Elon Musk And The Vulgarity Heard Around The Advertising World

I used to say that news no longer breaks, it tweets. At The New York Times Dealbook Summit on November 29, Elon Musk sent a message to the advertisers that had halted spending on X after Mr. Musk endorsed an antisemitic conspiracy theory.

Those words immediately reverberated across the social media platform at a velocity that reminds the world of its power and potential of X/Twitter. And in that moment, the world’s richest man once again stoked the tensions between X and the advertisers. Musk proponents rallied behind his defiance. Advertisers did not.

Musk was interviewed by Andrew Ross Sorkin, New York Times financial columnist, author and co-anchor of CNBC’s Squawk Box. In one promising moment during the conversation, Musk attempted to convey an apologetic tone. In reference to his antisemitic post on November 15, Musk said that the post “might be literally the worst and dumbest post I’ve ever done.”

That post was also a costly one. More than 200 advertisers subsequently pulled the plug on campaigns, costing X an estimated $75 million loss for the quarter. X disputed the figure to the Financial Times, estimating the number was between $10 and $12 million.

Sorkin then asked about the deserved criticism of his actions and the resulting loss ad spending. To that, Musk was uncompromising. “I hope they stop,” he quipped. “Don’t advertise.”

He then continued seemingly confusing blackmail with intolerance to hate, “If somebody’s going to try and blackmail me with advertising, blackmail me with money, go f*** yourself,” Musk said. He then reiterated his last statement with emphasis, “Go. F***. Yourself.”

Musk then directed his sentiment toward Disney’s CEO Bob Iger, “Hey, Bob, if you’re in the audience. That’s how I feel. Don’t advertise.”

Sorkin didn’t let up. He challenged Musk to consider the criticality of advertising to X’s business model and asked what someone in his position should do about it.

Musk explained his position this way, "What this advertising boycott is going to do, it's going to kill the company. And the whole world will know that those advertisers killed the company."

Sorkin challenged Musk again by pointing out that advertisers would argue that Musk would be responsible for killing the company if he continued to propagate the problems that send advertisers away.

Musk didn’t seem to connect the dots between his role in contributing the current state of polarized affairs and ad revenue. His response was that we’ll “see how Earth responds to that.”

What Musk refers to as a boycott and blackmail, advertisers call it branding 101.

Whether you're a community driven by UGC (user generated content) or a traditional media company, brands choose their buys based on the ability to target advertising at desirable consumers, at reach and scale, to drive measurable results.

More so, brands operate using a brand style guide. Its purpose is to define brand standards, establish guardrails, and articulate meaningful goals that are used to guide media buying, creative strategies, and measures.

Free Speech And The Business Of Advertising

Elon Musk acquired Twitter in April 2022 for $44 billion. Since then, X has also become a stage for his personal brand, with his musings, xeets, and endorsements earning him upwards of 165 million followers. But as a business leader, his behavior on X has been controversial in the least. At worst, his active trolling and promotion of conspiracy theories have created division and emboldened dissenting voices that appear to have shifted the greater conversation, and X’s brand sentiment, toward the dark side.

Musk has long claimed that one of the drivers for acquiring Twitter was to transform it into a platform for free speech. And while that is his right, it is also the right of anyone to walk away from conversations that are uncomfortable, irrelevant, and those that threaten the wellbeing or health of any person, entity, or brand.

Elon Musk and his supporters see this as a political flashpoint, one worth fighting.

Advertisers also see this as political flashpoint, one not worth fighting in public.

At the heart of the matter though is an important relationship between free speech and consequences. In this case, the consequence of the platform’s owner expressing controversial beliefs are motivating advertisers right to exercise their freedom of speech by walking away from the platform. Pulling ads is not without its risks.

The day after Musk’s already GFY moment, “cancel” was trending on the X platform. Musk supporters promoted the blackmail narrative as they self-reported their Disney+ cancellations.

One user responded with support, rationalizing the move this way, “It’s not like advertisers didn’t know X is a free speech fundamentalist platform. The only thing that is surprising is the number of US companies opposed to the 1^st amendment.”

Marketing executives very well know X has become a fundamentalist platform. And they are also exercising their rights to not associate their brand with the X brand, for now.

X CEO, Linda Yaccarino, a highly respected advertising industry veteran, defended Musk’s retaliation.

“X is enabling an information independence that's uncomfortable for some people,” she admitted.

That’s a key point and one that is lost in the politics of this debate. If it’s uncomfortable for anyone or any brand, it’s because this isn’t the “social contract” originally tied to the Twitter brand. It’s an amended go-to-market position imposed upon advertisers and users when Elon Musk took over Twitter and rebranded it as X.

Yaccarino continued, “We're a platform that allows people to make their own decisions. And here’s my perspective when it comes to advertising: X is standing at a unique and amazing intersection of Free Speech and Main Street — and the X community is powerful and is here to welcome you.”

In other words, you’re free to make your own decision as to whether you stand at this intersection, participate in the conversations that shape it, or invest advertising dollars to support its position.

As CEO, Yaccarino also has a fiduciary responsibility to the business, advertisers, and users.

X is now racing to replace lost advertising revenue by accelerating its plan to attract small businesses.

“Small and medium businesses are a very significant engine that we have definitely underplayed for a long time,” a company spokesperson told FT.

This bet on the long tail could unlock new revenue streams. It’s also an uncertain bet on user experiences.

Advertisers less inclined to care about Musk’s words could enhance, taint, or push users away.

