There has never been a better time to advertise on Twitter…
…or X as we now have to call it. Is anyone really using that name? The headlines in the advertising world this week have been dominated by Elon’s latest outburst telling advertisers to ‘go f*** yourself’ (video here, it has to be seen to be believed https://www.youtube.com/shorts/jH22atngRxk).
Many news outlets cut the clip early, missing the seemingly innocuous “Hi Bob” comment at the end. This is widely believed to refer to Bob Iger, CEO at Disney, who had spoken at the same conference earlier that day and recently approved a move for his company to withdraw all their advertising spend on X, along with several other high profile brands.
Musk’s recent antisemitic comments are one reason. Ads on X appearing alongside offensive content are another. But I believe there’s a third reason at play; efficient management.
Why Are Companies Boycotting X?
For companies operating at the scale of Disney, reach is key. These companies buy ads in a way that gets them the best return for their spend in terms of people who see their ads. Money in = views out. Since rebranding in July, that equation has been rocked more significantly than any social network has seen in a short period of time. Daily usage of the platform is thought to have been dropping by around 9% every month since the rebrand, but crucially the official stats have been made a closely guarded secret.
Big brands with big budgets value reach and transparency. Both of these have all but disappeared.
Disney will be planning their budgets months in advance and have committed spend on the platform. Unlike SMEs, big companies are difficult to steer and agility for changing approach or carefully adjusting budget is non existent. Unlike SMEs, their marketing teams will often prefer to completely shut down a channel than waste the time and energy managing a channel with less spend. For companies of this scale, the resources, systems, agencies and salaries required to manage a channel are pretty much the same whether the spend is 1 million or 10 million a month.
If reach drops, ad spend has to drop. But the resource commitments to run the channel are a fixed cost. It doesn’t scale in a linear format, and so it’s better to shut the channel down and redeploy resources.
This is what I believe the likes of Disney are doing.
SMEs though don’t have these same challenges. They have agility and the ability to test. They have less concern over scale and are more interested in audiences and click costs. Reach for big businesses means volume, reach for SMEs means cost efficiency.
It’s All About Supply & Demand
That’s why there has never been a better time to advertise on X. Like most digital advertising, X runs on an auction based system that bids based on impressions. Many businesses think they are paying per click, but in most cases that’s not the case and you are paying per impression. Less demand equals lower prices for those impressions. And demand just dropped.
The latest data that we have available suggests that the CPM (cost per thousand impression) on X is currently averaging around $1.37. A year ago, our data was showing the average CPM at $5.63. That’s a decline of 76%. Put another way, however much you spend on X will get you 4x the number of impressions, clicks and purchases as it would have a year ago.
Compare that to the other big networks. Meta averages $7.40 per 1000 impressions. YouTube is around $3.55. Even TikTok which advertisers were loving a year ago due to low costs is now up at $3.30. LinkedIn rarely falls below $20.00. The cost of advertising online has been increasing at a rate way faster than inflation in most of the world and shows no sign of changing. X offers a lifeline.
What’s The Catch
What’s the catch? There are two, maybe three. Firstly it probably won’t last, advertising on X is trading at way less than its market value even with the drop in usage and advertisers (even the ones currently boycotting the platform) will probably return. The second is that X has never been a fantastic platform for delivering high conversion rates, but with ad costs close to 80% less than those on Meta you can afford quite a reduction in conversion before the numbers don’t stack up.
The third depends on your point of view. If you believe that X deserves to be punished and that your vote counts, then stay away. If you feel there’s more to this platform than the ramblings of the guy who bought it then now is the time to consider a campaign there. But don’t dwell on it too long, one way or another this opportunity won’t be around forever.