A recent report by the Financial Times reveals that X, the social media platform which has been grappling with the fallout from Elon Musk’s offensive remarks to advertisers, is now pivoting towards small and medium-sized businesses (SMBs) to revive and strengthen its revenue streams. The move comes as several major brands paused or completely ceased advertising on X following Musk’s contentious statements about them at the New York Times DealBook Summit.
Key Takeaway:
Amidst the fallout from Elon Musk’s offensive comments to major advertisers, X aims to salvage its revenue by appealing to small and medium-sized businesses. The platform’s pivot towards SMBs was allegedly part of the company’s long-term plan, according to a representative. However, skepticism remains as numerous brands have already stated their intention to permanently cease advertising on X. The future of X hangs in the balance, as Musk suggests that an advertiser boycott could spell the end for the platform. Nevertheless, X is actively exploring alternative revenue sources and intensifying efforts to attract SMB advertisers.
Musk Warns of Impending Doom, but X Seeks Alternative Avenues
During the interview, Musk predicted that the loss of major advertisers would spell disaster for X, declaring, “What this advertising boycott is going to do is it’s going to kill the company.” However, a company representative has since clarified that focusing on SMBs was always part of X’s plan, asserting that “small and medium businesses are a very significant engine that we have definitely underplayed for a long time” and that X will now intensify its efforts in this direction.
While this announcement may seem like a positive development for X, it could be viewed skeptically when considering that many of the large brands that withdrew their advertising dollars from the platform are unlikely to reverse their decisions. The New York Times reported that numerous marketing agencies have advised advertisers not to resume posting on X, with some indicating that their temporary ad halts would likely become permanent. Notable brands such as Apple, Disney, Comcast, and Walmart have all ceased advertising on X. The platform witnessed around 200 advertisers suspend their spending after Musk endorsed an antisemitic conspiracy theory in a tweet.
Damage Control Efforts May Prove Insufficient
Musk’s subsequent attempts to clarify his controversial remarks were met with limited success, leaving a lingering sense that irreparable damage has been done to X’s reputation. In response to Musk’s claims that the advertisers would be seen as responsible for X’s demise, interview Andrew Ross Sorkin challenged Musk, suggesting that his own actions and inappropriate statements were the root cause of advertiser discomfort. Musk, undeterred, retorted, “Tell it to Earth. Let’s see how Earth responds to that. We’ll both make our cases, and we’ll see what the outcome is.”
Despite the uncertainty surrounding the future of X, the question remains as to whether Musk, as the world’s wealthiest individual, would allow the platform to fail. Sorkin pointed out that Musk possesses substantial resources to sustain the company independently. Musk’s response implied that he may not intervene, stating, “I mean, if the company fails because of an advertiser boycott, it will fail because of an advertiser boycott. And that will be what bankrupt the company — and that’s what everyone on Earth will know…Then it will be gone. It will be gone because of an advertiser boycott.”
X Shifts Focus to SMB Advertisers and New Revenue Sources
Notwithstanding the uncertainty surrounding X’s future, the company is actively exploring new avenues for ad revenue. The Financial Times highlights X’s partnership with marketing firm JumpCrew, through which it plans to outsource ad sales and target SMBs. The report indicates that X will expedite its efforts to reach SMBs. X CEO Linda Yaccarino has faced pressure to distance herself from Musk’s remarks, but so far, she has shown support for him and defended X’s mission in an internal email, emphasizing that the company’s principles are non-negotiable.
