Musk's Cambridge Analytica Moment

If Elon Musk is as smart as many believe he is, he already decided to change X’s business model from an ad-supported one to something else.

In that case, there was little risk in him cursing out the ad community last week.

Unfortunately, this probably isn’t the case and he’s simply reacting out of frustration. Linda Yaccarino, X’s CEO, was specifically hired to fix X’s ad business.

The words Musk used to attack advertisers were highly charged and potentially manipulative. While it’s hard for anyone to always say the right thing in the moment, there are so many other ways he could have said the same thing without alienating clients.

Musk could have said that advertiser spending impacts media content and it’s having an adverse effect on free speech.

X is trying to work with advertisers to create a safe advertising environment and at the same time provide a means for people to exercise their constitutional right to speak freely. 



He did take responsibility and apologized for an anti-semitic post he recently made on X and went so far as to say it was foolish. However, rather than try to put advertisers at ease about advertising on X, he chose to spin it that they were trying to blackmail him with advertising/money.

Even if the Media Matters for America report showing X’s advertisers’ posts alongside neo-Nazi and white nationalist posts is manufactured, the mere possibility of it being true should be enough to scare many advertisers away. His goal during last week's New York Times DealBook interview with Andrew Ross Sorkin should have been to reduce marketers' anxiety about advertising on X. Instead, he made it worse.

Based on my experience at Cambridge Analytica (CA), once the media echo chamber started to speculate that Trump won the 2016 presidential election due to a misuse of Facebook likes for ad targeting, whether it was true didn’t matter. CA was no longer able to win business. The very mention of impropriety was enough to scare off clients and the company eventually folded due to a lack of business and it being too expensive to fight all the lawsuits. Hopefully this won’t happen to X, but there is at least one precedent.

There are parallels between X and Cambridge Analytica, both the leaders of these companies were caught making public remarks that harmed their reputations while at the same time the companies were involved in perceived scandals – CA with Facebook and X with ads appearing next to hateful content.

Advertisers likely aren’t that sensitive to Musk’s accusations; although, they will be to any support for hate speech or other questionable Musk activity.

More than anything, CMOs want to be successful and build their brands. They’re looking for safe environments in which to advertise, expansive reach against target audiences, great ad targeting tools, competitive pricing, and measurable results. If X can deliver these, its situation can be salvaged.

Let us not forget that X has somewhere around 556 million active monthly users and most of them are highly coveted young adults. As of October, the platform was reported to receive around 6.14 billion visits per month and Musk himself is the most-followed person on X with more than 150 million followers. It has a lot going for it.

If X’s safety settings and AI were working perfectly today, and it might very well be the case, it would still take a lot of time and effort to prove it to advertisers. Perceptions can be a powerful deterrent and stubborn to change. It’s not going to happen overnight.

One thing is for sure, Musk’s claims and accusations are making him and Yaccarino the talk of the town. The earned media coverage is already spectacular, and you would expect it to translate into usage for X. You have to wonder how much of Musk’s antics are a calculated choice.

The good news is that Musk owns most of X, an estimated 74%. The stock price isn’t an issue as it was delisted when Musk bought the company and took it private. As a result, they don’t have to contend with activist shareholders. Musk and Yaccarino have the space to turn this around. Let’s hope it doesn’t devolve into another Cambridge Analytica scenario.

Next story loading loading..