X Faces Advertising Downturn: Experts Predict Difficult Quarter

X’s Advertising Landscape: Shifting Sands and Future trajectories

The advertising ecosystem on the social media platform X, formerly Twitter, presents a complex and evolving picture. While some data points suggest a potential uptick in ad spend for 2025, a deeper analysis reveals a notable shift in the types of advertisers engaging with the platform, raising questions about its long-term revenue sustainability.

Industry observers note that while 2025 has seen an increase in the number of companies advertising on X, this growth is largely driven by smaller, less prominent brands.This stands in contrast to the pre-acquisition era, when major corporations, including Fortune 1,000 companies, were the primary contributors to X’s advertising revenue. Matt Krepsik, CEO of MediaRadar, highlights this divergence, stating, “While 2025 has seen an increase in the number of companies advertising on X, the increase is overwhelmingly made up of smaller, long-tail brands versus the big-spending Fortune 1,000 advertisers X previously depended on for ad revenue growth.” He further emphasizes that these smaller brands have not been able to compensate for the loss of significant advertising budgets from larger entities, despite X’s prior efforts to attract small and medium-sized businesses.

However, not all perspectives are pessimistic.Market research firm eMarketer projects a 25% rise in U.S. ad spend on X for 2025, reaching an estimated $1.4 billion.Minda Smiley, a senior analyst at eMarketer, points out that this represents the platform’s first annual increase in ad revenue as Elon Musk‘s acquisition in 2022. Smiley attributes this to improvements in X’s advertising platform and the introduction of new features for marketers. Yet,she cautions that this growth may not necessarily indicate robust underlying health,noting that some advertiser return has been influenced by external pressures.

The recent departure of Linda Yaccarino and the acquisition of X by Musk’s AI firm xAI in March also signal a potential re-evaluation of the platform’s revenue strategy. Experts anticipate a future where X diversifies its income streams, potentially reducing its reliance on advertising. Lou Paskalis, chief strategy officer of Ad Fontes Media, suggests that the integration with xAI underscores the growing importance of subscription revenue. “when X folded into xAI, it was an indication that subscription revenue was going to become much more significant then ad revenue,” Paskalis told ADWEEK.

Under Musk’s ownership, X is actively pursuing a transformation into a so-called “everything app.” Initiatives such as hosting job postings and offering financial services through a partnership with Visa are indicative of this strategic pivot. Krepsik from MediaRadar observes, “This strategic pivot signals a shift in the company’s identity. Ads may still remain a significant revenue driver,but this may be fast followed by subscriptions and emerging capabilities.” This suggests that while advertising will likely remain a component of X’s monetization, the platform is positioning itself for considerable growth in other revenue avenues.

What specific brand safety measures can advertisers implement on X to mitigate risks during this downturn?

X Faces Advertising Downturn: Experts Predict Challenging Quarter

The Shifting Sands of Social Media Advertising

Recent data points to a significant slowdown in advertising revenue for X (formerly Twitter),with industry analysts forecasting a challenging quarter ahead. This downturn isn’t isolated; it reflects broader trends in the social media advertising landscape, but X appears particularly vulnerable. Several factors are converging to create this perfect storm, impacting digital advertising spend and forcing businesses to re-evaluate their marketing strategies.

Key Drivers Behind the Decline

Several interconnected issues are contributing to X’s advertising woes. These include:

Brand Safety Concerns: Ongoing concerns about content moderation and the prevalence of harmful or controversial content continue to deter advertisers. The perception of a less controlled surroundings directly impacts brand reputation and risk tolerance.

User Exodus & Engagement: Reports indicate a decline in daily active users and overall engagement sence Elon Musk’s acquisition. Fewer active users translate to a smaller audience for targeted advertising.

Competition from Emerging Platforms: Platforms like TikTok, instagram reels, and Threads are aggressively vying for advertising dollars, offering alternative avenues for reaching specific demographics. This increased competitive landscape is siphoning off potential revenue.

Changes to API Access: Restricting API access has hampered third-party tools used for ad campaign management and analytics, making it harder for advertisers to effectively measure ROI.

Economic Headwinds: The broader macroeconomic climate, including inflation and recession fears, is causing businesses to tighten their belts and reduce advertising budgets across the board.

Impact on Different Advertising Verticals

The downturn isn’t affecting all advertising categories equally. Some verticals are proving more resilient than others:

Gaming & Entertainment: These sectors often prioritize reach and engagement,and may be more willing to tolerate some risk in exchange for visibility.

Small Businesses: While sensitive to budget constraints, some small businesses continue to see value in X’s local advertising capabilities.

Political Advertising: Historically, political campaigns have been a significant source of revenue for X, though this is subject to cyclical fluctuations.

However, sectors heavily reliant on brand safety and a positive brand image – such as finance, healthcare, and luxury goods – are considerably scaling back their spending on the platform.

Expert Predictions & Forecasts

Industry experts are largely pessimistic about X’s near-term prospects.

eMarketer recently revised its advertising revenue forecast for X downward, predicting a decline of over 15% in 2024. https://www.emarketer.com/

Insider Intelligence analysts suggest that X needs to address its content moderation issues and rebuild trust with advertisers to regain lost ground. https://www.insiderintelligence.com/

* Advertising age reports that many agencies are actively advising clients to diversify their social media ad spend and reduce reliance on X. https://adage.com/

These forecasts suggest a difficult quarter, perhaps extending into the next fiscal year, unless significant changes are implemented.

Strategies for Advertisers Navigating the Downturn

For businesses still utilizing X for advertising, a cautious and strategic approach is crucial. Consider these tactics:

1. Enhanced Brand Safety Measures: Implement stricter keyword blocking and audience targeting to minimize exposure to potentially harmful content.
2. Diversification of Platforms: allocate a larger portion of your digital marketing budget to alternative platforms like facebook, Instagram, TikTok, and LinkedIn.
3. Focus on Performance marketing: Prioritize campaigns with clear, measurable ROI, such as lead generation and direct response advertising.
4. A/B Testing & Optimization: Continuously test different ad creatives, targeting options, and bidding strategies to maximize efficiency.
5. Monitor Brand Sentiment: closely track brand mentions and sentiment on X to identify and address any negative feedback.

The Rise of Alternative Social Media Platforms

the challenges facing X are accelerating the growth of competing platforms. Threads, launched by Meta, has quickly gained traction, offering a text-based social networking experience similar to X. TikTok continues to dominate short-