One of the intriguing questions surrounding X (formerly Twitter) is whether it can stay afloat if advertisers (including many in the sports world) withdraw en masse. This is a key part of the many things discussed in a new New York Times profile of X CEO Linda Yaccarino. Yaccarino abruptly stepped down as chair of global advertising and partnerships at NBC last May (right before the upfronts) to become CEO of the social media service under owner Elon Musk. The article has a lot of unflattering things to say about the state of X’s business, particularly on the advertising side.
The advertising component of X is especially noteworthy for a couple of reasons. First, it’s deeply entwined with Yaccarino’s prior career, which included 19 years at what was then Turner (including a stint as executive vice president and chief operating officer of ad sales, marketing and acquisitions) and then more than 11 years at NBC, where he held a variety of roles from president of cable entertainment and digital ad sales to ultimately chairman of global advertising. Second, it’s a key part of what was working at Twitter before Musk bought the company for $43 billion in 2022 (after Musk tried to back out of the deal in October of that year but was forced to do so by a lawsuit from the company’s board).
Beyond that, advertising is one particular area where the Musk-era X is significantly different from its predecessor, Twitter. And it’s an area where it has come under particular fire, including in sports, where many major sports broadcasters suspended advertising or pulled it entirely last fall after Musk’s blunt response to content appearing next to anti-Semitic posts. That’s why some of the arguments in the Times article (by Kate Conger of the Times, with files from Ryan Mack, Benjamin Mullin, David McCabe and Sapna Maheshwari) are so important. First, here’s what it says about revenue: While external advertising estimates have been reported before, this is the first time the internal documents have been made public (note that under Musk, X is not a publicly traded company, so revenue figures are not regularly reported).
The company’s business has struggled in recent months as advertisers remain hesitant. The company hasn’t released profits since Mr. Musk took it private, but market research firm eMarketer estimates that X’s U.S. ad revenue fell about 52% last year to $1.13 billion. The firm expects X’s losses to slow to a 2.5% decline this year.
X executives told employees last month that 65 percent of advertisers have resumed campaigns, but are likely spending less than before. X’s U.S. revenue for the second quarter of this year was $114 million, down 25 percent from the first quarter and 53 percent from a year ago, according to internal documents obtained by The New York Times. The company is targeting $190 million in U.S. revenue in the third quarter from ads related to the Olympics, soccer and political campaigns, the documents said, but that target would still result in quarterly revenue 25 percent lower than last year.
Certainly, with the Olympics, politics, and NFL summer and fall, it wouldn’t be surprising if X saw significant growth from Q2 to Q3. But it’s interesting to see that target so far below last year’s numbers, given that political ad revenues tend to be much higher in election years than other years. These numbers speak to Yaccarino’s overall struggle to rebuild X’s image as a respected destination for advertisers, which has been tarnished by Musk, as outlined in the rest of the article.
There are a lot of stories like that. The article starts by discussing how Yaccarino specifically recruited Don Lemon to be one of the first big names to do a video show on X, which started with an interview with Musk, who then canceled the deal because he didn’t like how the interview was conducted. But there are also a lot of stories about how Yaccarino tried to appeal to advertisers concerned about anti-Semitism to get back on the platform last fall, but Musk’s tweets undermined that effort. (Musk’s sharing of a heavily doctored version of a Kamala Harris ad on Friday may make those issues even worse.) And one particularly problematic story is Musk’s specific attendance at the New York Times’ DealBook Summit last November, where he slammed advertisers that X didn’t need them.
Some have praised Yaccarino’s efforts to rein Musk in — Endeavor CEO Ari Emanuel (who is also an investor in Company X) told Conger, “The measure of a good CEO isn’t how many punches you can throw, but how many you can take. She’s the Muhammad Ali of CEOs,” while others have praised her for persuading Musk to attend a private dinner with insiders after the DealBook summit, helping to repair some of the damage caused by his public comments.
There’s criticism of Yaccarino here, too. Some have questioned her appearance on CODE last fall and her ability to handle criticism there from former Twitter executive Yoel Roth, while others have pointed out that her comments don’t carry much weight and that Musk will soon publicly refute them. But regardless of your opinion of Yaccarino, what’s perhaps more noteworthy here is her allegations that friends have told her to leave the company, and that advertising executives on a conference call last fall had asked her to leave.
Some of Musk’s friends have offered to advise her on how to deal with the headstrong billionaire or even acted as a go-between, and, more surprisingly, some friends and former colleagues have begged her to quit.
“The thing you need to know about Linda is that quitting is failure, and Linda doesn’t tolerate failure,” said Lou Pascalis, a longtime advertising executive and friend who has openly criticized Linda’s decision to work for Musk. “She’s trying to use her glowing reputation to become Elon’s chief apology officer.”
…On a Nov. 18 conference call, several veteran advertising executives conveyed to Yaccarino their concerns about Musk’s appearance to endorse anti-Semitism and urged him to resign, according to two people familiar with the call.
Of course, each person makes their own employment decision. And there’s a lot in the article that explains why Yaccarino took and stayed on in a job that seems so often thwarted by Musk. The article says that some feel she and Musk have “a common vision for X that we can grit our teeth and bear,” and that she and Musk “share a strong belief that our responsibilities extend beyond running a viable business to upholding the principles of free speech, fearing disruption by employees and associates, and being prepared to take legal action against critics.” There’s also a lot about how she felt neglected and under-promoted at NBC and Turner.
So maybe this article goes a long way toward explaining why Yaccarino would move from a role at NBC where she was widely praised for her ad sales, including the Olympics, to one where she’s been heavily criticized for Musk’s decisions at X and for her comments and weakening policies. And she certainly can make those decisions. But this article is noteworthy for detailing how X still has so many problems on the business and revenue side, and how many people remain pessimistic about the future of the company and Yaccarino’s role in it, including her friends.
[The New York Times]