Has Twitter/X become too hot for advertisers to handle?

The curt dispatch was aimed at those that had pulled paid advertising from the platform after some fringe antisemitic conspiracy theory posts were fired off by Musk. “I hope they stop. Don’t advertise,” he told the Dealroom conference audience in November, pausing for audience gasps or laughs that never really came. “If somebody is going to try to blackmail me with advertising, blackmail me with money, go f*** yourself. Go f*** yourself. Is that clear? I hope it is.”

Ever since Musk acquired Twitter in 2022 for $44bn, the relationship between the platform and fmcg advertisers has been tumultuous, often toxic and, according to some, possibly unsalvageable.

Just how have things got this bad? Does the platform still hold value for brands wanting to reach its still-sizeable audience? Can things improve? And if not, where might media spend be diverted to?

In November 2022, a Twitter account named Pepsi, displaying the Pepsi logo and carrying the social media platform’s blue-tick symbol to signal it had been verified as legitimate, tweeted the unthinkable: “Coke is better.” It wasn’t the only unlikely brand tweet that week. A blue-ticked account for Nestlé tweeted: “We steal your water and sell it back to you lol.” An account for banana brand Chiquita posted: “We’ve just overthrown the government in Brazil.”

The unlikely posts were, of course, not really sent by the brands. They were written by mischievous impersonators, capitalising on Twitter’s introduction of paid-for verification marks to make their spoof accounts harder to discern from the genuine article. The impostor accounts were quickly suspended, but the damage had been done.

Falling victim to a childish prank is one thing. But for many brands, posting on X carries not-insignificant risk.

“What Musk seems to misunderstand is that the platform makes money from CMOs, marketers and media agencies that are very conservative about where they spend their money,” says Wander Bruijel, senior partner at brand agency Born Ugly, which has worked with Fairy, Heck, Tesco’s Wicked Kitchen and Somersby.

Volatile and risky

Musk’s mission since taking control of Twitter – which he renamed X in July last year – is to turn it into the world’s “digital town square”. Soon after taking ownership of the platform, the self-declared “free speech absolutist” dismissed its board of directors and cut its contracted content moderation teams. The company’s head of trust and safety, and head of brand safety and ad quality, have also departed.

Musk himself talks of the “woke mind virus” and entertains right-wing conspiracy theories. In August, he welcomed Donald Trump back to the platform after he was previously blocked over concerns his words would incite violence. Having a self-proclaimed “chief troll officer” as the public face of the platform can be a problem.

“The more X is associated with Musk, the more volatile and riskier the platform is perceived to be, and the less attractive it becomes,” Bruijel says. “Another component of this is the platform’s approach to sensitive content. Rather than actively stamping it out, it’s setting weak and ineffectual sensitivity filters. This says something about the platform’s attitude to content that might offend. And it leaves a big risk of brands’ advertising being seen next to content they don’t want to be associated with.”

And the risk is significant. After reporting 300 posts promoting “extreme hate speech” from 100 X accounts to the platform in September, a study by the Center for Countering Digital Hate found 86% remained in place a week later. The researchers also identified 38 ads from major brands placed adjacent to hateful posts. A September European Commission study, meanwhile, found X to have the largest “ratio of discoverability” of disinformation of all the major social networks.

“It increasingly feels hardwired for toxicity and culture wars,” says Richard Exon, founder and CEO of creative agency Joint, which has worked with Fox’s, Thatchers and Amazon. “It’s become easier for advertisers to dismiss the platform in favour of less troublesome alternatives.”

There is also a simpler reason brands are steering clear of X: it simply doesn’t have the influence and impact it used to.

“The world is increasingly polarised, and people expect brands to not add to that”

Wander Bruijel, senior partner at Born Ugly

Undoubtedly, its reach is still huge. It’s the fourth-biggest social media network by monthly adult audience in the UK after YouTube, Facebook and Instagram, and it reaches about half the UK population. But that audience fell by 2.9 million between 2022 and last year, according to Ofcom’s Online Nation 2023 report. By comparison, TikTok gained 4.6 million users. And X doesn’t feature in the top five platforms used by those aged 17 or under.

According to Similarweb estimates, in September global web traffic to twitter.com was down 14% year on year, and traffic to the ads.twitter.com portal for advertisers was down 16.5%. Some other social networks also saw declines, but not as pronounced.

