Musk's New Twitter-X Sales Pitch: Give Us Your Ad Dollars Or We'll Sue

While such bullying tactics may work in the short run, especially when it was believed that Musk had the backing of the White House and the threat of its regulatory apparatus, his falling out with President Trump throws that into question.

More importantly, for the long term, Twitter/X has to actually deliver the potential customers that advertisers want. If it cannot do that - which is not an unreasonable concern given the many millions of people who have dropped the site because of Musk's antics - then there is simply no financial justification for using that platform. JL

Suzanne Vranica and colleagues report in the Wall Street Journal:

X, the social-media platform, has been struggling to resuscitate its ad business after many corporate advertisers fled over concerns about loosened content-moderation standards following Elon Musk’s $44 billion purchase in late 2022. (But) at least six companies that had either received lawsuit threats or were motivated in part by pressure tactics have now struck ad deals with X. The legal threats are part of an extraordinary pressure campaign that Musk and X CEO Linda Yaccarino  launched to boost revenue by cajoling advertisers to spend money on their platform. X has accused some of them of illegally colluding with one another on an ad boycott.

Late last year, Verizon Communications got an unusual message from a media company that wanted its business: Spend your ad dollars with us or we’ll see you in court.

The threat came from X, the social-media platform that has been struggling to resuscitate its ad business after many corporate advertisers fled over concerns about loosened content-moderation standards following Elon Musk’s $44 billion purchase in late 2022.

It worked. Verizon, which hadn’t advertised on X since 2022, pledged to spend at least $10 million this year on the platform, a person familiar with the matter said.

Fashion company Ralph Lauren also agreed to resume buying ads on X after receiving a lawsuit threat, people familiar with the matter said. All told, at least six companies that had either received lawsuit threats or were motivated in part by pressure tactics have struck ad deals with X, according to people familiar with the negotiations. The agreements include both firm ad-spending commitments and nonbinding targets.

The legal threats are part of an extraordinary pressure campaign that Musk and X CEO Linda Yaccarino launched to boost revenue by cajoling advertisers—including Amazon, Unilever, Pinterest and Lego—to spend money on their platform. X has accused some of them of illegally colluding with one another on an ad boycott. Its tactics have generated a climate of fear on Madison Avenue.

“The strong-arm tactics” are unusual and worrisome for marketers, given Musk’s influence in Washington and “bully pulpit” of 221 million followers, said Greg Paull, president of global growth for MediaSense, a consulting firm that helps match advertisers with ad agencies. Despite his fallout with Trump last week, Paull said, Musk still has plenty of access to government officials.

“This type of activity may be common on Nanjing Road in China, but absolutely not at all common on Madison Avenue,” Paull said.

This account of X’s campaign and how advertisers reacted to it is based on interviews with more than two dozen people familiar with the discussions. A spokesman for X declined to comment, and Musk didn’t respond to a request for comment.

The advertising woes of the company formerly known as Twitter began shortly after Musk’s takeover. Major advertisers left the platform over content moderation concerns and turmoil stemming from the departure of senior X executives. X tried to woo brands back by offering discounts and introducing new brand-safety ad tools. 

In meetings on Capitol Hill, Musk told Rep. Jim Jordan (R., Ohio) that advertisers were boycotting X, people familiar with the matter said. He complained in particular, they said, about the Global Alliance for Responsible Media, an initiative by the World Federation of Advertisers intended to protect brands from what it deemed “unsafe” online content. Jordan, who heads the House Judiciary Committee, later subpoenaed GARM for documents, seeking evidence of anticonservative bias. Last August, X sued the World Federation of Advertisers and several advertisers, accusing them of engaging in an illegal boycott of the platform by conspiring to withhold advertising in violation of antitrust laws. The lawsuit cited allegations by Jordan’s committee that GARM’s activities “that rob consumers of choices [are] likely illegal under the antitrust laws.” The ad trade group disbanded GARM shortly after the suit was filed.

The trade group and advertisers moved to dismiss the suit, which they called in a legal filing “an attempt to use the courthouse to win back the business X lost in the free market.” The filing said the companies acted independently when deciding whether and how to make changes to advertising on X.

Some antitrust experts said X faces a high bar to prove its claims. “It would be an antitrust violation if the advertisers got together and said, ‘Let’s boycott X to get lower ad rates,’” said Cardozo Law School Professor Sam Weinstein, a former Justice Department antitrust lawyer. But if advertisers were motivated by a desire not to be associated with the kind of speech X was allowing, he said, “that’s unlikely to be an antitrust violation.”

 

The day the lawsuit was filed, X’s Yaccarino posted on the site what she called an open letter to advertisers. “To those who broke the law,” it read in part, “we say enough is enough. We are compelled to seek justice for the harm that has been done by these and potentially additional defendants, depending what the legal process reveals.”

Since then, X lawyers have told some reluctant advertisers that the company would add them to the lawsuit if they didn’t spend money on the platform.

Pressure campaign

Image-sharing platform Pinterest had paused its ad-buying on X, partly because of upheaval after the Musk takeover. In calls to Pinterest’s legal team in January, a lawyer for X demanded that the company commit to its pre-takeover spending level for two years or face legal action, said a person familiar with the conversations. Pinterest decided not to do so after having bought ads on other platforms that it concluded delivered stronger results than X, that person said.

In early February, X added Pinterest and a half dozen other advertisers to the lawsuit. Danish toy-bricks maker Lego was added after it rebuffed a demand to spend more on X, according to a person familiar with the matter.

“Advertisers are understandably concerned about the litigious streak of Musk’s X, interpreted by some as ‘invest with us, or else,’” said Ruben Schreurs, chief executive officer of Ebiquity, a consulting firm that works with advertisers.

