Elon Musk's social media platform, X, formerly known as Twitter, is facing skepticism as it strives to generate $100 million from political advertising in 2024. This move is seen as an attempt to offset revenue losses resulting from the departure of prominent brands from the platform.
In line with Elon Musk's position as a "free speech absolutist," X, which is now under his ownership, overturned a ban on political advertising that former CEO Jack Dorsey had imposed earlier this year. Despite the increased investment, skepticism arises as the company endeavors to position itself as a global town square, emphasizing brand safety and election integrity.
Elon Musk speaks onstage during The New York Times Dealbook Summit 2023 at Jazz at Lincoln Center on November 29, 2023, in New York City.
X CEO Linda Yaccarino's goal of attaining $100 million annually in political ad revenues during a significant election year has been met with doubt from industry insiders, as reported by the Financial Times.
X has formed a dedicated team, holding numerous meetings with digital marketers, campaigns, and political groups. While X did not confirm financial targets, communication-related to the event revealed efforts to improve targeting.
Skepticism intensifies, especially among left-leaning groups, given X's previous modest performance in political advertising during the 2018 midterms. Industry figures question the ambitious targets, citing the assembled team's lack of Washington experience and the perceived ineffectiveness of the ad offerings.
Notably, the Democratic ad group Authentic observes weaker results on X, attributing it to Elon Musk's influence and driving moderates and progressives away. The platform's data indicates varying spending by political nominees, with Donald Trump's team-leading in expenses. Moreover, Elon Musk's recent confrontations with major advertisers further complicate X's advertising situation.
X's 2023 Ad Revenue Sliding
Despite its push into political ads, X faces competition from superior platforms like YouTube and Facebook. While Republicans find X more attractive, Democrats exhibit hesitancy, citing concerns about Musk's comments degrading their candidates. X aims to diversify its ad business by wooing small and medium-sized businesses, further emphasizing its shift in advertising strategy.
Bloomberg earlier reported that X is projected to experience a significant dip in advertising revenue, estimated at around $2.5 billion for 2023, marking a substantial decline from previous years, with the platform generating slightly over $600 million in advertising revenue per quarter in the first three quarters of the year. Ad sales currently constitute 70-75% of X's total revenue.
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The figures underscore advertisers' concerns over X's content moderation practices under Elon Musk, particularly his posts amplifying antisemitic and extremist views. While X initially aimed for $3 billion in 2023 revenue from advertising and subscriptions, it is expected to fall significantly short of this target, with the final annual figure remaining uncertain pending the conclusion of the holiday quarter.
EU Initiates Investigation on X Under DSA
In a recent development, the European Union initiated "formal infringement proceedings" against Elon Musk's platform, X, citing violations of the Digital Services Act (DSA). This marks the first action against a major online platform under the DSA, a law enhancing online companies' responsibility for content moderation.
EU Commissioner Thierry Breton stated that the proceedings signify the end of big online platforms acting as if they are "too big to care." The investigation will focus on X's compliance with DSA obligations regarding illegal content, disinformation dissemination, transparency, and user interface design. X, while expressing commitment to DSA compliance, faces a confrontational response from Musk, questioning potential actions against other social media platforms.
"Are you taking action against other social media? Because if you have those issues with this platform, and none are perfect, the others are much worse," the tech mogul stated, as quoted by The Manila Standard.
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