How Elon Musk’s antisemitic comments pushed X advertisers over the edge

"If you suffer from ringing ears, you’re going to love this recent breakthrough," said the unblockable advertisement, featuring a man with Mona Lisa smile pouring baby oil into his ear canal.

Not tempted? Then how about a spammy ‘news’ website with the headline "This Seems Unbelievable, But Happens in Dubai Everyday"? Or an unauthorised SpaceX-branded cryptocurrency, complete with the dubious promise that you could win a trip to Mars?

These are the low-quality adverts that users of X, née Twitter, have been seeing more of in the year since Elon Musk bought the company for a titanic $44 billion.

Their prominence is a testament to the slow drip of reputable advertisers who have been abandoning the service – and thereby strangling it of its financial lifeblood.

Last week that drip became a torrent after Elon Musk enthusiastically endorsed the idea that "Jewish communities" in the US have been stoking "hatred against whites" and pushing to "flood the country" with "hordes of minorities" – a mildly watered-down version of the white supremacist conspiracy theory known as "the Great Replacement".

One day after, an investigation by the left-wing campaign group Media Matters for America found that ads for major companies such as Apple and IBM had appeared next to explicitly pro-Nazi posts – despite promises from X’s chief executive Linda Yaccarino that they would be "protected" from such unfortunate juxtapositions.

The following day, major companies including Apple, Sony, Warner Bros, Disney, and IBM all said they would no longer buy adverts on X, while advertising executives pressed Yaccarino, once respected throughout the ad industry as a high-flying executive at NBCUniversal, to resign before her reputation was indelibly tarnished. Tesla shareholders, tech barons, and even the White House joined in the criticism.

The crisis could deprive the ailing social network of tens or hundreds of millions of dollars in sales revenue, marking a turning point from which it may not recover.

"Any advertiser on the platform is tacitly if not explicitly supporting Musk’s choices – it’s impossible to separate them at this point," Brian Wieser, a widely respected ad industry analyst and head of the advisory firm Madison and Wall, told The Independent.

"Musk is doing everything he can to make sure this business that was overpriced when he bought it is worth nothing."

Musk argued that he is not antisemitic and launched what he called a "thermonuclear lawsuit" against Media Matters, which accused it of artificially manipulating the social network’s algorithms to achieve the contentious juxtapositions (while admitting that they had in fact occurred).

Advertisers and journalists reach their breaking point

It’s hard to assess the scale of the blow that was dealt to X last week – in part because, as a privately held company, it no longer needs to reveal its finances publicly.

But data provided to The Independent by the market intelligence firm Sensor Tower suggests that just six of the companies that pulled out – Apple, IBM, Sony, Comcast, and Paramount – accounted for 7 per cent of all US ad spending on the social network.

Wieser likewise estimates that all the boycotters combined could represent 5 or 10 per cent of X’s pre-Musk ad revenues, with each film studio accounting for perhaps tens of millions of dollars in a good year – though he cautions that this is only a guess.

"There’s no doubt that Musk’s own promotion of white genocide was not just a catalyst but a massive contributing factor of advertisers leaving," says Angelo Carusone, the head of Media Matters and a veteran of past advertising boycotts against Fox News and Facebook. He tells The Independent this latest incident was remarkable because it was such a direct and personal endorsement by Musk of claims that most large companies would run a mile from.

"If you’re an advertiser and you’re having some brand safety concerns, and then you’re [seeing] the platform promoting the very content that should be diminished, you’re saying: ‘I don’t think this is fixable’," he says.

This comes on top of an existing advertiser exodus that began when Musk bought Twitter in October 2022. Of the company’s top 100 US advertisers in the days before the buyout, only 50 were still there as of October 2023, according to Sensor Tower – and the new top 100 were spending roughly 45 per cent less money.

X and Yaccarino have given different figures, claiming that numerous top 100 advertisers have returned to the service this year. However, that is not supported by third party data.

The situation has created new pressure on Yaccarino, who is reportedly facing calls to resign from ad executives. "My advice was to leave before her reputation was damaged," said the prominent marketer Lou Paskalis on Monday. "I believe that there has been a groundswell of a lot of people such as myself saying, ‘save yourself.’”

Nor was the latest outrage limited to advertisers. "I call on Elon Musk to resign," said Facebook co-founder Dustin Moskowitz. "[This] CEO does so many detrimental things that destroy the brand," said longtime Tesla investor Ross Gerber. "We condemn this abhorrent promotion of antisemitic and racist hate in the strongest terms, which runs against our core values as Americans," said a spokesperson for Joe Biden.

Some journalists also reached their limit. Platformer, a widely-read tech newsletter that has often broken major news from inside the company, said it would no longer promote its content on the service or feature any tweets in its daily roundup of funny posts from across the internet.

"Any day over the past day would have been a good day to quit X; Thursday was just mine," Platformer’s editor Casey Newton tells The Independent. "X has devolved into a far-right cesspool, and it would undermine the integrity and value of what we try to do to continue contributing to the platform in any way."

Such decisions are dangerous to X because it has historically depended on reporters, pundits, and celebrities to draw other users to the service. Its own PR folk have always boasted that Twitter was the place where you could see the latest news playing out before it had even solidified into headlines.

"It does feel like a step change," says Wieser, arguing that it’s "really hard to come back from" what he describes as the "overt racism" of Musk’s remarks.

A comparison with the massive Facebook advertising boycott of 2020 is similarly instructive. That year, many companies froze their spending on the service out of concern over its refusal to take action on posts by Donald Trump that called for violence against George Floyd protesters.

Back then, Carusone says, many firms were "quiet quitters" and had to be cajoled or pressured into announcing their decisions. Those quitting X this month immediately publicised it.