 

The talks with Verizon ramped up when X informed the telecom company that it would be added to the suit unless it returned to the social-media network. In subsequent conversations, Yaccarino touted X’s improvements regarding brand safety tools and new ad formats, according to people familiar with the discussions. As part of its agreement, Verizon pledged to spend at least $10 million on X this year. That figure could rise to $25 million if the initial ad effort performs well and ads don’t appear near content that Verizon deems inappropriate, some of those people said. In 2020, before the takeover, Verizon had spent roughly $80 million on X, one of the people said. 

Yaccarino consulted Musk’s personal lawyer, Alex Spiro, for advice on getting advertisers back on X, according to people familiar with the matter. Spiro, who represents many Fortune 500 companies, made the case to brands to resume advertising on X, but didn’t advise Yaccarino on any litigation. 

Before calling advertisers, X’s team pulled records of what brands spent on the platform before Musk’s takeover, according to a person close to X. The team’s goal was to get them to return to spending at least that amount, but in some cases an in-house X lawyer asked for double the amount, the person said. The team focused on ad agencies, which could help boost ad revenues across their client bases, the person said.

 

Consumer-product giant Unilever, one of the largest advertisers in the world, was named in the original lawsuit. The maker of Dove soap and Hellmann’s mayonnaise reached an agreement with X last fall to increase ad spending, according to people familiar with the matter. It was dropped from the lawsuit in October. 

Activist investor Nelson Peltz, who has been a Unilever board member since 2022 and has had a close relationship with Musk, helped Unilever negotiate its deal, the people said. Unilever said at the time of the agreement that X had “committed to meeting our responsibility standards to ensure the safety and performance of our brands.”  

While X’s revenue dropped to about $2.6 billion in 2024, from $4.6 billion in 2022, it ticked up late last year. Research firm Emarketer projects that X’s ad revenue will grow this year for the first time since Musk took control. However, it’s expected to remain below its pre-Musk level.

 

Ad buyers said X has made progress in developing ad-technology tools that allow brands to avoid having their ads appear next to content they deem unsuitable. Another attraction for companies is the opportunity to place ads near sports content on X, which has struck deals to post highlights from National Football League and the National Basketball Association games. 

Amazon, which had pulled much of its spending from X in late 2023, began spending more on ads earlier this year after months of negotiations that involved Amazon Chief Executive Andy Jassy.

Last November, while discussions were under way, X added Amazon’s Twitch Interactive to the lawsuit, according to people familiar with the matter. X notified the court last month that it dismissed its claims against Twitch. The Twitch lawsuit didn’t factor into Amazon’s decision to ramp up spending on X, a person familiar with the matter said.

People close to X said the platform pressed vendors that were supplying it with goods or services to spend money on advertising. X is a customer of Amazon Web Services, its cloud-computing unit, and had past-due bills for that. X used those unpaid bills as leverage during negotiations, according to people familiar with the matter.

At its peak, Amazon had spent around $100 million a year on advertising on X, according to a person familiar with the matter, far more than it is currently spending. 

Agency talks

X has been eager to get more business from the world’s largest ad companies, which spend tens of billions of dollars a year on advertising on behalf of their clients.

In December, during discussions with advertising conglomerate Interpublic Group about increasing spending, X hinted that its recently announced $13 billion deal to merge with rival Omnicom Group could face trouble from the Trump administration, The Wall Street Journal has reported. IPG subsequently signed a new annual deal with X for potential client spending.

Paris-based ad agency Publicis Groupe agreed to spend about $150 million on X in the U.S. this year, up from roughly $70 million in 2024, a person close to the agency said. It isn’t obligated to spend that amount if client demand doesn’t materialize. Publicis was motivated largely by a desire to secure better rates for clients that wanted to advertise on X’s NFL and NBA content, that person said, but it also wanted to avoid pressure from X, which was suing some of its clients. X has been pushing the U.K.-based advertising conglomerate WPP to sign a global ad deal. It has sought roughly $200 million, more than double what WPP spent last year, according to people familiar with the matter. The discussions left some WPP executives feeling that failing to strike a deal might result in negative repercussions for the firm or its clients, some of those people said. WPP has yet to sign an agreement. 

An executive at another agency negotiating a spending agreement asked X to promise not to file lawsuits against its clients as part of the agreement, a person familiar with that meeting said. X refused. 

X also has sued left-leaning media watchdog Media Matters for America, alleging that the group tried to drive away advertisers by issuing a faulty report that showed ads for major brands on X appearing near pro-Nazi content. Media Matters called X’s suit frivolous and said it was intended to “bully X’s critics into silence.”

 

X has subpoenaed Omnicom, WPP and Publicis in connection with that lawsuit, according to people familiar with the subpoenas. The subpoenas demanded that the agencies turn over any internal emails that discuss the social-media platform and Media Matters, the people said. 

Those requests for internal emails took some ad executives by surprise, and some are reluctant to give X information about their clients, some of the people added. 

Musk has taken a personal interest in that litigation, according to text messages viewed by the Journal. In November 2023, Musk texted someone that he needed to “defeat Media Matters” and welcomed any help in the effort. 

On May 20, the Federal Trade Commission sent Media Matters a civil investigative demand, signaling that the agency is investigating the entity. The document, which was reviewed by the Journal, requests information from the group, including: “all documents that Media Matters either produced or received in discovery in any litigation between Media Matters and X Corp. related to advertiser boycotts since 2023.”

The agency is investigating whether ad and advocacy groups violated antitrust laws by coordinating boycotts of certain sites, including X. On Monday, the FTC sent requests for information to ad companies including Omnicom, WPP, Publicis and Interpublic.