Under pressure: Companies spend token amounts for ads on X to avoid getting on Musk's bad side

A growing number of major brands are quietly allocating small portions of their advertising budgets to Elon Musk’s social media platform X, in an effort to sidestep accusations of boycotting the site while avoiding direct confrontation with its controversial billionaire owner.

Financial Times cited marketing executives as saying that companies have faced mounting pressure to maintain a nominal presence on X (formerly Twitter), especially since Musk’s public support for Donald Trump’s administration and his increasingly aggressive legal strategy against former advertisers.

Last month, X expanded a lawsuit against several groups it claims unlawfully coordinated to stop advertising on the platform.

New names added to the legal action include Shell, Nestlé, Pinterest and Lego. The lawsuit follows Musk’s $44 billion acquisition of Twitter in 2022 and forms part of a broader campaign to hold advertisers accountable for what Musk describes as politically motivated boycotts.

“It’s whatever amount is enough to stay off the naughty list,” said Lou Paskalis, CEO of marketing consultancy AJL Advisory. “The brand safety risk hasn’t gone away – but the bigger concern is a Musk tweet that sends your stock tumbling. That’s a billion-dollar risk.”

The latest developments come as Musk’s artificial intelligence firm xAi completed its acquisition of X this week in a deal valuing the social media platform at $45 billion including debt. Musk said the merger would consolidate data, talent and technology across both companies.

Despite ongoing turbulence, investors remain cautiously optimistic. Musk’s cost-cutting approach has helped stabilise operations and improve revenue, and his proximity to Trump has energised some right-leaning segments of the market.

Internally, Musk and X chief executive Linda Yaccarino are aiming to bring advertising revenue back to 2022 levels – before the post-acquisition advertiser exodus. According to research firm Emarketer, X’s global revenue is expected to rise to $2.3bn in 2025, up from $1.9 billion last year, but still far short of the $4.1 billion reported in 2022.

In the US, ad spending on X declined by 2 per cent in the first two months of 2025 compared with the previous year, even as firms like Hulu and Unilever cautiously returned to the platform. American Express has also resumed advertising, though its spending remains 80 per cent lower than in early 2022.

In a sign of shifting dynamics, four of the world’s largest advertising agencies – WPP, Omnicom, Interpublic Group and Publicis – have either struck deals or are in advanced discussions with X to set annual ad spending targets via upfront commitments.

However, the uneasy détente is shadowed by ongoing legal tensions. Musk’s federal antitrust lawsuit against the Global Alliance for Responsible Media – a coalition of brands and agencies that includes Unilever – has unnerved many in the industry. The group is accused of coordinating an “illegal boycott” under the guise of brand safety.

Unilever was dropped from the lawsuit after it resumed advertising on X last October. Still, fears persist. Staff at GroupM, part of WPP, have reportedly been warned to watch what they say about X in internal communications, including on video calls.

Concerns over regulatory scrutiny have also cast a shadow over the sector. A proposed $13 billion merger between Omnicom and Interpublic has been delayed due to further information requests from US authorities, stalling what would be one of the biggest deals in the advertising world.

Even as legacy advertisers hold back, X is courting new clients. Sensor Tower data shows that 35 of the platform’s top advertisers this year did not spend on it in 2023. New entrants include pro-Trump merchandise outlet Rock Paper Sizzle, energy drink brand Celsius, and telehealth company Hims & Hers.

X insiders point to an uptick in small brands using self-serve ad tools, including features powered by its Grok AI chatbot to help generate campaigns. “They’ll get back [to previous ad revenue levels], but it won’t be the same mix of advertisers,” said one person close to the company.

Mark Penn, chief executive of New York-based ad agency Stagwell, claimed X was “a revived and increasingly vibrant platform”.