Elon Musk’s social media platform X might regain major advertisers as Donald Trump returns to power in the United States. Companies seeking connections with the new administration are eyeing X as a vital tool for achieving their goals. The potential for X to serve as an official White House communication channel further enhances its attractiveness in the advertising market.
Since Musk’s acquisition of Twitter, its valuation has plummeted from $44 billion to under $10 billion, following a significant advertiser exodus. Major brands like Disney, IBM, and Apple left the platform, citing weakened content moderation and reputational concerns, which contributed to declining revenue. Musk, in response, sharply criticized these brands, stating they could “go to hell.” Despite this, some companies are reconsidering X, viewing it as a means to foster ties with the Trump administration and gain long-term business benefits.
Political Influence and Advertising Strategy
With Musk’s political influence expected to grow, marketers increasingly view X as a platform for political leverage. Lou Paskalis, CEO of AJL Advisory and former media executive at Bank of America, noted that advertisers might use X to enhance their chances of securing government contracts. Musk’s appointment by Trump to co-lead the Department of Government Effectiveness (DOGE) has granted him significant powers, attracting brands aiming to solidify their standing in this political climate.
Experts predict X could become an official channel for White House messaging, making it even more compelling to advertisers. Shira Jeczmien, CEO of Screenshot Media, pointed out that principles often take a backseat when dealing with a crucial platform. Musk’s ties to Trump lend X a legitimacy that other social platforms lack, potentially pressuring companies in regulated sectors to engage with the platform.
However, skepticism remains among advertisers. Concerns over inadequate oversight and reputational risks keep many brands at bay. One media executive referred to X as a “mess,” emphasizing that not all companies are willing to gamble with their reputations. Still, Musk has expressed optimism, claiming the boycott is waning and predicting a return of brands, especially following his $100 million investment in Trump’s campaign.
Election Impact and Engagement Metrics
After Trump’s election victory, Musk and his supporters claimed X played a pivotal role by amplifying conservative political discourse. Musk shared data showing a rise in platform activity, with user engagement reaching 434.1 billion seconds—up from less than 400 billion seconds prior to the election. Musk celebrated this milestone, stating, “Highest platform activity ever!”
X CEO Linda Yaccarino highlighted the platform’s potential as a key tool for political candidates. Shaun Maguire, a partner at Sequoia Capital, echoed this sentiment, expressing confidence in their $800 million investment in X: “I’m confident that we’ll have the last laugh at the end of the day. Never underestimate Elon.”
Despite record engagement, the platform’s audience faced a mixed response post-election. Data from Similarweb revealed that X saw its highest US traffic the day after the election, with the election day itself ranking second. However, around 115,000 users deleted their accounts—a record single-day loss. Meanwhile, competitors like Bluesky and Threads gained users, underscoring audience division amidst political tensions.
Speculation Around a Truth Social Merger
Musk’s growing rapport with Trump has fueled rumors of a merger between X and Trump-owned Truth Social. Bruce Daisley, X’s former European head, remarked that Musk has essentially created a new version of Truth Social—albeit without Trump’s majority ownership. Daisley noted that X is shifting towards a politically conservative platform, a significant departure from Twitter’s historically neutral positioning as a space for dialogue and opinion exchange.
Financial Uncertainty and Advertising Challenges
X’s financial health remains precarious, notes NIX Solutions. Lenders, including Morgan Stanley, hold $13 billion in debt from the acquisition, which is unlikely to be sold profitably until at least 2025. Recent efforts to convince Musk to use Tesla or SpaceX shares as collateral for partial debt repayment have failed, intensifying lender risks and raising concerns about X’s financial sustainability.
Advertisers’ spending on X has significantly declined. Sensor Tower reported that spending by X’s top 100 advertisers fell by 68% in the first half of 2024 compared to the same period in 2022. Only seven of the 200 major brands that paused advertising on the platform by the end of 2022 have returned, primarily smaller companies with limited budgets.
E-marketer estimates X’s ad revenue in 2024 to be $1.9 billion, down from $2 billion in 2023 and well below the $4.5 billion generated in 2021 before Musk’s acquisition. To address the challenges, Musk filed a lawsuit against the Global Alliance for Responsible Media (GARM), accusing it of anti-competitive practices and conspiring to boycott X, which he argued violated antitrust laws.
Looking Ahead
The lawsuit led to GARM’s suspension, with the organization claiming Musk’s allegations misrepresented its purpose and caused significant financial harm. Some ad agencies are now advising caution when discussing X in internal communications. For instance, Unilever resumed advertising on X but was subsequently excluded from the lawsuit.
Despite these hurdles, Musk remains confident in X’s future. With Trump’s return to power and X’s growing political influence, some brands may return to the platform, albeit cautiously. We’ll keep you updated on how X navigates its challenges and whether it secures its position as a major advertising hub under the evolving political landscape.