X Sparks Advertiser Interest with 50% Discount on Ad Packages

Will Twitter's rebrand to X have an impact on how advertisers perceive the platform? Brand identity plays a crucial role, and Twitter is a well-established brand, while X may not carry the same recognition, which could potentially influence advertisers' ad spend decisions. X seems to acknowledge this change in perception, as they are making significant efforts to regain ad partners' trust and emphasize the advantages of X ads.

Check out the new #GalaxyZFold5 and #GalaxyZFlip5 from @SamsungMobileUS. What an incredible global launch on @X.

X is still the most powerful platform for launching new products.

Now the question is: are you ready to #JoinTheFlipSide? https://t.co/yAOdo2Xy61

— Business (@XBusiness) July 26, 2023

Recently, X Corp has been facing challenges in promoting campaigns as there is no equivalent feature for retweeting. Despite Elon's assurances of improving performance in July, the company's ad intake remains low. To retain ad partners and keep them engaged with the app, X Corp has been offering 50% discounts and warning that brands not maintaining regular spending might lose their official checkmarks. The Wall Street Journal reported that X representatives are actively meeting with ad partners in the U.S. and U.K. to explore new opportunities and maintain relationships with major brands.

According to The Wall Street Journal: “X this week began offering some advertisers reduced pricing on video ads that run alongside a list of trending topics in X’s ‘Explore’ tab […] It’s offering 50% off any new bookings of those ads until July 31, among other discounts. ‘The goal of these discounts is to help our advertisers gain reach during crucial moments on Twitter such as the Women’s World Cup,’ one of the emails read.”

Indeed, the new discounts introduced by X Corp appear to serve two main purposes. Firstly, they aim to demonstrate the platform's value, particularly during significant events like the Women's World Cup. Secondly, these discounts also reflect the current state of Twitter's ad business, which has experienced a decline. Elon's recent statements indicate that Twitter's total ad revenue intake is still down 50% year-over-year, highlighting the challenges the company is facing in this aspect.

We’re still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load. Need to reach positive cash flow before we have the luxury of anything else.

— Elon Musk (@elonmusk) July 15, 2023

 

The 'debt load' mentioned above is connected to the $13 billion in bank loans that Musk acquired as part of his $44 billion acquisition of the company. This decision has resulted in Twitter having to bear an additional $1.5 billion per year in interest payments, which continue to rise in line with market rates. As the debt has been loaded onto the company, Twitter is responsible for managing it, not Musk personally.

Essentially, for Twitter to break even, it not only needs to return to its regular revenue intake but also surpass it significantly due to the increased debt burden. Despite Musk's 80% staff reduction efforts, the company has not yet come close to achieving this.

As for the X rebrand, it's unlikely to have a substantial impact on these financial challenges. Nevertheless, Musk has held a vision for over two decades to create an 'everything app', and he remains confident that this ambitious venture will eventually become profitable.

X will become the most valuable brand on Earth. Make my words.

— Elon Musk (@elonmusk) July 25, 2023

 

X's new push includes a verification offering and a focus on building income through subscriptions. While the subscription revenue is currently minor compared to ad intake, X is pressuring brands to maintain ad spend to keep their verification marker in the app, which some view as extortion. X claims this measure is to protect brands from scams, although the previous free verification system served a similar purpose.

Despite the challenges, the X team remains optimistic about the expanded verification push and evolving ad approach, aiming to regain stability and elevate the platform. Twitter's new CEO, Linda Yaccarino, faces the task of selling X and finding a path to viability. Perhaps there are undisclosed plans that could lead to Twitter's resurgence, but if not, the future of X could be short-lived.