'Fear' of Elon Musk is driving advertisers to spend more on X, analyst says

• X will clock $1.3 billion in US ad revenue this year, per a new forecast from EMARKETER.
• The report said some of the growth is motivated by fear of Elon Musk and isn't sustainable.
• X's advertising tactics have garnered scrutiny from Democratic senators.

Things seem to be looking up for the advertising business of Elon Musk's X.

A new forecast from the research firm EMARKETER says X's advertising business will get its first annual growth since 2021 this year.

EMARKETER forecasts X's US digital ad revenue will jump 17.5% to $1.3 billion this year, up from $1.1 billion in 2024. Globally, EMARKETER estimates X will pull in $2.3 billion in ad revenue this year, up 16.5% year-on-year.

There's a catch, however.

EMARKETER principal analyst Jasmine Enberg cautioned in her report that some of the growth is "being driven by fear" and, because of that, could be unsustainable.

"Many advertisers may view spending on X as a cost of doing business in order to mitigate potential legal or financial repercussions," Enberg said. "But fear is not a sustainable motivator, and the situation remains volatile, partly as some consumers' discontent toward Musk grows."

Enberg's comments echo previous reporting by Business Insider.

BI recently reported that ad agency execs and consultants were begrudgingly advising clients to pay what could be called an Elon tax: buying ads on X in order to avoid legal and political woes.

Enberg also said some of the ad growth came from the addition of small and medium-sized businesses and that X could also stand to benefit from Meta's new lax moderation policies.

X did not immediately respond to a request for comment from BI. It's a private company and doesn't publicly report ad revenue.

X's relationship with advertisers has been fraught

Despite the recent upswing, X's ad revenue is still much lower than it was pre-Musk. In 2022, the year Musk bought it, the company pulled in $2.4 billion in US ad revenue, per EMARKETER estimates.

X's ad business plummeted in the wake of Musk's takeover. Some advertisers were wary of his changes to the company. X laid off a large chunk of its staff, loosened moderation, shook up account verification rules, and brought back some banned accounts.

X fired back at some advertisers who had spurned the platform. The company filed a lawsuit against several advertisers in August last year, accusing them of illegally conspiring to boycott the platform through their membership in a now-defunct industry initiative called the Global Alliance for Responsible Media. The case is ongoing.

X's sales tactics have garnered scrutiny from Democratic senators, who sent letters to the DOJ and FTC calling for investigations. In their letters, the Senators referenced a report in The Wall Street Journal that said X's CEO, Linda Yaccarino, and a lieutenant had pushed IPG to spend more money on X, citing people with knowledge of the talks. The Journal reported that IPG execs had interpreted the message as a reminder that the Trump administration could impede its proposed $13 billion merger with the ad giant Omnicom.

Disclosure: BI and EMARKETER share a parent company.