What Were the Effects of Elon’s Buyout of Twitter on Advertising?

X-cuse me, what has happened to Twitter?

In the most recent change to the platform that we used to know as Twitter, the micro-blogging platform has renamed its premium subscription service to X Premium or “X”. This change is one of a slew since Elon Musk took over the platform in 2022. He acquired the platform for $44 billion and merged the company into an entity called X Corp. His purchase of Twitter and the rebranding is a part of Musk’s long-term plan to create “X”, which he described as an “everything app” and likened it to China’s super-app WeChat. He aims to create a platform that offers services, including mobile payments and social media, under one umbrella.

In this blog, we’re exploring the effects of Musk’s buyout of Twitter has had on advertising through the platform and whether the platform should still be considered as an advertising platform in your brand’s digital marketing strategy.

What’s Changed with Twitter (X)

A noticeable effect of the name change is that X’s ranking (formerly known as Twitter) on the Apple App Store’s “Top Downloaded” chart fell significantly after the rebranding, from 35 to 54. This is indicative of fewer downloads, which implies slower growth and, in the long term, fewer users on the platform than on other growing social media platforms.

It is possible that the platform could hold less advertising value to digital marketers than other platforms with continuous user growth. The main reason for this decrease in downloads is that regular consumers aren’t aware of the name change or rebrand and when searching for Twitter and find X, doesn’t recognise it as the same platform.

Other changes to the platform include:

• The platform’s new slogan: “Blaze your glory!”
• The firing of more than 7 500 employees.
• Musk’s policy changes.
• Musk’s tweet messaging.

What Are Other Brands Doing About Twitter?

Musk’s amplifying of conspiracy theories, solo reinstatement of banned accounts, engaging with far-right accounts, and instituting a random verification scheme allowing extremists and scammers to purchase a blue check has led to an exodus of advertisers from the platform.  And these advertisers have yet to return.

Since Musk took over more than half of X’s top 1,000 advertisers before the acquisition have stopped advertising on the platform. The loss in advertisers has resulted in a drop from $2 billion ad spend in 2020, to a little more than $750 million in 2022. Their departure has contributed to the platform’s loss of almost half of its advertising revenue since Musk’s takeover. There are purportedly more advertisers that will stop using the platform.

What Does the Future Hold?

The uncertainty and volatility of Musk’s actions since acquiring the company, makes advertising on the platform a risk as there are no consistent controls in place to protect your brand’s reputation if needed. Further concerns include a high turnover in X’s sales department and confusion about the company’s policies regarding content moderation.

Advertisers are also concerned about Musk’s reaction to the decrease in his revenue from advertising. Instead of working with top advertisers to resolve their concerns, his solution is to move X away from being so reliant on advertisement for its revenue, to a subscription-based model in which the company would make most of its money by charging users for premium services.

The rise of the new rival app Threads, a text-based social media app created by Instagram to compete with X, is also a consideration for advertisers when deciding where to advertise. The new platform now has 150 million users and could be an alternative use of budget previously spent on X.

Even with the steep discounts and promotions that X has offered to its advertisers, those that have left since Musk’s takeover still haven’t returned to the platform. And from the above it is clear why. There is a deep distrust in the platform and specifically in the future of the platform.

Due to the constant changes and fear of brand reputational damage for being aligned with the platform, it is easier for advertisers to use other platforms than be associated with X. Advertising on the platform now is a risk each brand should carefully consider before spending their digital marketing budget on the newly named X.

Are There Any Positive Changes?

There are some positive changes that has been mentioned and should be kept in mind when deciding whether to use the platform or not. The first is that X is aiming to make use of more targeted advertising on the platform.

Although this will excite digital advertisers as it means their ads are placed in front of the right audiences, it is unclear how effective the platform’s targeted ads can be as it has less data than Google and Facebook to use to target ads.

The platform has also mentioned new tools it’s working on that would allow advertisers to make sure that their ads aren’t shown next to controversial tweets. This would go a long way in rebuilding the trust that advertisers have lost in the platform. Although these promises are positive in the digital marketing realm, it remains to be seen if they will be implemented and to what level.

Is X Worth Advertising On?

Right now, a lot is unclear about X. It seems that the acquisition by Musk and the rebranding has seemingly created a new platform, albeit with a large existing user base. So much is unclear about the platform, how it will work with the new changes and whatever changes might occur next, that the platform should be treated as a new social media platform.

It needs to be approached with anticipation for the possibilities it may hold, but with trepidation as the rebranding doesn’t yet create the recognisability of an existing and trusted platform. It might work for your brand, or it might not.

Reach out to Digital Squeak so we can create and walk through a digital marketing strategy that would work for your company and determine whether X is the right platform for you – pippa@digitalsqueak.co.za