President-elect Donald Trump with Elon Musk during a campaign rally in Butler, Pa. in October. Photo / Doug Mills, The New York Times
Some brands had abandoned the site over moderation concerns
Elon Musk’s support for Donald Trump is set to boost X’s flagging business, with some marketers poised for a return to the social media platform in order to seek favour with the incoming administration.
Media executives told the Financial Times that some brands were preparing to advertise on X once again, as its billionaire owner was likely to gain an influential role within a second Trump White House. The platform’s revenues have fallen dramatically since Musk’s $44bn acquisition two years ago, with some investor estimates suggesting its current valuation is less than $10bn.
Brands have expressed concern that Musk has stripped back moderation, with groups such as Disney, IBM and Apple leaving the platform last year. Musk has responded by telling big companies to “go f*** themselves” for pausing advertising.
But Lou Paskalis, chief executive of marketing consultancy AJL Advisory and a former media executive at Bank of America, said some marketers were likely to reallocate spending back to X as “political leverage”, such as if they were seeking government contracts. He added companies would seek to get in the “good graces of Elon”, who has been given a wide remit by Trump as co-head of a new Department of Government Efficiency.
“It could be seen as an official channel for White House communications,” said another advertising agency chief, adding that Trump’s victory has lent Musk new legitimacy as well as power over brands in sectors that could face new regulatory curbs from Trump.
“The high ground rarely kicks in if it’s an important channel,” said Shira Jeczmien, chief executive of Screenshot Media, the media and marketing group.
Others remain steadfast in their aversion, with one media director describing X as “a mess”, adding: “Which brand will take the risk?”
Musk has predicted a comeback for X’s business after fervently backing Trump’s campaign through the platform and in more than $100m in political donations. “Some of the boycott is starting to lift,” he told podcaster Joe Rogan ahead of the US elections, adding that “if Trump wins we’ll see ... most of the boycott lift”.
Since the election, Musk and his allies have been lauding X as integral to winning the vote and as the home for conservative political discourse. Last week, Musk posted a chart showing a jump in “global user seconds” to 434.1 billion from less than 400 billion in the days leading up to the vote. He wrote on X: “All-time high usage of this platform!”
Chief executive Linda Yaccarino responded to a post on X arguing that the site would grow exponentially and become a vital mouthpiece for political candidates, writing: “Reporting for duty”. Sequoia Capital partner Shaun Maguire said that while his Silicon Valley venture firm was “ridiculed” for investing $800m to fund Musk’s takeover, “I’m confident we’ll get the last laugh. Never bet against Elon.”
The election has had a mixed impact on X’s audience and engagement, however. According to Similarweb, X’s website had its best day for traffic in the US this year on Wednesday last week, the day after the presidential vote, with election day itself coming in second. Daily active users for the app also jumped, its data showed.
However, it also found that 115,000 US users deleted their X accounts on Wednesday, the single biggest day for web account exits since it began tracking, while rivals such as Bluesky and Meta’s Threads also appear to have increased users.
Musk’s closeness to Trump has also led to widespread speculation that X could merge with the President-elect’s own online platform, Truth Social.
“Whether by accident or design Musk has created not a new Twitter but a new Truth Social, albeit one that Trump isn’t a majority shareholder in,” said Bruce Daisley, former head of X’s operations in Europe, the Middle East and Africa.
It is unclear how the election will affect the seven banks that have been saddled with the roughly $13bn debt tied to Musk’s takeover. The banks, led by Morgan Stanley, had largely expected to continue holding the loan into 2025, given the fire sale prices they would likely need to offer to entice would-be buyers until X’s business stabilises, according to a person involved in the situation.
X has continued to make interest payments on the debt, even with its business challenges. Bankers as recently as September had given up on the prospect of convincing Musk to use his Tesla or SpaceX stock as collateral for a margin loan to pay down a portion of X’s loans.
Bolstering X’s flailing business will require work. X has hired Mahmoud Reza Banki, the former chief financial officer of streaming platform Tubi, as its CFO, according to his LinkedIn page, confirming an earlier report by The Wall Street Journal. Banki was pardoned by Trump in 2021 for charges of making false statements. He was also convicted of violating US sanctions against Iran, but that was overturned on appeal.
Total US ad spend among the top 100 advertisers on X in the first half of 2024 was down 68 per cent compared with the first half of 2022, before Musk acquired the platform, according to estimates from market intelligence group Sensor Tower.
The data show that only seven out of the top 200 advertisers on X that ceased ad spend in the final quarter of 2022 have returned to the platform in 2024. They have largely been replaced by advertisers that are completely new to X or did not exist in 2022, while spending significantly less than previous marketers.
X said nearly 90 per cent of the company’s top 100 advertisers from 2023 are currently spending on the platform, half of which are accelerating their spending year on year.
Emarketer estimates the company will bring in $1.9b in advertising revenue this year, down from $2b last year and about $4.5b in 2021, prior to the takeover. Musk has privately called chief executives of brands to berate them for leaving the site while publicly singling out others, such as Disney’s Bob Iger.
He has also taken legal action. In August, X filed a lawsuit against the Global Alliance for Responsible Media, a coalition of brands and advertising agencies, as well as members such as Unilever, Mars and CVS Health. It alleged the defendants had “colluded” to boycott X after Musk’s acquisition, limiting consumer choice in breach of antitrust laws. Garm has since shut down, saying the claims “misconstrue its purpose” but “significantly drained its resources and finances”.
Industry insiders suggested the action was having an effect. Last month, after Unilever took up spending again on X, it was quickly dropped from the lawsuit. One advertiser said that their agency had been warned following the legal action to be careful about what they communicated in writing about the billionaire and X internally.
Other advertising chiefs say many brands will remain reluctant to trust X and argue its ad offering is inferior to rivals such as Meta and TikTok.
X has increasingly become a “an Elon echo chamber”, said a top executive at an advertising company. “It’s a cesspit and many clients do not want to be part of that.”
“Trump’s victory may well mean brands give X a second chance in 2025,” said Richard Exon, founder of ad agency Joint, but warned they “will be wise to proceed with extreme caution”.
Written by: Hannah Murphy in San Francisco, Daniel Thomas in London and Eric Platt in New York
© Financial Times
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