Elon Musk’s X in political advertising push to offset revenue falls


A push by Elon Musk’s X to bring in $100mn from political advertising in 2024 is being met by scepticism from industry insiders, hitting its hopes of offsetting revenue losses caused by big brands leaving the platform.

Earlier this year, X’s billionaire owner reversed a ban on political advertising instituted by former chief executive Jack Dorsey, a move designed to align with Musk’s stance as a “free speech absolutist”.

It has since increased its investment in the space, including hosting a recent event with about 100 existing and prospective political clients in Washington to promote its advertising services.

The company subsequently sent a message to some attendees saying it is “building the modern global town square — a place for causes & candidates to meet their constituents — and we are doing this with brand safety and election integrity at the forefront”. The email, seen by the Financial Times, added that X had 92.4mn users in the US, 98 per cent of whom were of voting age.

Chief executive Linda Yaccarino has told industry figures she was aiming for the platform to bring in $100mn annually in political ad revenues in a big election year, according to two people familiar with the projections.

X has set up a team of about 10 people that has held around 400 meetings and calls with digital marketers, strategists, campaigns and political action groups, according to those familiar with the operation.

X’s new political advertising sales team is headed by New York-based Sten McGuire, who has previously worked in political sales for Hulu and Walt Disney. X has hired Yaccarino’s son Matthew Madrazo to manage Republican relationships. Media advertising veteran Jonathan Phelps has been tasked with soliciting business from Democratic groups. Semafor first reported the sales target and some of X’s recent hires.

The company is also advertising more positions for its “growing” political ads sales team ahead of the “upcoming 2024 election cycle”, according to online job postings.

While X did not confirm the financial targets, it did confirm the communication related to the event and said it had been working on improving its targeting. 

“On X people can actively participate in vital discussions with elected officials, community leaders and fellow citizens,” said Joe Benarroch, X’s head of business operations. “That’s exactly why we’re constantly refining our policies and our products to ensure all communities have an open and secure platform for safe political discourse on X.”  

The push has been met with scepticism by leading players in the US political advertising scene, particularly left-leaning groups.

During the 2018 midterm elections, X, then known as Twitter, brought in only about $3mn in political advertising. As of December 11, the company had made about $4.7mn from the start of 2023 from political ads, according to disclosure data that can be requested from the company.

One industry figure in US political marketing said that many in the sector believed X’s targets were too high as the team lacked experience in Washington and the ads offering was not effective enough.

The company had previously touted a political advertising revenue target of $200mn when pitching its plans but has since revised the figure, the person said. “Even $100mn is unattainable,” the person said. “The numbers are misinformed and off.”

Mike Nellis, chief executive of Democratic ad group Authentic, which has run more than a dozen campaigns on the platform, said that some of his clients were pulling back or refusing to spend on X.

“Our results on the site are weaker than they were in the first half of the year,” Nellis said. “We believe this is because Elon is driving moderates and progressives off the site. If our target audience isn’t reachable on X, there’s no reason to spend any more.” 

According to X’s data from earlier this month, US Republican presidential nominees testing the platform have ranged from spending a few cents on an individual ad campaign to tens of thousands dollars.

The biggest spenders include Donald Trump’s campaign team, which has spent nearly $36,000 in total, and Ron DeSantis, who has spent more than $355,000.

Prominent Democratic politicians including Adam Schiff and Gavin Newsom have each spent close to $100,000 on X. However, President Joe Biden does not appear to have run any ads on the platform.

Last month, Musk told groups including Disney, IBM and Apple to “go fuck” themselves, after the companies pulled their ad spending following his endorsement of an antisemitic post and the publication of research claiming to find some ads on X next to pro-Nazi content. 

In 2021, the year prior to Musk’s takeover, X booked about $5bn in revenues mainly from advertising. In July, Musk said ad revenues had dropped by 50 per cent, without giving precise details.

X has also outlined plans, first reported by the Financial Times, to focus on wooing small and medium-sized businesses to prop up its flailing ads business, alongside the political ads push.

Dorsey banned political advertising in 2019 over fears that misinformation was rife in the space. Musk’s decision to overturn the ban in August comes as he has worked with right-wing political figures, for example giving a platform to former Fox News host Tucker Carlson to host his show, and helping DeSantis launch his presidential bid via its Spaces audio feature.  

Political marketers say that X lends itself more to soliciting donations, collecting email addresses and efforts to boost voter turnout, rather than shifting opinions, as users of the platform tend to be entrenched in their political beliefs. 

“Political campaigns will leverage it, particularly for fundraising and ‘get out the votes’,” said Grace Briscoe, senior vice-president of client development for Basis Technologies, but added that levels of interest from her clients were low. 

Several political advertisers observed that the reach and performance of the services offered by Google-owned YouTube as well as Meta is superior to that of X.

Between October 12 and November 5, 79 per cent and 72 per cent of voters used YouTube and Facebook, respectively, while only 29 per cent used X, according to findings by Priorities USA, a progressive political action committee. 

However, the head of one right-leaning outfit said that the platform was becoming a more attractive place for Republicans, as the user base shifts towards their side of the political spectrum. 

Courtney Weaver, executive vice-president at Washington digital marketer IMGE, said that her company was pitching X to all clients looking to fundraise, adding that the platform had advantages such as the ability for brands to target “lookalike audiences”, which are similar to voters they may already have data for. 

Democrats, however, are pulling away. “Many of the Democratic agencies are sensitive to the comments that [Musk has] made that have degraded their candidates,” another industry insider said. “I think there is a genuine hesitation to jump back in again because many of them don’t trust the leadership.” 

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