Elon Musk’s recent remarks against advertisers leaving the micro-blogging platform X have accelerated the ongoing exodus of big-ticket advertisers. This has reportedly prompted the social media platform to come up with a new advertisement strategy.
Notably, on Friday (1st December), Walmart became the latest major advertiser associated with X till now, to join the exodus and part ways with Elon Musk-owned X. As per a Forbes report, Walmart stopped advertising on X as it found “alternate platforms to engage its customers”.
However, a Walmart spokesperson declined to tell Bloomberg when the change would come into effect and what led the company to take this decision to stop advertising on X.
With this, Walmart has joined the likes of IBM, Disney, Paramount, NBCUniversal, Lionsgate, and others in an ongoing exodus of advertisers from X.
Strikingly, the recent development pertains to Elon Musk’s remarks made during an interview in New York in front of an audience of the US business elite this week. Launching a scathing attack and asserting that he would not bow down to woke companies, visibly furious Musk said, “If somebody’s gonna try to blackmail me with advertising, go f**k yourself.”
Musk also asserted that the survival of X could be at stake. He added, “What this advertising boycott is going to do is kill the company.” “Everybody will know” that advertisers were responsible, he angrily added.
Musk claimed that X’s US ad revenue was down 60% and that the company had lost roughly $22 billion, which is half its value. Musk had purchased Twitter for $44 billion in October last year.
According to CNN, many advertisers have not only stopped advertising on X but also stopped posting altogether including flagship accounts of Disney, Paramount, Lionsgate, Sony Pictures, Universal, and Warner Bros. Discovery (CNN’s parent company) have not posted on the platform in more than 10 days.
Through the interview, Musk was slamming the advertisers who had abandoned his platform after leftist media watchdog ‘Media Matters for America’ published a controversial article, claiming that X (formerly Twitter) was placing advertisements of large companies next to anti-Semitic posts. Following those allegations, Elon Musk filed a lawsuit against the firm for making these claims.
The ongoing war of words and allegations of anti-Semitic barbs erupted earlier this month when Musk declared a tweet exposing an anti-Semitic conspiracy theory as the “absolute truth.” However, Musk later apologised for his tweet and said that it was “one of the most foolish things”. Additionally, he even undertook a trip to Israel to meet with Prime Minister Benjamin Netanyahu.
Elon Musk’s remark forces company to devise ‘survival plan’
As advertising revenues are going dry, an FT report has claimed that X is accelerating a plan to attract smaller and medium-sized businesses as big brands are boycotting the social media platform.
Speaking with the Financial Times, the company stated, “Small and medium businesses are a very significant engine that we have definitely underplayed for a long time. It [was] always part of the plan — now we will go even further with it.”
The company said that already this month, X has been forging tie-ups with third parties, such as US marketing start-up JumpCrew, to which it will outsource some ad sales to target small and medium-sized businesses.
Additionally, the firm plans to develop more subscription and data-licensing services.
Regarding Elon Musk’s remarks against outgoing advertisers, analyst Jasmine Enberg of Insider Intelligence said, “It doesn’t take a social media expert to know that publicly and personally attacking the people in companies that pay X’s bills is not going to be good for business.”
She added, “Most advertiser boycotts on social media companies, including X, have been short lived. There’s a potential for this one to be longer.”
As per data provided to AFP by market data analysis company SensorTower, around half of the social network’s top 100 US advertisers in October 2022 have already stopped spending altogether.
X (Formerly Twitter), is held privately and it does not release official figures, but all estimates point to a significant drop in the number of users.
Last week, the New York Times reported that X was at risk of losing up to $75mn this quarter from the advertising boycott and for this, it cited leaked internal documents. However, X disputed the figure to the FT and estimated that the fall was between $10mn and $12mn.
Apart from disengagements, dozens of highly followed accounts, including major brands such as Coca-Cola, PepsiCo, JPMorgan Bank, and Starbucks as well as many celebrities and media personalities have either stopped or reduced usage of X.
Despite Musk reducing the staff by two-thirds, X still maintains approximately 2,000 employees and faces significant fixed costs, including data servers and real estate. Another concern is the substantial debt incurred by Musk during the acquisition, which X is now responsible for, necessitating annual payments exceeding a billion dollars.