Elon Musk’s recent expletive-laden outburst at major advertisers on X, the platform formerly known as Twitter, was the latest in a long line of controversial remarks from the billionaire tech mogul.
However, Musk’s comments may have gone too far for advertisers this time, who experts warned may opt not to continue spending on the platform.
“I think the era of advertising is well and truly dead at Twitter, at X,” said Lou Paskalis, the CEO and founder of the marketing consultancy AJL Advisory.
Several major companies — including Disney, Apple, IBM, Comcast, Lionsgate, Warner Bros. Discovery, Sony Pictures and Paramount — paused their ad spending on the platform en masse last month as Musk faced renewed accusations of antisemitism.
The pullback started after Musk appeared to endorse an antisemitic conspiracy theory on X in a reply to another user’s post in mid-November, calling it the “absolute truth.”
Just one day later, a report from the left-leaning media watchdog Media Matters for America accused X of placing ads for mainstream brands next to pro-Nazi and white nationalist content.
As advertisers fled, Musk attempted to contain the fallout with a trip to Israel, in which he met with Israeli Prime Minister Benjamin Netanyahu and toured a kibbutz that was attacked by Hamas militants on Oct. 7.
However, upon returning to the U.S., Musk lashed out at major advertisers who had stopped spending on the platform.
“If someone is going to try and blackmail me with advertising, blackmail me with money, go f— yourself,” he said at The New York Times DealBook Summit. “Go f— yourself. Is that clear? Hope it is.
“Hey Bob, if you’re in the audience,” Musk added, in an apparent response to Disney CEO Bob Iger, who earlier in the summit addressed his company’s decision to halt spending on X.
Paskalis suggested that Musk already knew advertisers weren’t going to return to the platform before taking the stage at the DealBook Summit.
“Either out of hubris or a plan that I don’t understand, an end game I really don’t understand, he wanted to put the sword in the beast and say, ‘I don’t care about advertisers. Their concerns don’t concern me. I don’t need you to succeed,’” Paskalis told The Hill.
Advertisers flee as X bleeds money
Musk’s decision to spurn ad money comes after a year of deep financial losses for X, which the billionaire purchased for $44 billion last October.
Advertisers similarly pulled away last year after Musk initially took control of the company and rapidly began making changes. The billionaire fired top executives, laid off thousands of staff and followed through on promises to walk back content moderation policies and reinstate previously banned accounts on the platform.
By the end of November 2022, Media Matters reported that half of Twitter’s top 100 advertisers were no longer spending on the platform, and Musk was warning employees that the company could go bankrupt.
Since Musk’s chaotic takeover, advertisers appear to have slowly returned to X. CEO Linda Yaccarino said in September that 90 percent of the company’s top 100 advertisers were back, although some reports have indicated that ad revenue at X remains well below pre-Musk levels.
Wedbush Securities analyst Dan Ives said he now estimates that the social media company is worth less than $10 billion.
Why Musk’s latest comments are a turning point
Even more so than telling advertisers to “go f‑‑‑ yourself,” Paskalis said that Musk’s decision to publicly call out Iger has companies concerned.
“That is the more concerning thing for corporate America, that he would go so far to call out the CEO of somebody who’s stopped advertising,” he said. “That freezes large companies. It paralyzes them because they never want to put their CEO in any kind of thing that would get them caught up in the middle of the culture war.”
“In that context, if X paid me to advertise on X, if they actually paid a premium, money back to the client, it’s still not worth the reputational risk,” Paskalis added.
Jasmine Enberg, a principal analyst at the marketing research company Insider Intelligence, also said noted that because X is not essential for most advertisers, it is a “relatively painless and easy decision” for companies to cut spending on the platform.
“If it was a platform where advertisers got a strong return on investment, some of them might be more willing to overlook Musk’s antics,” Enberg said.
“But as it stands, X is a very small part of the digital advertising landscape, and there are other platforms and a growing list of other platforms where advertisers can spend their money,” she continued. “So why spend on a platform where the owner has explicitly told them not to.”
With the existence of these additional venues for advertising, Tom Hespos, who runs the consulting firm Abydos Media, said it has been easier for some of his clients to stop spending on the platform.
“Continuing to invest in Twitter when we have other options and they no longer have the clout and the control that they once did, again, the decision becomes a little bit more easy,” he told The Hill.
Hespos has begun recommending that some of his clients stop posting on X, in addition to halting ad spending.
“In the instance where I have a client that maybe hasn’t invested so much in Twitter, X, whatever its calling itself these days, it’s a consideration to pull not just advertising but to get off the platform entirely,” he said.
“Clients do not want to answer the questions surrounding, ‘Why are you supporting somebody who’s posted antisemitic things? Why are you supporting somebody who tells advertisers to f‑‑‑ off?’” he added.
Several major companies that halted ad spending on X seem to have taken a similar approach, with flagship accounts from Lionsgate, Warner Bros. Discovery, Sony Pictures and Paramount going silent in mid-November.
“We’re hitting a tipping point, I think, where the disdain for advertisers and the creation of a safe space for things like hate speech and antisemitism, those aren’t things that advertisers want to support through implied endorsement or any other methods,” Hespos said.
How Musk, X are trying to stay afloat
Amid the storm, X is reportedly working to attract ad spending from smaller and medium-sized businesses. The company told the Financial Times that the effort was “always part of the plan,” but it now plans to “go even further with it.”
Yaccarino has also attempted to attract advertisers with Musk’s “free speech” vision of the platform.
“X is enabling an information independence that’s uncomfortable for some people,” she wrote in a post last week. “We’re a platform that allows people to make their own decisions.”
“And here’s my perspective when it comes to advertising: X is standing at a unique and amazing intersection of Free Speech and Main Street — and the X community is powerful and is here to welcome you,” Yaccarino added. “To our partners who believe in our meaningful work — Thank You.”
However, experts expressed doubts about how effective such an approach will be at countering recent losses.
“Without those big brands, it’s going to be incredibly difficult for X to be able to pay its bills,” Enberg said. “Musk has not yet been able to roll out another sustainable monetization model that would be able to bring in as much revenue as advertising has brought in for the platform.”
While Ives, the Wedbush Securities analyst, acknowledged that X could use smaller businesses to “fill some of the void” left by major advertisers, he emphasized that they can’t replace them.
“I do think there’s going to have to be some olive branch to the advertisers to get them to come back at some point,” he said.
Ives noted that despite the current “groundswell moment,” he’s not entirely sure advertisers are done with the platform.
“On one hand, engagement on X has been, I think, significant,” he said. “Advertisers are focused on engagement, so do they come back slowly? I mean, that’s really that’s going to be the debate.”
“The world has short memories,” Ives added.
Updated at 11:01 a.m.