Elon Musk closed the acquisition of Twitter, now X, in October of 2022. Once that deal was closed, a bunch of advertisers left the platform out of fear of their brands being impacted by the new “Freedom of Speech” rules that X was looking to implement.
The premise was that ads would be shown next to content that advertisers don’t want to be associated with, and because X would now allow more “improper” content, the chances of having a negative ad experience could increase.
After leaving the platform for a few weeks, almost all advertisers have come back, albeit with lower ad spends. However, earlier this year, X gave guidance that the platform is near cash-flow neutral, minus debt obligations. This means that even though the platform has suffered losses in terms of ad revenue, the company is close to being self-sufficient.
In other words, no outside cash has to be brought into the company to keep it alive, as long as the trend continues.
Fast forward a few months, and after controversial comments made by Elon and an effort by Media Matters to encourage advertisers to boycott the platform, advertisers left again.
However – just like the first time, after a few weeks, advertisers are beginning to come back. There’s confirmation that Netflix has started to spend ad money on the platform again, and per Elon at his recent conference in Italy, advertisers are beginning to come back to the platform en masse.
I think all of this points to something quite clear – the Overton Window is beginning to shift, and with it, a massively profitable endeavor for advertisers.
For those that are not familiar, the Overton Window is a term used to express what is “acceptable” to be discussed in a given time period. If you compare what is acceptable to be discussed on X today, vs what was acceptable on Twitter pre-acquisition, you can very clearly see that the “acceptable” topics are much more diverse and plentiful. This means that the Overton Window has shifted.
Another example of this is also on YouTube. A few days ago, Mario hosted a space with Elon Musk, Alex Jones, Andrew Tate, and other folks discussing Alex’s reinstatement and a bunch of other topics. These topics pre-acquisition would not be admissible under Twitter’s former rules. What’s really interesting is that after making this edited content available on YouTube, YouTube has a) not taken down the content from the platform and b) allowed monetization on the content.
This implies that advertisers are now becoming comfortable advertising on content that they weren’t comfortable with in the past.
What does this mean for X? It’s quite simple – X’s willingness to stand for Free Speech, even when the CEO makes statements that cause the business to temporarily lose revenue, is creating a brand new market for advertisers that previously did not exist precisely due to an unwillingness to embrace Freedom of Speech.
And because X’s entire approach has been to uphold Freedom of Speech and accept the repercussions that come with it, the platform has positioned itself as the premier place for content that will be generated on this principle.
This same content is a market that advertisers have had 0 access to in the past because of the unwillingness of platforms to embrace Freedom of Speech, and the skittishness of ad agencies to sully their brands with controversial topics. On top of this, it’s a market that is untapped, which will generate billions of views, and billions of dollars, for creators and advertisers alike.
I do not suspect we’ll see another advertisers boycott in the future because of this dynamic. There’s way too much money to be made, and now that the Overton Window has shifted to where the “public” is now “comfortable” with listening to dissenting and controversial opinions, advertisers will be tripping over themselves to advertise on X over the long term.
In my opinion, people respect the notion of being allowed to think for themselves, and because this has been subdued for far too long, there will be an avalanche of interest for content that is specifically challenging and controversial. Ultimately, this will be massively profitable for advertisers due to the engagement and attention it’ll receive from the public.
I posited when Elon bought the platform that X would win if they could make Freedom of Speech profitable, and I think we’re starting to see glimpses of this being the case.
By Farzad Mesbahi