“We as an agency have drastically reduced our spend on the platform and overall haven’t noticed a detrimental effect on campaign performance,” says Simi Gill, senior digital account director at The Kite Factory, which has worked with White Claw and Little Freddie. “The platform was mainly used as a high-reach social platform for mid and upper-funnel comms, but shifting these budgets into other social platforms (and non-social such as broader programmatic networks) has enabled us to still fulfil campaign reach and KPIs.”

The unpredictable owner, loosened moderation and eroding usage are clearly putting brands off.

As Exon puts it: “Brands love an environment that they understand, that’s consistent and that suits their media plans. The decreasing user base and increased negativity around the platform makes it challenging to justify allocating significant resources to X.”

Appeasing advertisers

X is hurting as a result of Musk’s moves. Ad sales softened following his takeover, with 625 of Twitter’s top 1,000 advertisers in September 2022 no longer spending on the platform in January 2023, according to data provided to CNN by marketing analysis firm Pathmatics by Sensor Tower. That meant monthly ad sale revenue plummeted from around $127m to just over $48m, according to the data.

But it appears keen to turn things around. And the face of that turnaround is Linda Yaccarino, named CEO of X in June last year, an experienced advertising executive whose appointment was widely viewed as the company working to appease advertisers.

In January, Twitter announced it would launch peer-to-peer payments on the platform this year, “unlocking more user utility and new opportunities for commerce”, and utilise AI to “improve ads”. In response to the advertiser exodus, the platform said it would strengthen its ad offering “through the core pillars of video, performance, and brand safety”.

Some of those promised features are considered table stakes by rival social media platforms. But it’s X and Musk’s bigger goal that could bring brands back.

“X is not just another app – it’s becoming the everything app, seamlessly uniting experiences into one interface, for everyone,” the company says.

In his first address to Twitter employees after taking over the company, according to a leaked transcript, Musk told them: “There’s no WeChat movement outside of China. And I think there’s a real opportunity to create that.”

The Chinese super-app WeChat, with an estimated 1.34 billion users, is used extensively by brands, including grocers offering home delivery, as a sales channel.

“You basically live on WeChat in China,” he continued, “because it’s so useful to your daily life. And I think if we could achieve that, or even get close to that, it would be an immense success.”

A western equivalent – or even a poor imitation – would be significant, but is probably a distant dream for now. There are, however, improvements that can be made sooner.

Staying relevant

“Instagram and TikTok are already perfect for fmcg advertising, because they allure with their visually opulent content, and their users expect brand promotions. While on X, one expects just words and the occasional unhinged opinion,” says Benjamin Alalouff, chief strategy officer of agency Live & Breathe, which has worked with Morrisons, Nestlé and Carlsberg. “So, X should concentrate on honing its advertising offering in areas where it excels. For example, offering interactive advertising opportunities during ‘live tweeted’ events: fashion based on the outfits during the Oscars, sports gear during the World Cup final and so on.”

Indeed, many still use X to seek out real-time reporting on world events – but playing in the breaking news space is tricky for most fmcg brands.

“The world is increasingly polarised, and people expect brands to not add to that,” says Bruijel. “For now, businesses and brands are the only institutions left that people trust. They are expecting brands to tackle some existential societal issues that other institutions aren’t – such as climate change, economic inequality, disinformation – without becoming politicised.”

Brands and retailers still exist on X, of course. Few have deleted their accounts. “The role X seems to now be occupying for a lot of our clients is much more in the customer service and response area,” says Alex Attfield, client services director for The Social Element, which works with Oreo, Keurig and Mondelez.

As brand budgets for X ad campaigns diminish, the spend is being diverted to more reliable platforms such as Meta’s Facebook and Instagram, “where you can get equivalent or better paid reach,” says Attfield. Or TikTok, where the video-led nature demands more creative resources. It also opens up the opportunity to “get experimenting”, he adds, with platforms like Pinterest, Snapchat and beyond (see above).

Despite potentially exciting opportunities, for many in the sector there’s a mourning for what X once was.

“It’s still really important to be there and be listening, because conversations are happening. But X used to be the place to get disproportionate reach and go viral through a great tweet or a little comment,” says Attfield. “Now that’s just not happening to the same extent. And it’s a shame because we’re missing that a little bit in the social space.”