Is the X rebrand by Twitter going to change advertisers' perception of the platform?
Brand identity carries significant weight, and while Twitter is indeed a well-recognized brand, X lacks that heft. This could influence ad spending decisions. Recognizing a possible shift in perception, X is striving to win back ad partners and emphasize the benefits of X ads. The official X handles, along with Elon Musk, are promoting ad campaigns in the app to increase their reach and exposure.
However, not every campaign can be amplified this way. Despite Musk's recent assurances of improved performance in July, the company's ad intake seems to be lagging. To address this, X Corp has been offering 50% discounts to ad partners to keep them connected to the app. Brands that fail to maintain regular X ad spend might risk losing their official checkmarks.
X representatives have been engaging with ad partners in the U.S. and U.K., sharing new opportunities to strengthen ties with big brands. They are offering reduced pricing on video ads that run alongside a list of trending topics in X’s ‘Explore’ tab, with discounts up to 50% until the end of July.
Though these discounts are ostensibly to demonstrate the platform's value during significant events, they also indicate Twitter's dwindling ad business. Twitter's total ad revenue intake is down 50% YoY, according to Musk's recent statements.
Adding to the challenge, Twitter carries a 'debt load' of $13 billion in bank loans that Musk assumed as part of his $44 billion acquisition. This loan requires $1.5 billion per year in interest payments and continues to increase with market rates.
The rebranded X has a mountain to climb to break even and generate profits. Despite Musk's vision of an 'everything app' and slashing 80% of staff, X is still far from its goal. One of the strategies includes a new verification offering and a push towards subscription-based income streams. Brands spending over $1,000 per month on X ads get a gold Verification for Organizations checkmark, but they risk losing it if they do not maintain the spending.
Although this tactic may seem like extortion, X argues that it's an anti-scam measure to protect brands within the app.
It's an uphill battle for the new Twitter CEO Linda Yaccarino, tasked with selling X. While there might be unseen elements to the plan, if Twitter fails to return to viability, the X experiment could be short-lived.