Big Brands tell Musk to X off: can SMEs benefit from the Twitter boycott?

After spewing antisemitic rhetoric on X, formerly Twitter, Elon Musk has felt the pain as big brands have orchestrated an advertising boycott.

The marketing freeze has observed over 200 advertisers halting spending, including powerful names like Apple, Disney, the European Commission, Warner Bros, IBM, and Lionsgate.

X’s failure to moderate hate speech has seen ads published by the likes of Apple and Oracle appear next to posts praising Nazi ideology, posing a risk to brands’ reputation.

According to reports by the New York Times citing leaked documents, X is at risk of losing up to $75m (£60m) this quarter from the advertising boycott.

Could Musk’s latest tantrum – by alienating big business – evolve into an opportunity for SMEs?

Musk’s complicated relationship with advertisers

The souring relationship between big brands advertising on X and Musk appears irreparable. Speaking at the New York Times DealBook Summit, Musk told the boycotting companies to “f*** off*”.

“And what the whole world will know is that those advertisers killed the company and we will document it in great detail,” he said.

What Musk’s comments fail to acknowledge is that X’s advertising business has been volatile since last year, when he officially took charge of the company.

Moreover, X has failed to address criticism that it has created a platform for hate speech, which is far from inspiring advertisers concerned about safeguarding their reputation.

In fact, Musk has sued, or threatened to sue, nonprofit organisations like the Center for Countering Digital Hate for their reports, which he claims are to blame for the rotting relationship with advertisers.

At the heart of these accusations is a stubbornness to update X’s model and acknowledge the critical feedback that has piled up since the executive took over the reigns of then Twitter.

Capitalising on Musk’s blunders

Amongst Musk’s mess, there is a potential silver lining – advertising money will have to come from elsewhere to upkeep X’s revenue.

“While Musk’s most recent comments to X advertisers were inappropriate, they may provide a window of opportunity for SMBs,” explains Itzik Levy, CEO and Founder of vcita, an SMB technology company.

According to reports by The Financial Times, X is already working on new sources of ad revenue, citing an earlier tie-up with marketing firm JumpCrew, which will outsource sales targeting SMEs.

The shift to targeting smaller businesses may prove difficult, considering X’s ads offering lags behind rivals like Meta, Google, and TikTok.

“The platform’s move will showcase the essential role SMBs play in the economy,” predicts Levy. “While in this case Musk is using SMBs as a replacement for big business advertising, social media platforms and large websites should always consider SMBs as essential advertisers with a key role to play.”

Levy points out that the average SMBs spend 7-10% of their gross revenue on marketing every year and place hefty importance on having a social media presence. The issue with advertising on platforms like X is that the pricing can be prohibitive and intimidating.

While the cultural advertising shift is being catalysed by controversial events, the move could democratise social media ad sales and act as a case study on how to attract SMB advertisers.

SMBs will be a major market for ad sales, as statistics hint that 94% of small businesses plan to boost their marketing spending in 2024.

But proceed with caution

The big brand exodus undoubtedly represents an opportunity for SMEs, but taking a pragmatic approach is essential as brands design their advertising strategy for the new year.

The threats to sue organisations that have flagged X’s inability to suppress hate speech do not inspire confidence. If anything, it is a warning that brands are at high risk of having their reputation marred by poor advertising practices and shaky content moderation.

In its attempt to prop up its flailing advertising business, X will need to demonstrate it has updated its practices and understand the needs and advertising wants of a sector it has thus far ignored.

As small businesses look out for these signals, marketing teams should continue to diversify their advertising channels, particularly when factoring in Musk’s rhetorical volatility.

That said , whilst the blue bird’s wings may have been clipped by recent events, millions of users continue to scroll through their X feeds and will continue to represent a market businesses can target.

Moving on, smaller brands should continue to engage – with caution.