SMBs Still Cautious Advertising on X Despite Lower CPMs

X has been ramping up efforts to court small and midsized businesses in order to offset some of the ad revenue declines it has faced as brands have quit the platform. While costs per click are relatively low, inconsistent conversion and brand safety concerns are making SMBs wary of spending on X, five sources told ADWEEK. “The wider quality of the ads served across X has dropped, lowering trust in X ads, which, in turn, means SMBs are having to work harder to counter this in order to drive quality results,” said Jack Moore, head of social at social media agency Hatch Group. Brands Swap Viral Tweets for TikTok and Instagram This Super Bowl Moore added that 10% of its SMB brands across business-to-business, lifestyle and sports are buying media on X. “We are seeing better results in terms of CPM (cost per thousand impressions), CPE (cost per engagement) and CPC,” Moore said. “However, the quality conversions [are] inconsistent. [This is] in comparison to Meta, TikTok and LinkedIn.” In the past six months, the average CPM on X was down by 60% to $0.38, while CPC saw a 50% decrease to $0.10, said Moore. Driving conversion hasn’t been X’s strongest suit, and it has historically lagged behind platforms like Meta, Google and TikTok. After larger brands including Disney, Apple, and Comcast left X following its tumultuous takeover by Elon Musk, lower demand meant that its ad inventory became widely available at a lower cost. Yet, a lack of brand safety measures means that SMBs with limited ad dollars are instead choosing platforms that can drive repeatable results, like Meta, YouTube, and TikTok, alongside smaller platforms such as Reddit and Pinterest. “The audience quality may be impacted since Musk's takeover,” said Bryan Armit, head of social at Tigerbond. “Another concern [for brands] always is what content ads are going to be shown next to. It always comes back to brand safety issues.” Lower CPMs and easier ways to buy X outsourced its ad sales to target SMBs to marketing startup JumpCrew, Financial Times reported last December, and it began focusing on subscription and data licensing services. In the last quarter, SMBs on X have grown almost 10%, Joe Benarroch, head of business operations, X, told ADWEEK. X integrated with Google Display Network last September, letting advertisers buy X as part of a larger media spend. Following that, X announced earlier this month that advertisers can run ads against a “curated list of premium content creators via Creator Targeting.” To that, the platform is building a new engineering team in Japan to create new user and ad products for all sized businesses, including SMBs, said Benarroch. Despite these easier ways to purchase, X is currently grappling with a demand and supply issue, said Marcus Krzastek, president of VaynerX’s SMB arm, The Sasha Group. One of the opportunities is to go against the curve and look at where demand might be decreasing. Marcus Krzastek, president of VaynerX’s SMB arm, The Sasha Group “X has promised solid products and has a real consumer base across a variety of topics and demographics,” Krzastek said, adding that the cost of ads is relatively low. “We see an opportunity for brands to come in and, because we're running biddable media, we can buy impressions that are disproportionately valuable [compared with] what we'd have to pay for them.” The Sasha Group is in talks with clients to resume testing on X. Currently, 1% to 5% of its SMB brands run ads on the platform. “In the SMB space, one of the opportunities is to go against the curve and look at where demand might be decreasing,” said Krzastek. “There’s an opportunity for brands to test more in the coming months. However, not every brand will specifically see performance.” Others are noticing enticing, lower CPMs on X. “We are seeing much more efficient CPMs on X,” said Nathan Byrd, vice president, paid social at Media.Monks. “From a small business perspective, that could be an appealing aspect of advertising on the platform compared to Meta.” Byrd didn’t share CPM specifics. Beyond just paid media, brands still find success on X for building awareness, interjecting into conversations and ultimately driving interaction and engagement. However, content moderation feels alarmingly lax under the veil of free speech, said sources. This has led to verified bots taking over replies on popular posts, as well as timely, relevant content being downplayed in favor of clickbait-style video content with little context, said Moore. “This doesn’t tend to make for a brand-friendly platform," he added, "and those SMBs that are still active are having to work harder to ensure that the negative elements of X don’t encroach on their platform presence."

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SMBs Still Cautious Advertising on X Despite Lower CPMs

Inconsistent conversion and brand safety concerns are preventing more brands from testing

Trishla Ostwal

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Trishla Ostwal