It may also signal that X is working to get agreements for the largest and most influential brands in the lawsuit, knowing they will return the most revenue and also be able to sway small defendants to settle without a fight. If X wants to do a more widespread trust push here, it would benefit them and all companies impacted to share the agreement terms and the steps X is making to ensure brand safety and regain advertisers’ trust. Without this, it’s easy to believe it is a focus on the big and the small will just follow strategy.
For advertisers, transparent communication is crucial to rebuilding trust in a platform marred by controversy. The lack of such communication raises concerns that brands may need to settle with X to be removed from the lawsuit, potentially agreeing to terms just to resume advertising. If Unilever doesn’t want to move forward and fight the lawsuit, many smaller players will follow suit to prevent the litigation and thus minimize financial risks. Brands have to choose between litigation and the larger fear that associating with X could pose ongoing reputational risks.
What about the users?
One key audience usually forgotten during all this is the (casual or power) X user.
Depending on your level of account, you may encounter ads. With many large brands boycotting, the ads that are left tend to either be from smaller companies that shoot for mass awareness regardless of their relevance to the user, or from those who do not have concerns about brand safety or frankly are major Musk fans. The advertisers who choose to promote content on the platform impact the user experience, having the ability to clog up the feed with noise or crafting experiences that align with and convert users. It also can garner user safety if users see ads from brands they like. They are not just more likely to click on them and convert, but they are also more likely to feel like X is the place for them.
Amid these challenges, advertisers who do make agreements and return may not necessarily come back with the same or increased advertising spend. Many advertisers have diversified advertising strategies as is and have probably been testing other channels during the boycott. Depending on what they have learned from their advertising channel A/B testing, this could add another obstacle to heavy ad spending through X alone.
The situation also prompts a broader reevaluation within X. Revenue challenges persist, and while subscription models have been introduced, it’s not enough to replace lost advertising income. X might need a significant rethink of its business model, potentially shifting toward new approaches in international advertising or revamped subscription services.
