The Cyber Voice has learned that X, formerly known as Twitter, is experiencing a downturn in advertising revenue this year. According to a Bloomberg report on December 12, the social media giant’s ad revenue has dropped to approximately $600 million per quarter in 2023, a significant decline from the over $1 billion per quarter it reported in 2022.
Advertising sales, which constitute 70% to 75% of X’s total revenue, have been impacted by advertisers’ growing concerns over the platform’s content moderation practices under the leadership of its new owner, Elon Musk.
X‘s executives had ambitiously aimed for $3 billion in revenue from advertising and subscriptions for 2023, but it seems the company is on track to miss this target. Joe Benarroch, the head of business operations at X, told Bloomberg that this portrayal offers a partial view of the company’s operations. Benarroch highlighted that X is a global enterprise with diverse revenue sources and shouldn’t be judged solely on metrics from its Twitter-era.
Under Musk’s direction, X has gradually reduced its dependence on advertising revenue. Alongside ad sales, the company also earns from its subscription service, X Premium, and through data licensing deals. However, external assessments indicate that the subscription business contributes less than $120 million annually.
Musk has expressed intentions for subscription revenues to account for half of X’s overall business. Currently, the service has just over 1 million paying subscribers. To broaden its revenue base, X is also focusing on attracting small and medium-sized businesses (SMBs) in addition to major brand advertisers.
The decline in ad revenue poses questions about X‘s future viability. Musk himself has acknowledged the risk of the company failing due to reduced ad revenue.
On December 11, reports emerged that X is laying the groundwork to expand into money movement. The company obtained three new money transmitter licenses in the United States at the end of November, bringing its total to licenses in a dozen states. This move indicates X‘s strategic shift to diversify its revenue streams and bolster its financial footing.