• Some ad agencies and consultants say they're advising clients to spend on Elon Musk's X.
• Industry insiders told BI they felt advertising on X could help brands avoid some political and legal risks.
• However, many ad insiders bemoaned the way the political environment was affecting ad buys.

You might call it the Elon tax.

Some ad agency execs and consultants tell Business Insider they are begrudgingly advising clients to spend on Elon Musk's X.

Their attitude reflects a wider discomfort in the ad world.

Thirteen ad industry insiders who spoke with BI said they were bristling at the current state of play — namely that advertising on X seemed to be a cost of doing business in a politically charged era with Musk a central force in Donald Trump's White House.

Some of these insiders said they viewed spending on X as a type of insurance policy to avoid an advertiser being singled out publicly as a boycotter, sued, or saddled with some sort of regulatory scrutiny.

These insiders were a mix of marketers, agency executives, and consultants. Most of them asked for anonymity because of concerns about potential reprisals; their identities are known to BI.

On Tuesday, the research and advisory firm Forrester published a blog post that lambasted X while advising advertisers to spend on the platform to avoid potential repercussions. The analysts wrote that advertisers were "losing control of media choice" in the current political environment. They recommended advertisers "lean into non-binding advertising commitments with X" and increase spending gradually if X met specific goals.

Jay Pattisall, VP and principal analyst at Forrester, told BI that the firm heard less feedback than usual for a post weighing in on a hot industry topic.

"It's reflective of the business community at large not wanting to engage in controversy," Pattisall said. "The unique conditions of the moment and politics of the day make for the necessity to put these very common sense, practical pieces of advice out."

Some advertising agency insiders and consultants shared similar sentiments with BI.

"While Musk keeps the position he has, you just have to be a bit more careful," said an ad agency veteran of more than 20 years. "That's the reality."

"Until we get more legal guidance, keep setting aside that money," they added.

Fears of potential political reprisals for advertisers who spurn X got more credence recently with a report in The Wall Street Journal. Citing people with knowledge of the talks, the Journal reported that X CEO Linda Yaccarino and a lieutenant had pushed IPG to spend more money on X. IPG execs interpreted the message as a reminder that the Trump administration could impede a proposed merger with ad giant Omnicom, the Journal report said.

Several ad industry insiders said that if X really used these tactics, they felt it would amount to bullying.

"We do not make spending commitments on behalf of clients to any partner or platform, and decision-making authority always rests with the client," an IPG spokesperson said in a statement.

X and Yaccarino didn't respond to requests for comment.

X has been attracting advertisers, but long-term success is far from certain

While X has attracted advertisers, new and old, in recent months — including big names like Apple — its business doesn't seem to be booming. Marketing research company WARC estimates that X will pull in $1.96 billion in global ad revenue in 2025, down 11% from last year — and a steep fall from the $4.53 billion WARC estimated X generated in 2022, the year Musk acquired it (back when it was named Twitter). X is a private company and doesn't publicly share revenue figures.

X has not historically been a priority media buy because it doesn't provide the scale and performance that platforms like Meta and Google offer.

That said, X has a sizable audience that appeals to many advertisers, especially during high-engagement events like live sports or breaking news.

WPP CEO Mark Read, who runs one of the world's largest advertising holding companies, told the Financial Times that the company had seen more clients returning to X in recent months. He added that WPP was talking with X about how it could support the platform in communicating to advertisers that it is a safe venue to advertise on.

"The usage is definitely up and if you look at the impact that it has on world politics, you have to say it's powerful," Read said in an FT story published last week. "I think for some clients it's a good place to be."

Some advertisers are seeing a higher return on investment on X than in previous years, Michael Beach, CEO of the adtech company Cross Screen Media, told BI.

"Pre-Elon Musk, their adtech was so bad we moved spend away from Twitter," Beach said. "The technology has improved, and small advertisers understand that the inventory is undervalued versus other platforms."

Another top media buyer previously told BI that advertising money was increasingly being used to hedge against political risk — and often, these decisions were being made by the CEOs of big corporations versus the chief marketing officer.

Lou Paskalis, CEO of the marketing consultancy AJL Advisory, said this kind of fraught political situation makes the job of a CMO harder.

"If 10% of my ad budget has to be allocated" to risk mitigation, Paskalis said, "my CFO isn't going to reduce my business goals by 10% — he's simply going to say, you need to deliver your goals with the 90% of your budget that is investable 'rationally.'"

Musk versus advertisers

Musk's takeover of the platform in 2022 laid the groundwork for the current relationship between X and the ad industry.

A wave of advertisers pulled away from X over concerns about brand safety, ad performance, and the return of banned accounts.

But X didn't go down without a fight.

In August, X filed a lawsuit against several of its advertisers — such as Mars and CVS Health — 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. X has since added several more brands to that complaint as defendants, including Colgate, Lego, and Shell. Unilever was initially named as a defendant but reached an agreement with X — the terms of which weren't disclosed by either party — and was dropped from the suit in October. Unilever said X had committed to meeting its responsibility standards around brand safety and performance.

GARM shut down days after the X lawsuit was filed, saying it was a small nonprofit with limited resources. Its parent organization, the World Federation of Advertisers, has maintained that it plans to fight the suit and didn't contravene antitrust laws. The litigation is ongoing.

Jim Jordan, the chairman of the House Judiciary Committee, is also investigating whether advertisers' and agencies' participation with GARM led to conservative media, including X, being demonetized. In December, Jordan wrote to the CEOs of Omnicom and IPG, asking them to provide documents and reserve records regarding their GARM membership.

"Given that your company was a member of GARM from its inception and was also an active participant in GARM during its collusive activities, the proposed merger raises potential anticompetitive concerns," the letters read.

The legal developments — as well as Musk's political rise — have put marketers on high alert.

"I've never seen anything like this before in the history of our business," said a second advertising industry veteran speaking generally about the current political environment for advertisers.

But, they added, "You've got to play defense right now."