Advertisers do not return. Musk also admits the problems of the X network, bankruptcy is also at stake – Echo24.cz

More real than it might seem. This is how the eventual bankruptcy of American billionaire Elon Musk’s X social network could be described. According to a British report BBC is the loss of advertising revenue so significant that it could seriously threaten the functioning of one of the most important social networks. Musk himself admitted this in an interview with The New York Times on Wednesday.

“If company (X) fails… it will go bankrupt because of the advertiser boycott. And that will be what bankrupts the company,” Musk said in the aforementioned interview. The companies suspended their ads on X after Media Matters for America, an American organization, found and flagged ads that appeared alongside pro-Nazi posts after an extensive search. The X Network vehemently denied the report, questioned the organization’s research methods, and filed a lawsuit against it.

The owner of the X network has previously played down the advertising issues somewhat. “If Disney and Apple are able to advertise children’s movies and the iPhone on Twitter, those are good indicators that Twitter is a good place to advertise,” Musk previously said.

A few months later, when none of the mentioned companies and many others are no longer advertising on the former Twitter, the erratic Musk is speaking differently. In an impassioned interview on Wednesday, he told companies that stopped advertising on his social network X because of anti-Semitic content to “go to hell”.

Although the most recent figures are not available, last year advertising revenue accounted for approximately 90% of X’s revenue. It was a key factor in the company’s operation. In addition, Mark Gay, CCO of marketing consultancy Ebiquity, which works with hundreds of companies, says there is no indication that any of the former advertisers are returning. “The money has dried up and no one is strategizing how to reinvest it,” he says.

At the same time, Musk knew that newly introduced services on the X network, such as subscriptions, would not replace advertising money. “If you have a million people who buy subscriptions for $100 a year, that’s a total of $100 million. This is a relatively small source of income compared to advertising,” Musk said in the spring of this year.

In 2022, Twitter’s advertising revenue was approximately $4 billion. Insider Intelligence estimates they will drop to $1.9 billion this year. The company has two main expenses. The first of these is the expenditure on employees. Musk has already reduced the number of employees to a minimum in X and laid off thousands of people. The second is servicing the loans that Musk took out to buy Twitter, totaling about $13 billion. Reuters reported that the company now has to pay about $1.2 billion in interest each year.