Elon Musk’s verbal attack on advertisers who are shunning .
“They want to blackmail me with publicity, with money? Screw you. » The sentence, belched by the billionaire on Wednesday during a public interview in New York, continues to resonate.
Elon Musk was referring to the suspension, by many leading brands, of their advertising presence on X.
A first wave of advertisers took the initiative in August after the media observatory Media Matters reported big-name advertisements backed by a neo-Nazi account.
Others have joined them in recent weeks, notably Apple and Disney, in reaction to a tweet from Elon Musk, which relayed an anti-Semitic conspiracy theory.
The majority shareholder of the social network apologized for this message on Wednesday, but immediately went on the offensive against refractory advertisers.
“You don’t have to be an expert to understand that attacking companies that pay X’s bills is not good for business,” commented Jasmine Enberg of Insider Intelligence. “Most advertiser boycotts on social media have been short-lived, but this one could last. »
A deadly desertion for the network?
Elon Musk himself also mentioned, on Wednesday, a possible bankruptcy of the platform.
“What will happen is that this boycott will kill the company,” warned Elon Musk. “And the whole world will know that these advertisers killed the business.” »
The businessman and his team have launched several paid plans, but the social network remains free by default and still depends almost entirely on its advertising revenue.
Even before the latest controversy, Insider Intelligence anticipated a 54% contraction in X’s turnover from the sale of promotional space, bringing it down to US$1.9 billion this year.
“The fact that Musk refuses to seek a compromise could accelerate the exodus of advertisers,” recognizes Dan Ives of Wedbush Securities.
According to information provided to AFP by market data analysis company SensorTower, half of the social network’s top 100 American advertisers in October 2022 have already completely stopped their spending.
By withdrawing, “you are leaving the field open to your competitors,” nevertheless warns Kellis Landrum, co-founder of the digital marketing agency True North Social, an opportunity that some companies could take advantage of.
Advertisers could also choose to stay for lack of an equivalent alternative, Meta’s new network, Threads, being, for the moment, not a legitimate competitor, argues the manager.
As for redistributing your advertising budget towards digital giants, “you can spend as much money as you want on Google Ads [la régie publicitaire de Google]but after a certain point, your return on investment decreases,” he says.
Jasmine Enberg insists that “X is not an essential platform for many advertisers, so temporarily withdrawing from it is quite painless” – for them.
The specter of debt
If X does not communicate official figures, all estimates point to a significant drop in the number of users. SensorTower estimates it at 45% for monthly users at the start of the fourth quarter, compared to the same period last year.
Added to this phenomenon is the apparent disengagement of dozens of widely followed accounts, notably from large companies such as Coca-Cola, PepsiCo, JPMorgan bank and Starbucks. These big names have not published content for weeks although they previously had a regular presence.
None of the ten contacted responded to AFP’s requests.
“The influence of X has always been greater than its weight in advertising,” explains Jasmine Enberg. “It was an important place for brands to connect with consumers. […] But if content declines, it will become even more difficult to generate advertising revenue. »
Even having reduced its workforce by more than two thirds, X still has around 2,000 employees and remains subject to significant fixed costs (premises, servers).
Another threat is the colossal debt burden contracted for its acquisition by Elon Musk but now borne by X and which provides for the payment of more than a billion dollars in interest and principal each year.
On Wednesday, the fiery boss suggested that he would not bail out the former Twitter in the event of a financial impasse, even if he had ample means, adopting a die-hard position.
“If the company fails because of an advertiser boycott,” he claimed, “it will go bankrupt. »