Amazon increases X ad spending as Musk’s political capital grows

The news: Amazon is planning to significantly increase ad spending on X (formerly Twitter), per Wall Street Journal reporting, a dramatic reversal from when the company pulled nearly all ad spending in 2024. CEO Andy Jassy was reportedly involved in the decision.

Amazon isn’t the only tech company looking at X with new eyes: Apple is also reportedly considering re-upping spending.

Why the return? Despite the launch of a new video tab and other initiatives, X’s revenues remain unimpressive. But as Musk becomes an influentiall figure in the Trump administration, companies that faced regulatory pressure under the Biden administration are attempting to improve their relationship with the world’s richest man.

• “Unimpressive” is Musk’s own wording: The Journal reported he sent a memo to X staff claiming “user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.” Our own forecast shows X’s US ad revenues continuing to slide this year, falling 4.2% to $1.05 billion.
• But political favor may provide a bigger ROI than impressions for some companies looking to make significant moves in the next four years or clear regulatory hurdles. Other major advertisers that are returning to X include Disney, IBM, Comcast, and Warner Bros. Discovery.
• Amazon’s return is especially noteworthy given the company’s existing size and influence; if even one of the largest companies in the world feels the need to improve its relationship with Musk, others are likely to follow suit.

Our take: Even before Musk’s takeover, Twitter/X had significant problems increasing its advertising revenues and standing out in the crowded social media field. Ad revenues have fallen further under Musk’s ownership, but political changes are giving X a boost.

Other similar platforms are getting extra attention: Bluesky saw a strong surge in sign-ups last year and is mulling advertising, while Meta claims that Threads is attracting 1 million new users per day.