This time of year, companies tend to open their wallets wider to promote their wares online, and it’s high season for many of the platforms where they choose to advertise. In the case of X, the former Twitter, those ad dollars are the site’s lifeblood.
In the last quarter of 2021, the year before famed tech executive Elon Musk purchased the social media company, it reported $1.57 billion in revenue. Almost 90% of that came from ads.
That business model was already showing signs of wear after the takeover, given Musk’s habit of writing and endorsing controversial posts and what critics call a more permissive environment for disinformation and hate speech on the platform. Now, with the Israel-Hamas war raging, another Musk post has accelerated the flight of advertisers.
New York Times journalist Ryan Mac has been reporting on these events. He spoke with Marketplace’s Lily Jamali about how fleeing advertisers view the problem and how the fallout could affect X.
The following is an edited transcript of their conversation.
Ryan Mac: A couple of weeks ago, he decides to start engaging with an account that’s promoting a white nationalist conspiracy theory called the “great replacement” theory. And Elon Musk decides to engage with this tweet and call it “the actual truth.” And so this sets off alarms everywhere. Brands, companies who are advertising don’t want to be associated with this blatant kind of antisemitic rhetoric.
Lily Jamali: Yeah, let’s look at that. What are some of the brands that are suspending advertising on the platform in response to that specific reply post that you just mentioned?
Mac: So some of the first movers were IBM, Apple, Lionsgate, Disney, we’ve reported on Netflix starting to pause, Google. And some of the initial advertisers were fueled by this report by this left-wing group called Media Matters that showed some of these advertisers’ ads being placed next to white nationalist and Nazi content. They said, not only is Elon Musk endorsing these antisemitic and white nationalist conspiracy theories, but also advertisers’ content is being shown against this white nationalist, Nazi content that we found.
Jamali: And several of the companies that you just ticked off on that list are tech companies. I’ll add to it: Microsoft, Amazon, Airbnb all pulling back. Is there anything we should glean from that?
Mac: I think tech is seen as a more liberal kind of group of companies and leading in some ways, but these aren’t just tech companies that are pulling out. There’s Jack in the Box, for example, Coca-Cola, Bank of America. I mean, these are massive brands, Fortune 500 companies that spend a lot of money on X. And the reason why is they want to have an alternative to a Facebook-, Google-dominated ad world. And they see platforms like X and TikTok as great places to go to attract customers. Now, they’re not going to do that if the head of the company is engaging with this kind of content.
Jamali: And you and your team got a look at internal documents at X, which reveal the total ad dollars the company is worried about losing. What did you find?
Mac: So these documents were interesting. I mean, these are sales documents, they’re shared within the sales team, and folks are just kind of detailing the loss in ad dollars, or the potential loss in ad dollars. You know, brands that had already paused, or brands that were at risk of pausing. These are sometimes in the high hundreds of thousands, even in the million dollars of expenditures. And they were just detailing what was at risk for the rest of Q4 till the end of December. And that was last week, you know, they were saying up to $75 million is at risk right now. And we don’t know if that’s going to come back. And I think beyond kind of this quarter, there is a big question of will these advertisers return? Some of them have just stopped tweeting completely, not just advertisements. They have stopped using the platform in protest of some of this stuff. And so it is a big concern for the company, especially considering how much revenue is derived from, from advertising.
Jamali: Let me ask you about the relationship between Elon Musk and Israeli Prime Minister [Benjamin] Netanyahu. They were on what looked like an apology tour of sorts earlier this week. How would you characterize what that was?
Mac: Well, it’s funny because it’s not even the first meeting post an antisemitic comment. Back in September, Elon Musk hosted Netanyahu at a Tesla factory. And Netanyahu at the time had a pretty low opinion rating in his own country. So you know, both of them, in some ways, were using each other to burnish their reputations back then. Fast-forward a couple months later, now Israel’s in a war, Elon Musk has once again engaged in antisemitic conspiracy theory. And he flies over to Israel to see some of the things that Netanyahu wants to show him with regards to some of the places where the attacks happened.
Jamali: Are your sources telling you anything about whether that trip made a difference, whether it might actually bring some advertisers back to the platform?
Mac: I think it’s too early to tell. These brands, sometimes they can move fast, but oftentimes they are cautious. So I think it’s kind of a wait-and-see at this moment. I think it’s not a great sign that a lot of these brands have stopped tweeting completely. If they’re starving X of their own original content, it’s not going to be a good sign for whether or not they advertise.
Jamali: The relationship between Musk and Netanyahu is kind of confounding if you are just coming to it fresh. The idea that you have somebody who is pretty regularly being accused of antisemitic posts and commentary, side by side, kind of on the regular lately, with the head of state of Israel. I don’t know how to process that.
Mac: Yeah, I think it’s hard. The political lines during this conflict have been strange, and it’s actually quite hard to group Musk in any one political camp. He’ll say he was once a liberal and voted for Obama, but all his activity, especially recently on X, is evidence kind of a rightward shift. But I think the best way to view them is these are two very powerful people who need each other, who need each other’s reputations, for different reasons. And Elon Musk has been attractive to a lot of world leaders at this point. He met with [Turkish President Recep Tayyip] Erdoğan recently. He’s met with [former Brazilian President Jair] Bolsonaro, he has met with [Indian Prime Minister Narendra] Modi. He is himself a political player and one that a lot of politicians love to associate with. And so I think, just through that lens as well, not just viewing him as a tech CEO but essentially a world leader, you start to understand that this goes far beyond traditional business.
We reached out to X for a comment and got this response: “Busy now, please check back later.” The standard reply, it seems, to most press inquiries these days.
When you Google “Elon Musk” now, it’s hard not to notice how many of the results have to do with his posts on X. There was one that made the rounds just this week in which Musk voiced support for the Pizzagate conspiracy theory, which led to a shooting at a Washington restaurant back in 2016. Musk pulled that post.
Incidentally, Musk’s startling statements aren’t limited to what comes off his keypad. On X itself Wednesday, Ryan Mac posted an update of sorts on the tech magnate’s response to the advertiser exodus:
“With X CEO Linda Yaccarino sitting in the room, Elon Musk just told advertisers who have pulled out of X — including Disney CEO Bob Iger — to go fuck themselves.”
The ongoing spectacle could cast a pall over the long-awaited release of the Tesla Cybertruck, which happens Thursday. Andrew J. Hawkins at The Verge compared the procession of Musk’s recent scandals to “an indecipherable rat king of bad news that most people would prefer to tune out.”
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