Musk's anti-Semitic comments put X AD partnership in trouble

Dozens of major brands have suspended their marketing on the social media company X after its boss, Elon Musk, allegedly made comments supporting anti-Semitic conspiracy theories this month, which could cost X up to $75 million in advertising revenue by the end of the year, according to internal documents.

The documents, from X's sales team, are designed to track the impact of all the advertising outages this month, covering companies that have suspended their ads and others that may be at risk of doing so. The filing also lays out expectations for lost AD revenue that X employees are worried about, or how much AD revenue the company could lose by the end of the year if advertisers don't return.

The documents show that X's situation is more difficult than previously known. Concerns about Musk and the X platform extend far beyond the likes of IBM, Apple and Disney, which suspended their X campaigns last week. The filing lists more than 200 advertising units from companies such as Airbnb, Amazon, Coca-Cola and Microsoft, many of which have suspended or are considering suspending ads on X.

X responded in a statement last week that it had $11 million in advertising revenue at risk. The numbers will fluctuate as some advertisers return to the platform and others increase their spending. The company said the numbers seen by foreign media were either out of date or just a calculation for an internal assessment of overall risk.

The suspension came in the fourth quarter. The last three months of the year are traditionally a strong time for AD sales on X, as brands run promotions for holiday events such as Black Friday and Cyber Monday. In the final three months of 2021, the last time X reported fourth-quarter earnings before Musk took over, the company generated $1.57 billion in revenue, nearly 90 percent of which came from advertising.

Since Musk bought X(then known as Twitter) for $44 billion last year, some brands have been reluctant to advertise on X, fearing that his actions and content moderation decisions would lead to an increase in inflammatory and hateful content. U.S. advertising revenue on X has fallen nearly 60 percent this year, prompting the company to try to lure back advertisers, an effort its CEO Linda Iacarino is overseeing. X also ran an advertising campaign during the holiday season to try to make up for the revenue shortfall.

However, X's plans to attract advertisers fell short, according to the documents. More than 100 brands were shown to have "completely suspended" their advertising, while dozens of others were listed as "at risk." Many companies suspended advertising on or after Nov. 15. At the time, Musk posted on X that a conspiracy theory that a Jew supports minority immigrants replacing white people is a "fact of life."

Organizations that have suspended ads on X include political campaigns, fast food chains and tech giants. For example, Airbnb suspended more than $1 million in advertising, and Uber cut more than $800,000 worth of advertising and halted its advertising campaign in the United States and international markets. Other big brands, including fast-food restaurant Jack in the Box, Coca-Cola and Netflix, also suspended some advertising campaigns. According to X's estimates, the advertising that Netflix suspended was worth nearly $3 million.

Multiple Microsoft subsidiaries have also discontinued advertising operations, which filings show may have cost X more than $4 million in lost revenue in the fourth quarter. Amazon's books and music division, a subsidiary of Google, also stopped advertising on X. Google and other brands that had taken a break from advertising continued to publish content on X without paying for it, in an effort to ensure that the content reached a wide audience.

For the X platform, this incident is also a wake-up call. They need to take a hard look at their platform governance and content moderation mechanisms to make sure something like this doesn't happen again. At the same time, they also need to actively take steps to restore the trust of advertisers and users, such as strengthening content moderation, increasing transparency, and strengthening user feedback mechanisms. Only in this way can the X platform regain the trust of advertisers and users and maintain steady growth.