Advertisers will return to Platform X to get closer to the Trump administration

Social platform X, owned by Elon Musk, may once again attract major advertisers due to Donald Trump’s return to power in the United States. Companies looking to connect with the new administration see X as an important tool to achieve their goals. The potential of X becoming one of the White House’s official channels makes the platform particularly attractive to the advertising market.

Image source: @elonmusk/X

Since Musk’s acquisition of the social network Twitter, its value has dropped from $44 billion to less than $10 billion, due to a massive exodus of advertisers. The departure of major brands such as Disney, IBM and Apple was caused by the weakening of content moderation and the resulting deterioration of the platform’s reputation, which led to a noticeable drop in its revenue. Musk lashed out at the move, saying brands that paused advertising on X could “go to hell.” But in the new political climate, some companies are again considering advertising on X, believing it could boost their ties to the Trump administration and bring long-term business benefits.

Amid Musk’s likely rise in political influence, some marketers see X as an effective tool for creating political leverage. Lou Paskalis, CEO of AJL Advisory and former head of media projects at Bank of America, notes that advertisers can use X to improve their chances of winning government contracts. Musk, appointed by Trump to co-lead the new Department of Government Effectiveness (DOGE), has broad powers that are attracting the attention of major brands seeking to strengthen their positions in the new political environment.

Experts believe X could become the official channel for White House messages, increasing its appeal to advertisers. As Shira Jeczmien, CEO of Screenshot Media, noted, principles often take a backseat when it comes to an important platform. Musk’s connection to Trump gives X a legitimacy that other social networks don’t have, and could potentially put pressure on companies in sectors that could be subject to new regulations.

Many advertisers continue to shy away from X, believing the platform lacks oversight and poses reputational risks. One media director described X as a “mess,” emphasizing that not all brands are willing to risk their reputation. Musk, however, predicts a return of interest in the platform, especially after he contributed more than $100 million to support the Trump campaign. In a conversation with podcaster Joe Rogan, Musk said that “the boycott is already starting to weaken” and that if he wins Trump, most brands will resume advertising on X.

After the election, Musk and his supporters said Platform X played a crucial role in Trump’s victory, becoming a key conduit for conservative political discourse. Musk published a graph showing a significant increase in activity on the platform: the total time users were active increased to 434.1 billion seconds, compared to less than 400 billion seconds on the eve of the election. “Maximum activity on the platform in its entire history!” — Musk wrote.

X CEO Linda Yaccarino noted that the X platform could become a key channel for political candidates. Sequoia Capital partner Shaun Maguire also expressed confidence in the effectiveness of the $800 million investment in X and noted: “I am sure that in the end we will have the last laugh. Never underestimate Elon.”

Although X saw record activity, the impact of the election on its audience was mixed. According to Similarweb, the platform reached its peak traffic in the US the day after the election, and Election Day itself was the second most visited day. Still, about 115,000 users deleted their accounts, the largest single-day exodus since such data began being tracked. At the same time, X’s competitors such as Bluesky and Threads have seen an influx of new users, highlighting a divided audience amid political tensions.

Musk’s rapprochement with Trump has sparked speculation about a potential merger between platforms X and Trump’s Truth Social. Former head of X in Europe, Bruce Daisley, emphasized that Musk essentially created a new version of Truth Social, but with an important difference – Trump does not own a controlling stake. According to Daisley, X is increasingly turning into a political platform aimed at a conservative audience, which differs markedly from Twitter’s traditional positioning as a neutral space for communication and exchange of opinions.

X’s financial stability remains uncertain as creditor banks, including Morgan Stanley, hold $13 billion in debt related to the platform acquisition. It was expected that this loan will remain on their balance sheet until 2025, as current market conditions do not allow for a profitable sale of the obligations. In September, bankers abandoned efforts to persuade Musk to use Tesla or SpaceX shares as collateral to partially repay X’s debts, further increasing risks for creditors and raising tensions over the platform’s financial sustainability.

X faces a major challenge in restoring advertising revenues. Spending by the top 100 advertisers on Platform X fell 68% in the first half of 2024 compared to the same period in 2022, according to Sensor Tower data. Of the 200 major brands that suspended advertising campaigns on the platform by the end of 2022, only 7 have returned, mostly smaller companies with limited budgets.

Emarketer forecasts that Social Network X will generate $1.9 billion in ad revenue in 2024, down from the $2 billion it earned in 2023 and well below the $4.5 billion Twitter took in in 2021, before it was acquired by Musk. In his efforts to win back major advertisers, Musk even filed a lawsuit against the Global Alliance for Responsible Media (GARM), accusing the alliance and its members of conspiring to boycott X, which he believes restricts competition and violates antitrust laws.

As a result of the lawsuit, GARM’s activities were suspended. The organization said Musk’s allegations “distort its goals” and the trial has “substantially undermined its resources and finances.” According to sources, this impact has had a significant impact on the behavior of advertising agencies: Unilever, which resumed advertising on Platform X, was soon dropped from the lawsuit. One advertiser said agencies are now being advised to be more careful and measured in how they word internal documents and communications regarding Musk and his platform.