More and more marketers are pulling their advertisements from X, exacerbating the obstacles that the company is facing, fortunately within the crucial holiday season.
Earlier this month, several top brands revealed that they were halting their X advertisements due to concerns that their promotions were appearing alongside offensive content in the app. After a report by Media Matters published on November 17th found that IBM’s X advertisements were running alongside material “promoting Adolf Hitler and the Nazi Party,” IBM became the first major brand to withdraw its X ad spend.
On the same day, X owner Elon Musk shared an anti-Semitic conspiracy theory through his X account, prompting even more brands to pause their X campaigns, including Apple, Lionsgate, Disney, and others.
Musk and his team have filed a lawsuit against Media Matters, hoping to prove that its research was flawed and biased against the platform. However, another report from NewsGuard has supported Media Matters’ findings, leading to another group of advertisers pulling their spending from the app.
According to the New York Times, the growing advertiser boycott is set to cost X approximately $75 million in ad revenue this year, further impacting its bottom line. This will disrupt X’s optimistic forecast of returning to profitability in early 2024, a forecast that was already unlikely based on X’s earnings and expenses.
Musk has estimated that X’s ad revenue is down around 50% overall year-over-year, meaning the platform could have obtained around $2 billion in ad revenue for 2023 if it followed previous trends from 2022. This forecast doesn’t take into account other sources of income, such as subscriptions and data licensing, but X had been aiming for around $2.6 billion for the full year, mainly from advertisements despite its focus on other components.
X’s expenses are currently estimated to be around $2 billion to $2.8 billion per year. Looking at these figures, it’s clear where X’s previous predictions of returning to profitability were coming from.
It’s important to note that the estimate of “operating” profitability, as mentioned by X CEO Linda Yaccarino, excludes the substantial debt load that X took on as part of Elon’s takeover of the app. In that deal, X must also pay back an additional $1.5 billion in debt each year, in addition to its operating costs. Therefore, while X, the service, might have been on track to return to profitability, it still would have posted a billion-dollar loss for the year regardless. Worth noting too,
