‘X’s lifeline users, not ads – keep them hooked, ad dollars will follow’

New Delhi: Recently, Elon Musk declared “war” against advertisers for boycotting advertising on X. The company filed the lawsuit against the World Federation of Advertisers and member companies Unilever, Mars, CVS Health and Orsted. 

It accused the advertising group’s brand safety initiative, called the Global Alliance for Responsible Media, of helping to coordinate a pause in advertising after Musk bought Twitter for $44 billion in late 2022 and overhauled its staff and policies.

Following this, WFA halted activities for its Global Alliance for Responsible Media initiative.

However, as one of the industry experts pointed out to BestMediaInfo.com, "GARM was more of a catalyst than a cause. The underlying issue is a fundamental disagreement about the role of advertising in the digital ecosystem."

Dhruv Sachdeva, Founder, Humour Me, elaborated, "There is suspicion that GARM, including the World Federation of Advertising, etc, in some form or function sort of boycotted X – also involving names like Bob Iger with whom Musk has had a showdown and spoke very openly about how he didn't care about advertisers.”

Rather than bowing down, ad industry leaders told BestMediaInfo.com that this bold move will likely push brands further away unless the platform ups its transparency game or keeps users glued enough for advertisers to stay interested.

The potential implications for the advertising industry are profound. According to Arunima Singh, COO of Asymmetrique, "Advertisers will increasingly demand greater transparency and control over where their ads appear. This could lead to a more fragmented media landscape as they seek out platforms that align with their brand values."

The increasing scrutiny on data privacy, coupled with the rise of ad-blocking technologies, has eroded advertisers' confidence in traditional digital advertising models. Moreover, the issue of content moderation and brand safety has been a persistent challenge for social media platforms. The GARM boycott was a direct response to concerns about the proliferation of misinformation and hate speech on X. 

The Global Alliance for Responsible Media is a relatively new initiative, launched in 2019, to help the advertising industry tackle the challenges posed by illegal or harmful content on digital platforms.

“Twitter used to be the second sought-after platform when it came to advertising after Facebook,"  Singh said. “Although now, Instagram has come and it has developed into FB and Meta, depending upon again, whether it is a B2B business or a B2C business. From a broadcasting channel to what is called X today, advertisers have lost trust in the platform. Not off late, the limitations of X basis the platform control it has made its usage is a little tougher to navigate than before."

Beyond these immediate factors, the conflict also reflects broader tensions between technology giants and regulators. The scrutiny faced by tech companies over antitrust, privacy, and market dominance has created a climate of uncertainty. Musk's defiance of conventional industry practices can be interpreted as a challenge to the status quo.

Interestingly, some industry experts (who preferred anonymity) revealed a nuanced perspective on their reliance on X. While acknowledging the platform's reach, they downplayed its criticality in their marketing mix formulations. This suggests a potential trend—advertisers might be diversifying their strategies, placing less emphasis on X compared to other platforms. 

"If you want to target the largest potential audience in India, X might not be the best platform. YouTube is better suited for that. However, if you're selling a premium or niche product to a specific demographic, X could be effective. Ultimately, advertisers should choose platforms based on their target audience. Whether people like or dislike ads is less important than the platform's ability to reach the desired customers.”

Advertising is crucial for X's survival but the only factor that can kill a platform is its users. Unless the users choose to boycott, there won’t be much of a threat. However, a sudden loss of ad revenue could be difficult terrain. While Musk might have the resources to temporarily sustain the platform, it's unlikely he would choose to do so indefinitely. I believe most brands will continue advertising on X, regardless of external pressures," said Sachdeva.

He stated, "X has positioned itself as a global town square, emphasising freedom of speech. This has alienated some advertisers. The platform's long-term strategy might involve a subscription model, and the primary factor for it to work is its appeal to an intellectual audience base."

As the battle between Musk and advertisers unfolds, it is likely to have far-reaching consequences. A potential shift towards subscription-based models could disrupt the advertising ecosystem, forcing advertisers to adapt their strategies. The outcome of this conflict will shape the future of social media, determining the balance of power between platforms and advertisers, and ultimately influencing the user experience.

Sachdeva concluded, "X's survival depends on user engagement, not advertising. If users abandon the platform, it faces a crisis. But as long as user numbers remain strong, advertisers will continue to see value in the platform."