Market tracker expects brands' fear of Musk to boost X ad revenue

Emarketer on Wednesday forecast that ad revenue at X, formerly Twitter, will grow this year as brands fear retaliation by politically connected owner Elon Musk if they stay away.

X's billionaire owner, the world's richest person, is a major financial backer of US President Donald Trump, and heads a Department of Government Efficiency that has been slashing the ranks of government employees.

"Many advertisers may view spending on X as a cost of doing business in order to mitigate potential legal or financial repercussions," said Emarketer principal analyst Jasmine Enberg.

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"But fear is not a sustainable motivator and the situation remains volatile, partly as some consumers' discontent toward Musk grows."

Also factored into the expectation that X will have its first year of positive ad growth since 2021 was Meta's decision to drop or amend content moderation protocols, as the tech giant cozies up to Trump.

Industry watchers expect the hateful content that has flourished on X under Musk to also pervade Meta's platforms as the changes go into effect.

Emarketer expects X ad revenue worldwide to grow 16.5 percent this year, after losing ground annually since Musk bought Twitter for about $44 billion in late 2022.

"X's ad business is recovering, but it's too soon to call it a rebound," Enberg said.

The social media platform's forecasted revenue this year will still be less than it was in 2019, according to Emarketer.

X has managed to attract advertising from small- and medium-sized businesses that Twitter historically struggled to win over, the analyst said.

Meta's recent decision to ease off on moderating content could be benefitting X, Enberg reasoned.

Emarketer forecast that Meta ad revenue will grow slightly more than 11 percent in the United States this year.

"While advertisers still care about brand safety, many are getting a reality check that they may not have as much control over where and how their ads show up as they thought," Enberg said.

"The kind of hateful and controversial content that prompted advertisers to flee X is no more acceptable, but there is a sense that it could become unavoidable."