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Last year Elon Musk told advertisers to “go fuck” themselves. Then, he tried wooing them at the Cannes Lions Festival. Now, he’s suing them.
On Tuesday, X CEO Linda Yaccarino posted in an “open letter to advertisers” that the platform has filed an antitrust lawsuit against two of the most prominent advertising industry trade groups, the Global Alliance for Responsible Media (GARM) and the World Federation of Advertisers (WFA), as well as the GARM members CVS Health, Mars, Orsted, and Unilever. CVS Health, Unilever, Mars, and GARM did not respond to requests for comment by publication time.
The move comes after Musk tweeted in early July that the company would take legal action against “the perpetrators and collaborators” of an alleged “massive advertising boycott” on the X platform, according to the complaint.
The Rub? Both Musk and Yaccarino point to a report by the House of Representatives’ Judiciary Committee, which claims to have obtained evidence that GARM and its members organized boycotts against X. It’s a repeated right-wing talking point that claims brand safety standards tend to demonetize right-wing media. X “reinstated” its relationship with GARM in early July, after slowly moving away post-Musk acquisition .
“This behavior is a stain on a great industry, and cannot be allowed to continue,” Yaccarino wrote, who also posted a 1:56 minute-long video on the platform, sharing the same sentiment.
Look at the numbers: Many blue-chip advertisers have avoided the platform since Musk purchased the company on October 28, 2022. Ad spend on the platform was down 73% in June compared to October 2022 levels, and 73 of the 100 top-spending US advertisers in October 2022 were not advertising on the platform as of June, according to SensorTower estimates.According to the New York Times, reporting on obtained internal documents, “X earned $114 million in revenue in the United States, a 25% decline from the first quarter and a 53% decline from the previous year.”
“No advertiser needed GARM to tell them that advertising on the platform would create substantial reputational risk that far exceeded the value that advertising on the platform would create. The entire industry knows this,” Lou Paskalis, a marketing consultant and former president and COO of the industry trade group MMA Global, told Marketing Brew.
Read on: X’s ad business is going so well that the ads are now coming from Google.
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