Since onboarding Yaccarino in June 2023 to stabilize a business in freefall after Musk’s takeover, X has yet to demonstrate sustained ad revenue. The platform is projected to grow U.S. ad revenue by 17.5% this year to $1.31 billion, according to eMarketer, marking its first increase in two years.
As ad dollars began trickling back, they did so under complex motivations. “The ones that did come back came back either because they have a strong personal relationship with Linda herself, or because they did a little bit of calculus around the lawsuits Musk put in the market,” said Lou Paskalis, chief strategy officer of Ad Fontes Media. “That’s more like buying insurance than buying advertising.”
Paskalis described Yaccarino’s stint as both a victory and a defeat. “Is that a victory because she got advertisers back on the platform? Yes. Is that a defeat because they’re never going to spend as much as they used to? Also yes. Both things can be true,” he said.
Subscriptions and AI over ads
Musk has increasingly shifted focus from ads toward subscriptions and AI. The folding of X into xAI earlier this year signaled a long-term pivot away from ad revenue, according to three industry sources. In July, xAI raised $10 billion in debt and equity, underscoring the shift.
“When X folded into xAI, it was an indication that subscription revenue was going to become much more important than ad revenue for Musk,” Paskalis said. “All of a sudden, that might be a good time to take costs out of the ad side of the business.”
Lawsuits against advertisers could ease off
X’s combative leadership leaned heavily on lawsuits to pressure brands. In August, the company sued the World Federation of Advertisers and several marketers, accusing them of orchestrating an illegal boycott in violation of antitrust laws.
Ruben Schreurs, global chief strategy officer at Ebiquity, said the lawsuit “may lose some of its momentum with fewer people in power focused and dedicated to it.”
The situation is further complicated by Musk’s ugly divorce with President Donald Trump. “This just portends an acceleration of the decline in the platform’s importance to advertisers,” said Paskalis.