Ad Buyers Rethink X Presence Following the Platform’s GARM Lawsuit

X is back to warring with advertisers, and advertisers are back to executing caution when engaging with the platform, buyers told ADWEEK.

Two buy-side sources who have advertised on X this year said X’s new lawsuit against the Global Alliance of Responsible Media (GARM), an advertising trade body, makes them reconsider future investment in the platform.

X today filed a lawsuit against GARM, the World Federation of Advertisers (of which GARM is a subsidiary), and GARM members CVS Health, Mars, Orsted and Unilever for using their influence to inspire brands to boycott X and depriving the platform of ad revenue. GARM is an industry organization that was formed in 2019 offering standards and guidelines to help brands avoid monetizing illegal or harmful content on digital media platforms.

X owner Elon Musk said on the platform today, “We tried peace for 2 years, now it’s war,” as he reposted CEO Linda Yaccarino’s bizarre video about the lawsuit.

This is an about-face from Musk’s conciliatory presence at the Cannes Lions Festival earlier this summer, where he called brand safety “critical,” and said that “advertisers have a right to appear next to content that they think fits with their brand.”

One buy-side source, who is not authorized to speak with the media on the record, said a brand they work with had paused advertising on X last year after Musk made antisemitic comments in November but returned to the platform this year as the dust settled around that controversy.

“A lot of brands had slowly warmed back up,” to advertising on X, the source said, noting incentives X has given to advertisers.

Today’s lawsuit will likely change that calculus.

“Every advertiser needs to stop and think very hard right now and decide if Twitter just doesn’t fit a campaign, and [a brand is] not going to spend with them on this quarter or this initiative, is Elon going to just tell Linda Yaccarino to sue?” the buyer said. “Here’s a guy … who can fund any lawsuit forever.”

A large brand that advertised on X around the Olympics said the lawsuit would make the brand reconsider whether to even post organically on X. Their paid activation has ended.

“Why would I want to be in any way, shape or form, involved in a place that wants to sue individual advertisers and the bodies that authentically represent them for choosing to not advertise there?” the source said.

X currently takes the most time for VaynerMedia employees to monitor for their clients out of every other platform, given the myriad controversies and drama on X, said Anthony Scarola, vp of media and programmatic lead at VaynerMedia. He said today’s lawsuit is another example of the volatility of the platform, though noted the platform’s reporting on brand safety has become more granular, and thus has flagged more brand safety issues as a result.

“We’ve definitely had those conversations as to is the juice worth the squeeze?” Scarola said.

Leaving X isn’t all about brand safety

X’s lawsuit comes on the heels of a report from Republican members of the House of Representatives which found GARM limited choice for consumers by organizing to demonetize content it doesn’t favor, specifically pointing to X and conservative creators and outlets, like Fox News and The Daily Wire.

But sources said there were many reasons brands chose to stop advertising on X, starting with Musk’s takeover in 2022, that had nothing to do with politics or brand safety. Axios reported that X is supposed to make $2 billion in advertising revenue this year, compared to the $4.5 billion in revenue in 2021, the last full year X reported its earnings publicly.

First, the most successful digital media companies like Meta and Google typically attract performance budgets, which are focused on linking advertising with sales. X has never been good at this and still isn’t, the first buy-side source. “It’s never been about cost per acquisition,” they said.

Plus, at the time of Musk’s takeover, brands had concerns about X’s operational capacity that sparked a reconsideration of ad spend, said Arielle Garcia, director of intelligence at industry watchdog Check My Ads, who served as chief privacy officer at ad buying giant UM Worldwide at the time of the Musk takeover.

“You had agency reps that were just gone. You had no one to speak to about brand safety issues. The platform was in complete turmoil,” Garcia said. The first buyer source said there is more support from X reps than during Musk’s initial takeover.

“It’s interesting the way that they’re positioning all of this, when the reality is that brands were making decisions based on a whole host of different factors. Brand safety itself was only one of them,” Garcia said.

ADWEEK has requested comment from X and will update the story if the platform responds.