We just got our first real look at how small X's ad business is
Advertisers seem to be spending a whole lot less than they used to on the platform.
Recent earnings report from X, formerly known as Twitter, reveals a significant decline in the company's advertising business since Elon Musk's takeover in 2022. In the first quarter of 2023, X reported $367 million in advertising revenue, a decrease from $343 million in the previous quarter and a substantial drop from $426 million in the same period last year. Notably, this marks a stark contrast to the $1.08 billion in advertising revenue X earned during the second quarter of 2022, right before Musk's acquisition.
SpaceX's CFO, Bret Johnsen, attributed the recent growth in ad revenue to an overhauled ad tech platform but did not elaborate on the specifics. The company now focuses heavily on premium subscriptions, including a Premium+ tier that removes ads from the platform, though X has not disclosed the revenue from these subscriptions or the total number of daily active users.
Elon Musk's leadership has also been marked by significant workforce reduction and legal actions against advertisers who withdrew their ads from the platform, often accompanied by heated public statements. Despite recent claims that a majority of top advertisers have returned, with Musk's ad chief stating that 97% of the top 100 advertisers have resumed spending, advertising remains a minor component of X's overall revenue.
Other major revenue streams include $2.2 billion from its AI division and $4.3 billion from Starlink, underscoring the dramatic shift in X's business landscape post-Musk's takeover.
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