Elon Musk’s Arduous Efforts to Keep Users and Advertisers Hooked to X Platform

User engagement on the X platform is another growing concern for Elon Musk. The total hours engaged by X users fell 8% YoY in Q3 2023. This decline was consistent, averaging 6% YoY per quarter from Q1 2023 to Q3 2023.

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Since Elon Musk‘s acquisition of Twitter, now rebranded as X, the platform’s trajectory has become a central focus among industry leaders and business analysts. X is on a rollercoaster, grappling with challenges like retaining and attracting new advertisers as well as users, coupled with the ongoing task of boosting engagement levels.

However, the plot thickens as engagement takes a nosedive, shadowed by concerns about brand safety, policy dilemmas, and the notorious spread of misinformation, prompting advertisers to stage a mass exit from X.

According to the latest data from Sensor Tower, 46 out of the top 100 advertisers on X have entirely ceased their US ad spending as of September 2023. This dramatic departure is a far cry from the glory days of October 2022, when engagement and profitability were on the rise.

Exploring the post-acquisition journey of X reveals a tumultuous ride marked by a series of advertiser departures from the platform. The impact was immediate; within a month of Elon Musk’s acquisition of Twitter, the platform lost 50 of its top 100 advertisers in November 2022. The ensuing months have seen a continuous ebb and flow of advertisers globally, driven by uncertainty regarding return on investment.

As a consequence, the X platform has been witnessing over 50% YoY decline in its monthly U.S. ad revenue since October 2022, according to third-party data provided to Reuters.

Zooming out to a broader perspective, although many tech firms have experienced a slowdown in ad growth throughout the past year, X’s advertising business appears to have borne the brunt of this trend. Elon Musk openly acknowledged the severity of the situation, confessing to a staggering 60% YoY drop in X’s U.S. ad business.

Insider Intelligence’s projections further underscore the financial impact, estimating that X’s ad business is anticipated to generate $2.9 billion this year, down nearly 30% YoY.

X Struggling to Keep Users Hooked

The challenges for X extend beyond advertiser relations into the very fabric of its user base. The number of daily active users of X has declined a notable 16% YoY in September 2023. In stark contrast, its competitors, including Snapchat (+11% YoY), Instagram (+8% YoY), YouTube (+6%), TikTok (+3% YoY), and Facebook (+2% YoY), all witnessed growth during the same period, as reported by The Wall Street Journal. The data raises questions about X’s ability to keep users engaged despite all the relentless efforts put forth by Elon Musk and his team.

In the third quarter of 2023, X stood out as the only social media platform experiencing a notable 10% YoY decline in its DAUs count. In contrast, Snapchat emerged as the leader in user growth during the same period, boasting an impressive 13% YoY growth in worldwide DAUs. This is followed by Instagram with over 10% YoY, TikTok with over 6% YoY, and Facebook with over 2% YoY growth in their DAUs in Q3 2023.

User engagement on the X platform is another growing concern for Elon Musk. Sensor Tower data reveals that the total hours engaged by X users fell 8% YoY in Q3 2023. This decline was consistent, averaging 6% YoY per quarter from Q1 2023 to Q3 2023.

In contrast, Meta’s Facebook and Instagram witnessed robust user engagement growth in the third quarter of 2023. This surge in engagement plays a pivotal role in contributing to the company’s ongoing advertising revenue growth, largely attributed to the popularity of Reels. Instagram, in particular, witnessed an impressive 29% YoY growth in total hours engaged in 3Q23, more than double that of competitors TikTok (+13% YoY), Snapchat (+10% YoY) and sister app Facebook (+9% YoY).

With competitors thriving and X losing ground in user engagement, advertisers may find themselves questioning the platform’s viability as a lucrative advertising space.

As X grapples with challenges in keeping its users engaged, the spectre of user churn has loomed large over the platform in the past year. Surprisingly, the number of churned users on X surged by more than 30% in September 2023 compared to October 2022. This significant increase in user churn, compounded by a decline in engagement and an overall reduction in active users, further complicates the pathway toward effective user monetization for X.

Amidst the challenges faced by X (formerly Twitter), there are notable bright spots in its performance. According to Data.AI, global first-time downloads of the X mobile app remained flat in the past year compared to the year prior to Elon Musk’s acquisition of the company. This suggests a level of stability in attracting new users to the platform.

Furthermore, the traffic to Elon Musk’s X profile and posts skyrocketed to a 96% YoY increase in September 2023. This surge in engagement with Musk’s content could potentially contribute to increased overall activity and interest on the platform.

Linda Yaccarino, the CEO of X, has asserted that the platform boasts “half a billion users all over the world showing up multiple times a day.” Although this claim suggests a sizable user base, the challenges of user churn, declining engagement, and the exodus of advertisers underscore the complexity of retaining and monetizing this user pool effectively.

In the fast-paced and ever-evolving world of social media, the growth of X delivers a poignant message to all tech companies and entrepreneurs: The success of the company hinges not only on innovation and feature updates but also on addressing fundamental issues of user satisfaction and advertiser appeal.

Under the leadership of Elon Musk, X has been rolling out new features consistently, with the ambitious goal of transforming it into a super app. It would be interesting to see how X will strategically overcome various challenges and position itself as the preeminent social media platform in the intensely competitive digital landscape.


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