2023-12-01 22:03:00
Usually so boastful, billionaire tech genius Elon Musk adopted a rather dramatic tone when discussing the flight of advertisers from his social network X (formerly Twitter). “What will happen is that this boycott will kill society,” he warned. “And the whole world will know that these advertisers killed the business.” »
The businessman was referring to the suspension, by a number of leading brands, of their presence on X. A first wave of advertisers took the initiative in August after the media observatory Media Matters had reports big-name advertisements backed by a neo-Nazi account.
Others have joined them in recent weeks, notably Apple and Disney, in reaction to a tweet from Elon Musk, which relayed an anti-Semitic conspiracy theory. The majority shareholder of the social network apologized for this message on Wednesday, but immediately went on the offensive against refractory advertisers.
“They want to blackmail me with publicity, with money? Fuck you,” he belched Wednesday during a public interview in New York.
The exodus of advertisers
“You don’t have to be an expert to understand that attacking companies that pay X’s bills is not good for business,” commented Jasmine Enberg of Insider Intelligence. “Most advertiser boycotts on social media have been short-lived, but this one could last. »
Jasmine Enberg insists that “X is not an essential platform for many advertisers, so temporarily withdrawing from it is quite painless” – for them.
According to information provided by market data analysis company SensorTower, half of the social network’s top 100 US advertisers in October 2022 have already completely stopped their spending.
Financial difficulties
Alongside this flight of advertisers, the financial health of the platform is not in good shape. Even before the latest controversy, Insider Intelligence anticipated a 54% contraction in turnover from the sale of promotional space, bringing it down to $1.9 billion this year.
Elon Musk and his team have launched several paid plans, but the social network remains free by default and still depends almost entirely on its revenue.
“The fact that Musk refuses to seek a compromise could accelerate the exodus of advertisers,” recognizes Dan Ives of Wedbush Securities.
If X does not communicate official figures, all estimates point to a significant drop in the number of users. SensorTower estimates it at 45% for monthly users at the start of the fourth quarter compared to the same period last year.
Added to this phenomenon is the apparent disengagement of dozens of very popular accounts, from large companies in particular such as Coca-Cola, PepsiCo, the JPMorgan bank or Starbucks. These big names haven’t posted content for weeks even though they previously had a regular presence.
Musk will not reinject money
“The influence of X has always been greater than its weight in ,” explains Jasmine Enberg. “It was an important place for brands to connect with consumers. (…) But if content decreases, it will become even more difficult to generate revenue. »
Even having reduced its workforce by more than two thirds, X still has around 2,000 employees and remains subject to significant fixed costs (premises, servers).
Another threat is the colossal debt burden contracted for its acquisition by Elon Musk but now borne by X and which provides for the payment of more than a billion dollars in interest and principal each year.
On Wednesday, the fiery boss suggested that he would not bail out the former Twitter in the event of a financial impasse, even if he had ample means, adopting a die-hard position. “If the company fails because of an advertiser boycott,” he claimed, “it will go bankrupt. »
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