### Brand Exodus Hits Elon Musk’s X Amid Political Associations and Content Moderation Issues
In recent years, Elon Musk’s social media service, X (formerly known as Twitter), has encountered major hurdles, including a steep drop in advertising revenue, a large-scale departure of brands, and extensive criticism surrounding its content moderation practices. Following Musk’s $44 billion acquisition of the platform, X has had difficulty securing its financial stability, with various estimates indicating its present valuation may have nosedived to below $10 billion. The platform’s contentious content moderation strategy, along with Musk’s political connections, has generated a complicated and shifting landscape for both the platform and its advertisers.
#### Major Brands Depart
A primary concern for X is the exit of significant advertisers. Companies like Disney, IBM, and Apple have withdrawn their ad spending from the platform, expressing worries regarding the insufficient moderation and an increase in racist and damaging content. Musk’s choice to reduce content moderation has been perceived as a pivotal reason for this brand departure, with numerous firms reluctant to link their names to a platform perceived as nurturing an unsafe or toxic environment.
In a characteristically candid response, Musk told companies that paused their advertising to “go f*** themselves,” a statement that further distanced certain advertisers. Nevertheless, some indications suggest that particular brands may be reassessing their positions, especially considering Musk’s expanding political impact.
#### Political Influence and Returning Advertisers
Musk’s endorsement of Donald Trump has introduced a new layer to X’s business challenges. With Trump potentially set to reclaim the White House, some marketers are reportedly gearing up to resume their advertising on X, viewing the platform as a viable means to curry favor with the expected administration. According to media executives, certain brands perceive Musk’s close relationship with Trump as a pathway to secure government contracts or additional political leverage.
Lou Paskalis, CEO of marketing consultancy AJL Advisory, pointed out that companies might aim to get into Musk’s “good graces,” particularly in light of his anticipated position as co-head of the Department of Government Efficiency in a possible Trump administration. Such political leverage could position X as an “official channel” for communications from the White House, further motivating brands to return to the platform.
However, skepticism remains among various advertisers. Some media directors have described X as “a mess,” casting doubt on which brands might be willing to take the gamble of advertising there. The platform’s reputation as a sanctuary for controversial content continues to pose a significant challenge for numerous companies.
#### Effects of the 2024 U.S. Election
The upcoming 2024 U.S. presidential election has produced a mixed influence on X’s user engagement. Data from Similarweb indicates that X experienced a surge in traffic during the election period, achieving its highest day for U.S. traffic in 2024 the day following the election. However, this uptick in engagement coincided with a notable wave of account deletions, as 115,000 U.S. users deleted their X accounts the day after the election, marking the largest single-day exit since Similarweb began tracking these metrics.
Musk has been quick to highlight the platform’s performance throughout the election, sharing a chart that displays a surge in “global user seconds” and asserting that X has reached an “all-time high” in usage. Nevertheless, the long-term outlook for the platform remains murky, especially as it competes with rival platforms like Bluesky and Meta’s Threads, both of which have enjoyed an influx of users.
#### Legal Challenges and Financial Hardships
X’s financial difficulties are well-known. The platform’s advertising revenue has substantially decreased, with insights from market intelligence firm Sensor Tower revealing that U.S. ad spending among the top 100 advertisers on X in the first half of 2024 dropped 68% compared to the same timeframe in 2022. Only a few major advertisers have returned since Musk’s takeover, and those that have are investing far less than their predecessors.
To tackle these issues, Musk has initiated legal proceedings against the Global Alliance for Responsible Media (GARM), a group comprising brands and advertising agencies. X’s lawsuit claims that GARM and its members, which include Unilever, Mars, and CVS Health, “colluded” to boycott the platform in breach of antitrust laws. Though GARM has since disbanded, citing financial strain from the lawsuit, this legal conflict has reportedly instilled caution among some advertisers, with agencies advised to tread carefully when discussing Musk and X internally.
#### The Prospects for X
As X strives to manage its financial and reputational dilemmas, the platform’s future appears uncertain. Musk has forecast a resurgence for X’s operations, particularly if Trump secures victory in the 2024 election, but the platform’s capability to reclaim its former standing remains to be seen.
