Elon Musk’s X ventures into political advertising to counter revenue decline
Elon Musk’s X is expanding into political advertising, setting an ambitious target of $100 million in sales by 2024. This is a strategic move by the Company to offset revenue losses prompted by major brands departing the platform.
Aiming for $100 million in political ad sales by 2024
However, industry insiders are expressing skepticism about the feasibility of this goal, citing concerns about the team’s experience and the effectiveness of X’s advertising offerings.
Earlier this year, Musk, a self-proclaimed “free speech absolutist,” lifted a ban on political advertising imposed by former CEO Jack Dorsey. This decision aligns with Musk’s vision of creating a “modern global town square” on X, providing a platform for causes, candidates, and constituents while prioritizing brand safety and election integrity.
Industry doubts and high targets
CEO Linda Yaccarino is leading the charge, expressing her aim to generate $100 million annually in political ad revenues, particularly during major election years. To achieve this, X has assembled a dedicated political advertising sales team, spearheaded by Sten McGuire, a seasoned professional with experience in political sales for Hulu and Walt Disney.
Despite X’s efforts to build momentum by hosting events and engaging with digital marketers, campaigns, and political action groups, skepticism remains prevalent in the industry. Critics argue that X’s targets are overly optimistic, citing the team’s lack of experience in Washington and perceived shortcomings in the effectiveness of their ad offerings.
While X did not officially confirm the financial targets, the company emphasized its commitment to improving targeting and fostering open and secure political discourse on its platform. However, some leading figures in U.S. political advertising, particularly left-leaning groups, remain unconvinced.
In the 2018 midterm elections, X (then Twitter) generated only about $3 million in political advertising. As of December 11, 2023, the company had earned approximately $4.7 million from political ads, a modest figure compared to the set targets.
Reclaim advertiser trust
The skepticism is further compounded by Musk’s recent controversies, including clashes with major advertisers like Disney, IBM, and Apple, leading to a decline in ad revenues. Musk’s outspoken nature and endorsement of controversial content have raised concerns about advertiser trust and brand safety on the platform.
X faces tough competition from other digital advertising giants like Google-owned YouTube and Meta (formerly Facebook), whose reach and performance are perceived to be superior. Priorities USA, a progressive political action committee, reported that between October 12 and November 5, 79% of voters used YouTube, 72 percent used Facebook, while only 29 percent used X.
As X endeavors to woo small and medium-sized businesses to revitalize its ad business, the company’s foray into political advertising remains a bold yet contentious strategy. Whether X can overcome industry skepticism, rebuild advertiser trust, and meet its ambitious financial targets in the politically charged landscape remains to be seen.
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