X is actively seeking to attract small and medium-sized enterprises (SMEs) to bolster its struggling advertising division, this shift follows Elon Musk’s harsh criticism, laden with scathing comments, against major brands boycotting his social media platform. Musk accused key advertisers who halted spending on X of trying to financially pressure him.
Currently, the platform is pivoting towards strengthening ties with smaller and medium-sized advertisers to offset declining revenues, this strategic move was necessitated after the company’s owner alienated major brands from the platform, which withdrew due to anti-Semitic content, as reported by the Financial Times.
X is ramping up its investments to attract smaller advertisers and facilitate their advertising spend in an effort to fill the significant revenue gap left by the departure of major advertisers.
Despite Musk’s own warnings that losing these big advertisers could spell doom for X’s future, the company is forging ahead.
X stated, “Small and medium businesses have always been a key component of our plans, serving as a vital growth engine that we have long underestimated.”
In line with this strategy, X has recently partnered with external entities like the emerging American marketing firm JumpCrew to expand its advertising sales reach to SMEs.
X is accelerating changes to its advertising strategy, planning to develop new subscription services and innovative data licensing options.
Amid a mass exodus of major advertisers, X faces increasing financial challenges. The New York Times recently reported that X might incur losses of up to $75 million this quarter due to the advertising boycott, based on leaked internal documents.
However, X questions this figure, estimating the revenue decline to be between $10 and $12 million only.
Musk now faces a tough decision: maintain a large advertising team or move towards more cost-effective solutions, such as outsourcing sales and focusing on a small, automated, self-service business platform.
This shift will not be easy, given X’s delay in developing its advertising platform compared to major competitors like Meta, Google, and TikTok, partly due to a historical lack of commitment to building a world-class advertising platform.
However, changing the advertising strategy might prove beneficial, as certain sectors remain indifferent to Musk’s bold statements, and some influencers have pledged to spend millions on the platform’s ads.