According to FT citing a former X senior sales executive, X would greatly benefit in catching up to Google, Meta, and TikTok by building “a world-class ad platform.”

Advertising At The Intersection Of Free Speech And Main Street

X is willfully asking users and advertisers to choose if they want to stand at the intersection of Free Speech and Main Street, with them. Free speech is now not just a freedom, benefit, or feature of the platform, free speech becomes an official brand pillar of X.

Advertisers recognize Musk himself is also a brand pillar. His actions on the platform, his personality, go beyond X’s brand, it has become the DNA of the platform itself.

To stand at the intersection of free speech and main street is a choice. Imagine a billboard hanging above the crowds congregating at these crossroads. To send a message to them is to endorse not just the location, but also why people are gathered there. At the same time, not advertising does not mean you don’t support its purpose. You’re just choosing to align your brand in settings that align with the pillars and standards defining in your brand style guide.

For context, Musk called-out Iger by name because of his earlier appearance on stage at Dealbook.

Before Musk Sorkin asked Iger about Disney’s decision to pause its ads on the X platform.

“You stopped advertising on X,” Sorkin observed.

To which, Iger responded, “We did.”

Sorkin then asked Iger to explain the decision.

Iger, noticeably thoughtful in his response, took his time and chose his words carefully knowing Musk and Yaccarino were listening.

“I have a lot of respect for Elon and what he’s accomplished,” he opened. “And we know that Elon is larger than life in many respects and that his name is very much tied to the companies that either he has founded or he owns, whether it’s Tesla, SpaceX, or now X.”

Iger continued, “By him taking the position that he took in quite a public manner, we just felt that the association with that position, and with Elon Musk, and X, was not necessarily a positive one for us and we decided we would pull our advertising."

Iger also made it a point to observe that Disney companies continue to use X as a platform to communicate to their audiences.

What Iger is not saying is that he doesn’t stand with free speech. What he is saying is that when the platform owner himself supports an antisemitic conspiracy theory to his 165 million followers, it’s time to reevaluate the advertising strategy and consider brand alignment.

The company didn’t pull advertising because other users on the platform share similar sentiments. When the platform brand is intrinsically tied to one person who does something extremely controversial or goes against what you, as an advertiser stand for, any brand would need to consider the benefits and consequences of a “guilt by association” relationship.

Again, to his credit, Musk apologized for his post.

“I mean, look, I’m sorry for that … post,” Musk expressed to Sorkin. “It was foolish of me. Of the 30,000 it might be literally the worst and dumbest post I’ve ever done. And I’ve tried my best to clarify six ways from Sunday, but you know at least I think it’ll be obvious that in fact far from being antisemitic, I’m in fact philosemitic.”

Brands that support X must do so willingly, accepting that the original Twitter brand and charter are gone. Those that do not, also do so willingly. Risk and consequences are rife on all sides.

For now, fleeing advertisers do not plan to return according to the New York Times.

Lou Paskalis, the founder and chief executive of AJL Advisory, a marketing consultancy. “There is no advertising value that would offset the reputational risk of going back on the platform.”

With every action, Musk risks alienating brands or welcoming them.

With every advertising pause or departure, brands risk alienating their audiences who support Musk and X.

In Social Media, Markets Are Conversations

In the early days of the consumer internet, the authors of Cluetrain Manifesto predicted that online, conventional marketing techniques would be rendered obsolete. “Markets are conversations,” the authors observed. The idea was that online platforms were democratizing conversations, enabling two-way dialog between companies and consumers. Brands were encouraged to rediscover their human voice to foster genuine engagement rather than talking at their markets through traditional one-way campaigns.

These conversations have become the lifeblood of social media platforms like X. The nature of those conversations, user behaviors, and the platform guardrails, or lack thereof, become the culture of the network and frame the parameters for how those conversations develop and spread.

The reality is that advertising is not usually, a contribution or write-off. It’s an investment where returns are expected. And these days, CMOs are increasingly pressured to drive not only ROI, but also significant business growth.

A McKinsey study found that 78% of CEOs are banking on CMOs and marketing leaders to drive business growth. Add to that, the average tenure of Fortune 500 CMOs was down to 4.2 years in 2022. Beyond reach, relevance, and resonance, performance is now part of the job. It’s a success criteria, not just for marketing, but also for the CMO role itself.

In November 2022, Mark Cuban used the X platform to say as much.

“If advertisers were getting results from their X ads, or possibly If you [Musk] posted data that showed that ads on this platform were effective and produced results, you would be in an entirely different position,” he posted.

Notable author and business management consultant Peter Drucker believed that the purpose of business is to “create and keep a customer.”

“The business enterprise,” he wrote, “has two – and only two – basic functions: marketing and innovation… All the rest are costs.”

Drucker's perspective highlights the significance of continuously delivering value to customers to achieve long-term success. By focusing on creating and retaining customers, businesses can effectively focus on growth initiatives such as revenue growth, profitability, customer retention, finance, sales, production, and management.

Shiv Singh, CMO at LendingTree shared in a LinkedIn post, that marketers are intensely focused on ROI and understandably wary of risks. He observed that X is still a platform that should not be underestimated.

Singh offered advice to anyone at X willing to listen. “For better marketing outcomes, X needs to improve its AI driven recommendation systems,” he offered. “It'll drive more large advertisers to the platform while fueling an advertising renaissance among smaller advertisers.”

On X, and any social media platform, markets are conversations. This is X’s opportunity to create and keep an advertiser. At the same time, this is a moment for advertisers to determine if X helps them create and keep a customer.