Elon Musk’s social media platform, X, formerly Twitter, is poised to register a substantial dip in advertising revenue for the year 2023, with projections hovering around $2.5 billion.
According to a report by Bloomberg, X amassed slightly over $600 million in advertising revenue during each of the initial three quarters of the year, with expectations suggesting a similar outcome for the ongoing period.
This contrasts starkly with the more than $1 billion per quarter recorded in 2022.
Sources reveal that ad sales currently constitute between 70% and 75% of X’s total revenue, implying 2023 sales of approximately $3.4 billion when accounting for subscriptions and data licensing deals.
What X was supposed to rake up in Ad revenue
Underscoring advertisers’ apprehension with X’s content moderation under Musk’s ownership, particularly concerning posts amplifying antisemitic and extremist views, the unreported sales figures reveal a departure from earlier revenue targets.
X executives had initially aimed for $3 billion in revenue from advertising and subscriptions in 2023 but are expected to fall significantly short, pending the conclusion of the holiday quarter.
Joe Benarroch, X’s Head of Business Operations, responded to these revelations by emphasizing that the presented figures offer an incomplete view of the company’s overall business.
He asserted that reliance on sources not providing accurate and comprehensive details could misinform the understanding of X’s current standing.
Benarroch emphasized that X has evolved into a new global business with multiple revenue streams, distancing itself from past Twitter metrics in both revenue and user metrics.
Backstory
X has historically relied on advertising for the majority of its sales, a trend that has seen a decline since Musk assumed control.
Musk himself acknowledged a substantial drop in ad revenue, citing a decrease of approximately 50% in March and later confirming a 60% decline in US ad revenue in September.
Activists advocating for a halt in spending on the platform were attributed as a significant factor in this decline.
While the subscription service, X Premium, and data licensing agreements contribute to the company’s revenue, external estimates peg the subscription business at less than $120 million annually.
In 2021, when X was still Twitter, revenue from data licensing deals amounted to $572 million.
Musk’s cost-cutting measures and controversial social media posts have unintentionally alarmed brand-conscious marketing partners.
Despite a public goal set by Twitter executives in early 2021 to achieve $7.5 billion in revenue by the end of 2023, Musk’s management has resulted in substantial reductions in costs and an unintended cooling of relationships with key advertisers.
Having taken over a non-profitable X, Musk, in contrast, reported over $5 billion in revenue the year before the acquisition.
Musk’s goal of having subscription revenue constitute half of the company’s total business is yet to materialize, with just over 1 million paying subscribers, significantly fewer than initially anticipated.
X is actively seeking to diversify its advertiser base by engaging more small- and medium-sized businesses.
