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X is racing to attract smaller and medium-sized businesses to prop up its flailing advertising business, following Elon Musk’s profanity-strewn attack on the big brands that are boycotting his social media platform.
The billionaire has accused major advertisers such as Disney, IBM and Apple, which halted spending on X following his endorsement of an antisemitic post, of “blackmail”. He told the boycotting groups to “go fuck” themselves.
Following those remarks on Wednesday, X is doubling down on investments to facilitate ad spending by smaller players, seeking to offset the steep revenue losses from the departure of larger advertisers that Musk said were “going to kill the company”.
“Small and medium businesses are a very significant engine that we have definitely underplayed for a long time,” the company told the Financial Times. “It [was] always part of the plan — now we will go even further with it.”
Already this month, X has been forging tie-ups with third parties, such as US marketing start-up JumpCrew, to which it will outsource some ad sales to target small and medium-sized businesses, the company said.
It added this push would now be accelerated, alongside plans to develop more subscription and data licensing services.
The latest advertiser exodus has raised fresh fears about the financial health of X. The New York Times reported last week that X was at risk of losing up to $75mn this quarter from the advertising boycott, citing leaked internal documents. X disputed the figure to the FT, estimating the fall was between $10mn and $12mn.
The Tesla chief’s $44bn takeover last year has also saddled the company with huge interest repayments on the debt, worth more than $1bn annually. Last month, X told employees it valued the company’s equity at just $19bn.
One former X senior sales executive said Musk would need to make a choice between keeping a large ads team or moving towards cheaper solutions, such as further outsourcing sales and adopting an automated “self-service small business platform”.
Such a shift would be difficult, the former executive added, as X’s ads offering to businesses lags behind rivals such as Meta, Google and TikTok due to a historical lack of “commitment to building a world-class ads platform”.
Some industry executives said a switch in advertising strategy would help, as there were sectors less inclined to care about Musk’s words, such as sports gambling. Some right-wing influencers, such as Andrew Tate, have pledged to spend millions on advertising on the platform.
However, other industry executives added that Musk’s latest outburst would probably lead to fresh freezes in spending.
“Marketers have a number of major platforms to choose from and they would tend to gravitate to those that don’t tell you to f-off,” said Jonathan Miller, chief executive of Integrated Media, which specialises in digital media investments.
Linda Yaccarino, X’s chief executive hired by Musk for her deep connections to the advertising world, was bombarded by calls from friends and associates last weekend during her daughter’s wedding, according to several people familiar with the matter. They urged her to quit to protect her reputation.
On Thursday evening, Yaccarino instead sent a company-wide email cheering on X’s stance on fighting “censorship” and stating that Musk had shared an “unmatched and completely unvarnished perspective” and vision for the future.
“Our principles do not have a price tag, nor will they be compromised — ever,” she wrote. “And no matter how hard they try, we will not be distracted by sideline critics who don’t understand our mission.”