened the situation. While he apologized for an antisemitic post, he accused advertisers of trying to “blackmail” him and explicitly told them not to advertise on X. His language and dismissive attitude towards advertisers further solidified their decision to distance themselves from the platform.
X CEO Appeals to Advertisers to Return
In an attempt to mitigate the damage caused by Musk’s comments, X CEO Linda Yaccarino appealed to advertisers to reconsider their decision. She shifted the focus to Musk’s apology for associating himself with antisemitism and portrayed X as a platform enabling information independence. However, it remains to be seen whether this appeal will be successful in convincing advertisers to return.
Marketer Recommendations to Abandon X
Some marketers are recommending that brands completely abandon X. Tom Hespos, a media planning executive, even advised his clients to not only stop spending but also to stop posting on the platform. The controversy surrounding Musk’s actions on X has made it difficult for marketers to ethically recommend their clients to continue being associated with the platform.
Challenges Faced by X in Stabilizing Revenue
X’s CEO and the entire company face challenges in stabilizing revenue without the support of advertisers. The last three months of the year are typically lucrative for X due to major advertisers launching campaigns for Black Friday, Cyber Monday, and the holiday shopping season. However, with many big-spending brands already halting their campaigns on X, the platform will struggle to make up for the revenue loss.
Brands That Have Halted Campaigns on X
Several major brands, including Apple, Disney, and IBM, have recently halted their campaigns on X. These brands are unwilling to associate their image with a platform that has been embroiled in controversy due to Musk’s actions. However, some brands like the National Football League and The New York Times’s sports site, The Athletic, have continued their presence on X.
Musk’s Acknowledgement of Potential Bankruptcy for X
Musk himself acknowledged that an extended advertiser boycott could potentially push X into bankruptcy. However, he also pointed out that the public would likely blame the failure on the brands rather than on him. This statement indicates that Musk remains unapologetic about his remarks and is not willing to make concessions to appease advertisers.
Brands View Musk as a Risky Partner
Musk’s dismissiveness of advertiser concerns has led brands to view him as a risky partner. The uncertainty surrounding Musk’s platform, his intentions, and his attitude towards advertisers make it difficult for businesses to trust him as a reliable and respectful partner. Businesses value being treated well, respected, and dealt with dignity, which is not demonstrated by Musk’s behavior.
In conclusion, Musk’s offensive comments towards advertisers at the DealBook Summit have had a significant impact on X. Advertisers have no incentive to return to the platform due to the reputational risk associated with advertising on X. Temporary spending pauses are turning into permanent freezes, further jeopardizing X’s revenue. Musk’s dismissive and offensive remarks, coupled with his history of criticism towards advertisers, have made brands view him as a risky partner. X faces significant challenges in stabilizing its revenue and regaining the trust and support of advertisers.
Source: https://www.nytimes.com/2023/11/30/technology/elon-musk-dealbook-advertisers.html
