X, the social media platform formerly known as Twitter, is facing a potential loss of up to $75 million in advertising revenue by the end of the year due to a boycott by major brands following its owner, Elon Musk’s, endorsement of an antisemitic conspiracy theory. Internal documents viewed by The New York Times reveal that concerns about Musk and the platform extend beyond companies like IBM, Apple, and Disney, which paused their advertising campaigns. The documents list over 200 ad units from companies such as Airbnb, Amazon, Coca-Cola, and Microsoft, many of which have either halted or are considering pausing their ads on the platform.
According to the documents from X’s sales team, the advertising freezes during the crucial holiday season, the company’s strongest quarter, could result in a significant revenue loss. The last reported fourth-quarter earnings in 2021 were $1.57 billion, with nearly 90% coming from advertising. Since Musk’s acquisition of Twitter last year, some brands have been hesitant to advertise due to concerns about his behavior and content moderation decisions, resulting in a nearly 60% decrease in U.S. advertising on the platform this year.
X acknowledged that $11 million in revenue was at risk, with the figure fluctuating as some advertisers returned and others increased spending. The internal documents provide a comprehensive view of the impact of advertising lapses this month, with over 100 brands listed as having “fully paused” their ads and dozens considered “at risk.” Many paused their ads after Musk’s endorsement of the antisemitic conspiracy theory on November 15.
The brands that have paused their ads on X range from political campaigns to fast-food chains to tech giants. Airbnb halted over $1 million in advertising, while Uber cut ads worth over $800,000 in the U.S. and international markets. Netflix’s paused ads were estimated to be nearly $3 million. Various Microsoft subsidiaries also stopped advertising, potentially leading to a loss of over $4 million in revenue for X’s fourth quarter. Amazon’s units for books and music and one subsidiary of Google also paused advertising.
Brands like Google and NBC Universal, which paused spending, continued to post content on the platform without paying X to reach a broad audience. The recent controversy stems from Musk’s endorsement of an antisemitic conspiracy theory, causing widespread backlash and a boycott by several advertisers.
Some advertising agencies and clients had already reduced spending on X after Musk’s takeover, seeking alternatives on platforms like LinkedIn and TikTok. Brands are increasingly considering their options, emphasizing the importance of platform owners exercising discretion in personal beliefs and political stances.
X’s chief executive, Linda Yaccarino, is leading efforts to woo back advertisers, especially during the holiday season, to compensate for revenue shortfalls earlier in the year. Despite Musk’s recent controversies, the company has faced challenges in attracting advertisers, and the boycotts have put a dent in its revenue expectations for the crucial quarter.
In response to the advertising boycott and revenue concerns, Musk has expressed defiance, stating that X is a defender of free speech and blaming a report by Media Matters for the decline in ad sales. The company has also filed a lawsuit against Media Matters, accusing the watchdog group of manipulating algorithms to create images of advertisers’ paid posts next to racist and incendiary content.
Musk’s recent statement regarding the donation of advertising revenue associated with the war in Gaza to hospitals in Israel and the Red Cross/Crescent in Gaza is part of X’s effort to counter the negative publicity and highlight its commitment to free speech. However, the internal documents suggest that the challenges for X go beyond the impact of a single controversy, raising questions about the platform’s ability to retain and attract advertisers in the long term.