X’s AI-generated ads may not win brands back

The news: X (formerly Twitter) launched two new automated ad creation features with the release of its Grok 3 AI model to give advertisers more ways to optimize campaigns on the platform.

• “Prefill with Grok,” now available to select advertisers, allows brands to create AI-generated ad copy, imagery, and calls to action with just a URL.
• And “analyze campaign with Grok" helps brands optimize campaigns based on performance insights.

The state of advertising on X: The new venture into AI-generated ads is another attempt to attract the advertisers lost when Elon Musk bought X in 2022—but whether it’s enough to convince brands of X’s potential as an advertising platform is uncertain, as the platform still lags behind competitors.

• Advertisers may remain suspicious over X’s potential to guarantee campaign success, as the platform lags far behind Instagram, Facebook, TikTok, and YouTube for product discovery, per Sprout Social.
• These suspicions will likely be exacerbated by heightened consumer discourse over Musk’s controversial political opinions.

Ad revenues for X are expected to fall 4.2% to $1.05 billion this year, per our forecast, behind second-tier platforms like Snapchat and Pinterest, expected to generate $2.34 billion and $3.11 billion in ad revenues in 2025, respectively—and massively behind Meta platforms, which will generate a combined $73.90 billion in ad revenues in 2025.

Our take: X’s AI-generated ads could bode well for the platform, especially as it continues to draw in advertisers it initially lost with Musk’s takeover. At least 70 of the platform’s top 100 advertising spenders pre-takeover are returning to X, and with the growing reliance on AI in marketing, this new feature could attract more.

However, X needs to consider that consumers are wary of brands’ overreliance on AI.

• Nearly two-thirds of US adults are uncomfortable with brands using AI-generated ads, so the “Prefill with Grok” feature might do more harm than good.
• Almost 40% of consumers believe that AI will negatively impact their lives, making it likely that relying on the technology to create entire campaigns will remain risky unless consumer sentiment changes.

For now, brands that decide to take advantage of X’s advertising tools should explore what the new resource can offer in terms of performance optimization—but should remain cautious about what consumers will think if they go beyond Grok’s analysis capabilities.