After Elon Musk told the biggest advertisers on X, representing 90 per cent of its revenue, to “go fuck yourselves” a new report has shown that the company is looking to pivot its ad play to smaller businesses.
The report, published in the Financial Times, presented a bright future at X with SMBs more than capable of plugging the gaps left by the likes of Disney, Apple and IBM.
Over the weekend, Walmart stopped its advertising on X.
“We aren’t advertising on X as we’ve found other platforms to better reach our customers,” a Walmart spokesperson said.
A company representative told the FT that “small and medium businesses are a very significant engine that we have definitely underplayed for a long time” and that “it [was] always part of the plan — now we will go even further with it”.
Whether that was part of the plan all along is up for debate. Apple alone spent as much as US$100 million on advertising on X, for instance. It will take a lot of spending from a lot of SMBs to atone for that loss of spend.
X earlier tied up a deal with paid social agency JumpCrew to outsource some of its ad sales, targeting SMBs. The company told the FT that this work would be accelerated.
However, it would need to be accelerated and scaled rapidly to account for X’s flagging business. The company brought in around US$4 billion last year. This year, Insider Intelligence estimates it will drop to less than half that.
The company has two major expenses — its staffing bill (despite Musk firing more than half of its workforce) and the interest on the loans that Musk took out to buy the company. Reuters reported that these loans total about US$13 billion and the company has to pay US$1.2 billion in interest payments every year.
All of this debacle follows Musk’s promotion of antisemitic conspiracy theories on X. He later tried to clarify the statements in his interview with DealBook but advertisers seemed to remain unconvinced. X CEO Linda Yaccarino, a former ad exec herself, backed Musk.
Today @elonmusk gave a wide ranging and candid interview at @dealbook 2023. He also offered an apology, an explanation and an explicit point of view about our position. X is enabling an information independence that’s uncomfortable for some people. We’re a platform that allows… https://t.co/PSmSKRkJSq
— Linda Yaccarino (@lindayaX) November 30, 2023
Yaccarino and Musk making a success of their new SMB strategy seems unlikely. Plus, saying “To our partners who believe in our meaningful work — Thank You” is unlikely to woo companies back round.
Musk could likely support X purely with his personal fortune alone but that seems unlikely given his comments last week. Who knows what the next 12 months hold for X? We might be here bemoaning its demise next year.
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