By Jess Jones
The chief executive of media analysis giant Ebiquity advises 70 of the 100 biggest advertisers globally, including Unilever, General Motors, HSBC and Pepsico.
In September of last year, around the time when Elon Musk took over Twitter, Nick Waters said about half of Ebiquity’s biggest brand clients were regular active advertisers on Twitter.
At least, that was before the billionaire father of 11 decided to cut costs.
This move itself made sense, said Waters. “To make it a viable business this was not an unreasonable thing to do, Twitter had been losing money.” It was the way he went about it that was the problem.
Musk scrapped a large portion of Twitter’s content moderation resources — the part of the company that removes offensive content from the site.
“Big brand owners are very, very concerned about what we call brand safety, about where the ad appears,” explained Waters, “and Twitter is a pretty grim platform for the sort of content posted on it.”
Taking the content moderation out left advertisers worried that their ads would appear in or around objectionable content that, by association, could result in a knock to the brand’s reputation or sales. So a lot of them came off.
Waters said Ebiquity advised clients to leave the site and “see how things settled down, see if the dust settles”, before returning.
They could not have foreseen all of the Musk madness that followed over the next year though.
He has reinstated banned accounts, such as those of Alex Jones and Graham Linehan, and introduced a paid subscription service called ‘Twitter Blue‘.
Most controversially of all, he rebranded Twitter to X and killed the iconic Larry the Bird logo.
Confidence began to perk up a little bit in June when Musk brought Linda Yaccarino in as the chief executive. Yaccarino had a good reputation amongst advertisers from her days as chairman of global advertising and partnerships for NBCUniversal.
The former TV claimed in September that 90 per cent of advertisers had returned from last year and X is set to turn a profit in early 2024.
But non-profit Media Matters recently compiled a list ofmore blue-chip companies who have pulled ads in response to antisemitic content, triggered by the war in Gaza. In response, Musk filed a lawsuit.
And Ebiquity’s data showed that this September, almost a year since the Musk coup, 90 per cent of its clients had still not returned to the social media platform, now called X.
“Everybody sort of stayed off because they weren’t confident and the more Musk described himself as a free speech absolutist the more everybody got concerned by that,” Waters explained.
Then, about two weeks ago, the Tesla and SpaceX owner made some “rather bold comments”.
Of course, Waters was referring to Musk’s outburst in which he told fleeing advertisers to “go fuck yourself”.
“I don’t want them to advertise,” he said at the New York Times DealBook Summit in New York. “If somebody has been trying to blackmail me with advertising, blackmail me with money, go fuck yourself.”
This may have been the nail in the coffin for many advertisers.
Following this, “there’s no reason why a major brand owner that is worried about its brand image would return to the platform. It’s just too high risk and there’s plenty of other places where you can reach your potential customers”, Waters added.
All of this is not to say X will entirely flop as an advertising platform though.
A lot of small to medium-sized enterprises (SMEs) use X as a way of advertising and the tech company is now doubling its investments to increase ad spend by the smaller fish.
“Small and medium businesses are a very significant engine that we have definitely underplayed for a long time,” X told the Financial Times at the start of December. “It [was] always part of the plan — now we will go even further with it.”
SMEs may be far more concerned with reaching potential customers than brand safety, according to Waters.
“So it won’t necessarily collapse as an advertising platform but I don’t think Musk necessarily views it as an ad-only business and I also think he doesn’t necessarily views it as a subscription revenue business. He may be looking at its potential as an ‘everything app’,” he said.
Musk is hoping to bring in more revenues by ‘bundling’ services as he transforms X into a super app, similar to WeChat in China, where you can message people, exchange information and buy goods and services.
While everything apps have taken off in eastern countries like China and Indonesia, some have argued there is not the same appetite for them in the West and people are unlikely to trust Musk with their money.
