Shauna Lewis
Oct 27, 2023

One year on from Elon Musk's arrival: X is cheaper and 'better value' for brands

Advertisers demonstrated 'nervousness' around Musk's takeover and turned to rival platforms, but media buyers say some clients are willing to spend again with the company formerly known as Twitter.

X: Musk took over in late October 2022 (Photo: Getty Images).
X: Musk took over in late October 2022 (Photo: Getty Images).

Since Elon Musk’s takeover of X, formerly Twitter, on 27 October 2022, brands have departed the platform in droves and, in their wake, left cheaper inventory for clients who have stayed.

In July this year, Musk said the platform had suffered a 50% decline in advertising revenue.

The nadir was December 2022, in the immediate aftermath of the takeover, when the company recorded an estimated 78% drop in US ad revenue year on year, according to a report from Reuters.

Before the Musk takeover, Twitter was making $4.5 billion in global advertising revenue a year and had more than 200 million daily active users, according to its last annual report as a listed company in 2021.

UK media buyers say brands moved to platforms such as TikTok, as well as other social media players including Reddit and We Are 8.

X has also faced competition from other rivals such as Snap and Instagram, with the latter launching a direct rival, Threads, in July of this year.

In the wake of brand departures, cost-per-viewer and cost-per-engagement have declined, according to agency sources.

But media buyers working with the platform said that this had “benefitted” those still on there because brands had been able to take advantage of CPMs that were “predictably cheaper”.

They added that there was now less competition on X and were “surprised” more people hadn’t taken advantage of the cheap inventory, adding that its reach was “astronomical” and unlike other social media platforms.

When Musk took over the platform and cut half of the company's 7,500 workforce, it led to uncertainties around brand safety. These increased after its old verification programme was suspended and it became harder to distinguish accounts which were “authentic”, according to Jamie Marks, social director at Rapp.

Another media buyer added: “With Elon Musk making those changes, naturally brands were being a bit conscious about what people were saying on there.

"I think one thing to remember is that that’s the whole purpose of Twitter. It’s people putting their opinions online and unfortunately you’re never going to stop someone from being a keyboard warrior.”

Commercial departures

The UK operation went through big changes as high-ranking members of the commercial team departed. These included Twitter UK’s managing director Dara Nasr and UK director of planning David Wilding. Some senior staff such as Christopher Bailes have remained, with Bailes being promoted to UK sales director in November 2022.

In a letter to agencies and advertisers in July 2023 following the rebrand, Bailes offered reassurance that it would have "no material impact on advertisers" and it was "business as usual" for the platform.

He said: "The advertising community–who for so long pushed us to dream bigger, to innovate faster, to command the space we occupied–should be excited by today's announcement, and stands to be one of the greatest beneficiaries."

Since the takeover though, X's visibility has also dropped at big industry events this year amid cost-cutting–for example, the company stopped its annual tradition of renting a beach at Cannes Lions to entertain clients and agencies.

Some clients are willing to spend again

Media buyers say that some of their clients have been reconsidering the platform and returning in recent months. Fears around brand safety have been alleviated by the introduction of adjacency controls and brand safety partners DoubleVerify and IAS.

These partners were introduced by X’s new chief executive, Linda Yaccarino, in August when she reinstated a “client council” for advertising execs, previously disbanded by Musk.

Speaking at Vox Media's Code Conference in September, Yaccarino, the former advertising chief at Comcast's NBCUniversal, said that 90% of its top advertisers had returned in the previous 12 weeks.

Mulenga Agley, founder and chief executive of Growthcurve, said: “This could be in part due to the desperate flurry of incentives and discounts on offer to advertisers, but we can’t ignore the benefits to be had from Musk’s 'everything app' approach that aims to diversify its offerings to attract varied user demographics and businesses.”

Still, Yaccarino and her team have work to do to reassure brands. Research by Ebiquity found only two out of the top 70 advertisers with which it works had spent on X in September 2023, according to a report from Insider.

One media buyer said X is looking to bolster its advertising offering with new vertical videos in the next 12 months, intended to rival TikTok and Instagram Reels, and also intends to improve its shopping capabilities.

Campaign has reached out to X for comment.

Source:
Campaign UK

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