Elon Musk’s X Faces Ad Revenue Crisis Despite Legal Wins with Unilever

Is Elon Musk Winning the Legal War but Losing the Ad Battle?

Elon Musk’s X (formerly Twitter) finds itself at the center of a legal and advertising controversy. After a settlement with Unilever, X has dropped the multinational company from its antitrust lawsuit. However, the platform’s legal war continues against other major advertisers. While Musk’s X might have secured a small victory, the platform is grappling with a significant decline in ad revenue and marketer trust.

Unilever Settlement and Lawsuit Continuation

X’s lawsuit, filed in Wichita Falls, Texas, accuses the World Federation of Advertisers’ Global Alliance for Responsible Media (GARM) and its members of conspiring to boycott X due to brand safety concerns. Although Unilever has reached a settlement with X, allowing them to continue advertising on the platform, other companies such as Mars and CVS Health remain embroiled in the legal battle.

Elon Musk’s frustration with advertisers escalated when he famously told them to “go fuck yourself” and declared “war” on brands boycotting the platform. X claims advertisers ignored brand safety features and refused to use the platform for political reasons. Despite these challenges, X’s leadership remains hopeful, believing that the legal action may bring some level of resolution.

GARM Shutdown and Brand Safety Concerns

GARM, a significant body representing advertising standards, shut down due to lack of funds, which X’s CEO, Linda Yaccarino, applauded. She argued that no small group should control what gets monetized. However, X’s lawsuit has raised questions about fairness, with industry experts claiming that advertisers have the right to choose where to spend their money based on brand alignment and values.

Declining Ad Revenue and Marketer Confidence

Despite the settlement with Unilever, X faces an uphill battle with advertisers. Reports show a predicted 6.4% decline in global ad revenue for 2024, following a significant 46.4% drop in 2023. Marketer trust in X has hit an all-time low, with only 12% expressing confidence in the platform’s brand safety. Kantar’s research highlights that a net 26% of marketers plan to reduce ad spend on X by 2025, marking the largest pullback from any major platform.

The platform’s reputation as a brand-safe advertising space continues to deteriorate under Musk’s leadership, with marketers increasingly shifting their ad budgets to platforms like Google, YouTube, and TikTok, which are viewed as more innovative and trusted.

While Musk’s legal battle may offer some victories, X’s advertising woes continue to mount. The platform’s inability to address brand safety concerns, coupled with Musk’s controversial public statements, has caused a massive erosion of trust among advertisers. Without a significant shift in strategy, the future of X’s advertising revenue remains uncertain.