Moreover, X’s nascent revenue sharing programme for big accounts – an attempt by Musk to vie with YouTube and TikTok for the favour of professional social media influencers – means advertisers must also contend with the risk of their money directly funding extremists.

(Andrew Tate, the misogynist influencer who is under investigation for rape and human trafficking in Romania, claims to have received at least $20,000.)

And while Zuckerberg had exercised great personal influence over how Facebook treated Trump, he wasn’t the one who was actually making the posts at the heart of the debate.

"This all ties into Musk’s conduct because so much of X’s policies and orientation to brand safety are an extension of Elon Musk’s view, which frankly is redpilled – and bad for business," says Carusone.

X was already bleeding away money and clients

In November 2022, weeks after closing the deal on Twitter, Elon Musk held a gigantic conference call to reassure advertisers about his plan for the company, saying he was "open to ideas".

One problem: just days earlier he had threatened "a thermonuclear name and shame" campaign (he seems fond of that word) against advertisers who paused their spending, accusing them of giving in to activists who were "trying to destroy free speech in America".

It was, Wieser tells The Independent, "one of the dumbest things I’d ever seen" – and symptomatic of the long-term problems that have brought X to this point.

One of those Musk was mad at was Carusone from Media Matters. But, he tells The Independent, "no one was rooting against X. Everyone really seemed to want X to succeed".

However, advertisers were quickly spooked by the scorched earth blitzkrieg that Musk seemed to be waging against his own company. He gutted not only the content moderation and policy teams responsible for stopping hate speech and abuse, but also sales teams responsible for liaising with advertisers and ensuring their problems were flagged to other departments.

"Twitter, certainly for large brands, was never a must-buy," says Wieser. "It requires a lot of work to persuade marketers to buy from them and develop programmes that are unique to those advertisers.

"So when you cut the workforce by that much, that had very direct consequences – in addition to the brand safety and suitability issues."

‘Brand safety’, incidentally, is an ad industry term for the difficult craft of avoiding reputational damage when promoting your products – such as by not letting them be associated with some dollar store Adolf Hitler fan club. There is a sizeable sub-industry of consultants and technologists working to shield advertisers from these risks.

Carusone says that most of the early exodus was driven by media buyers – middlemen who run ad campaigns on behalf of their clients. When the initial chaos abated, the middlemen relaxed their postures, and at that point Carusone thinks the situation was still salvageable.

Over the summer, Yaccarino touted a new automated system that would use AI to spot extremist posts and prevent any ads from running next to them.

Yet as Musk continued his own inflammatory statements – from antisemitic conspiracy theories about George Soros to claiming Mark Zuckerberg “bought” the 2020 election – individual advertisers began to peel away, not least because of Media Matters’ intervention.

In August, companies such as Adobe and Gilead Sciences paused spending after Carusone’s group found their ads running beside pro-Nazi posts. In September, Apple chief executive Tim Cook said he was "constantly asking" if the company should keep using X, saying there were "some things about it I don’t like".

So for Wieser, X had already "degraded to a point of inconsequence for most marketers" when Musk posted his most recent antisemitic tweet – and tipped the company into perhaps its biggest mess since the buyout.

'There's no way back with Elon Musk in charge'

Large social networks have died before, and there is no reason to think it can’t happen again. So does X have a viable path back to safety, or even success?

For Wieser the company’s future looks "totally bleak". What little information we have suggests that Musk’s vaunted premium service, formerly known as Twitter Blue, has not been widely adopted and is nowhere close to making up for the loss of ad revenue.

"Your base case," says Wieser – meaning the most likely outcome for X – "should be that Musk grinds it down to zero."

Granted, he adds, there may still be some low-end advertisers who don’t care about where their ads appear – the kind of scammy or spammy promotions that have proliferated on X this year.

Like most major social networks, X puts ads in front of its users based on an automated auction process, in which advertisers bid against each other to fill each potential advertising space as it comes up. If big-spending major brands don’t show up, those auctions will be won by smaller and cheaper bidders – which often means lower-quality ads.

This issue is not unique to X, but Musk’s decisions have made X uniquely vulnerable to it. Lower ad quality could also exacerbate the flight of ordinary users, meaning fewer eyeballs and fewer spaces in which X can sell ads.

Both outside estimates and internal leaks suggest that X has lost users since the buyout – anything from 4 to 15 per cent. That is not surprising given the cavalcade of unpopular decisions Musk has made, such as trashing X’s verification system for public figures, dumping the Twitter brand and its iconic blue bird logo, and briefly capping the number of posts users could view.

"It’s a shell of what it was, and there’s no way back that I can see, unless Musk steps aside," concludes Wieser.

The only upside to the current crisis, he adds, would be if it provokes shareholders of Tesla – another Musk company, which is thriving in comparison to X – into a revolt that forces him to sell X or otherwise insulate it from his influence.

X did not respond to a request for comment from The Independent, except for the automated response: "Busy now, please check back later." (It was, at least, a step up from the poop emoji with which all media requests previously met.)

On Sunday evening, Yaccarino sent an email to X employees saying that "no other platform" is "working as hard to protect free speech" and decrying "deceptive attacks" by outside activists.

The company’s lawsuit accused Media Matters of "knowingly and maliciously manufacturing" controversial juxtapositions of adverts and posts, claiming that these combinations were extremely rare and would never be seen by most users.

It said that the group’s dummy accounts had only followed two kinds of profiles: big-name advertisers and known extremists. It further claimed that the group had to "endlessly scroll and refresh" this "unrepresentative feed" in order to achieve those results, generating "between 13 and 15 times more advertisements per hour than the average X user".

In response, Carusone describes this lawsuit as "like getting mad at a mirror because you don’t like the reflection", and says his group will fight the case.