X ads faces brand safety challenge and revenue struggles

X is introducing new advertising targeting capabilities to attract content creators and compete more effectively and able to complete with platform like Youtube.

Here's some fact about X Platform reach and user base:

  • X has 535 million global monetizable monthly active users (mMAU).

  • It's considered the #1 platform for discovery.

  • There's been a 12.5% year-over-year growth in time spent on X, with users spending an average of 30.9 daily minutes on the platform

It's clear that the platform's reach and engagement are robust. Given these metrics, prioritizing ad targeting features to attract larger advertiser and compete with platforms like YouTube makes strategic sense.

date published

Jul 17, 2024

date published

Jul 17, 2024

date published

Jul 17, 2024

date published

Jul 17, 2024

reading time

2 min read

reading time

2 min read

reading time

2 min read

reading time

2 min read

An overview of X ad business direction

It introduces new features such as AI-powered search capabilities, peer-to-peer payments, premium content offerings, and ongoing improvements in ad targeting. However, these advancements haven't prevented X from facing challenges in regaining advertisers' trust.

Two significant incidents contributed to this challenge:

  1. Data Breach:


    In a major data breach in March 2023, the personal information of over 150 million users was exposed. This included sensitive data such as email addresses, phone numbers, and payment information. The breach resulted in a $200 million fine and a 20% drop in user activity over the following quarter. Advertisers became wary of investing in a platform with significant security vulnerabilities.

An overview of X ad business direction

It introduces new features such as AI-powered search capabilities, peer-to-peer payments, premium content offerings, and ongoing improvements in ad targeting. However, these advancements haven't prevented X from facing challenges in regaining advertisers' trust.

Two significant incidents contributed to this challenge:

  1. Data Breach:


    In a major data breach in March 2023, the personal information of over 150 million users was exposed. This included sensitive data such as email addresses, phone numbers, and payment information. The breach resulted in a $200 million fine and a 20% drop in user activity over the following quarter. Advertisers became wary of investing in a platform with significant security vulnerabilities.

  1. Challenges in Regaining Advertisers' Trust


    Despite these innovations, X has been struggling with significant brand safety issues. Major brands like IBM and Hyundai have suspended their advertising on the platform after their ads appeared next to antisemitic content. This has raised critical concerns about the platform's ability to ensure a safe environment for advertisers. In response to this, X has been updating its advertising policies to reflect the changing landscape. These updates include allowing political campaigning ads in certain countries, permitting the advertising of blockchain games and cryptocurrency services in specific regions, and adjusting policies on gambling and healthcare-related advertising. However, these efforts have not been enough to completely alleviate the concerns of advertisers. X's advertising revenue remains about 50% lower than before Elon Musk's acquisition, indicating a significant loss of confidence among advertisers.

  2. European Commission put X on hold:

    The Commission got backlashed recently over its use of paid targeted ads on X. The European Commission has decided to stop advertising on social media platform X, owned by Elon Musk, over “widespread concerns relating to the spread of disinformation,” according to an internal note obtained by POLITICO's Brussels Playbook.

Conclusion

For businesses looking to enhance their digital marketing campaigns with X, there's good news: the platform is offering several new features and incentives. Currently, X provides a $500 ad credit when advertisers spend $250, making it an attractive option for budget-conscious marketers.

Noteworthy targeting options include Movies and TV Shows targeting, which allows advertisers to reach users who engage with content related to specific films or series, and Conversation targeting, enabling advertisers to connect with users based on specific discussions happening on the platform.

While X is making strides with new features and policy updates, the platform must address its brand safety issues comprehensively to regain the trust of advertisers. Only by ensuring a safe and reliable advertising environment can X hope to fully capitalize on its innovations and drive growth in the competitive digital landscape.

X Ads require some expertise to set up effectively, including understanding the auction-based bidding system and advanced targeting features. Also ads on X are currently eligible to run only on desktop and iOS devices, which limits the reach compared to platforms that support a broader range of devices.

If you're interested in running X ads - book a call with us!

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