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X to Report First Annual Ad Revenue Growth Since Musk’s Takeover

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Elon Musk’s social media platform X is on track to achieve its first year of advertising revenue growth since Musk acquired the company in 2022. Data from research firm Emarketer, released on Wednesday, suggests that X’s U.S. ad revenue will increase by 17.5% in 2025, reaching $1.31 billion, while its global ad sales are expected to rise 16.5%, totaling $2.26 billion. This growth marks a significant turnaround for the platform, which had struggled to attract advertising revenue following Musk’s acquisition.

Factors Driving Growth

The growth in ad revenue is partly attributed to the return of brands to the platform, bolstered by Musk’s growing influence, particularly within the U.S. Department of Government Efficiency. Jasmine Enberg, principal analyst at Emarketer, noted that some of the growth is driven by a sense of caution, with many advertisers viewing spending on X as necessary to mitigate potential legal or financial risks.

X has also successfully attracted more small- and medium-sized businesses, which had historically been a challenge for the platform to engage. This shift in advertiser behavior is a positive sign for X as it seeks to rebuild its advertising revenue stream.

Industry Competition and Economic Uncertainty

Despite the growth, X’s advertising business remains smaller than it was when Musk took over, as Emarketer’s data points out. In 2021, prior to Musk’s acquisition, X reported ad revenue of $4.51 billion as a publicly traded company. Even with the projected growth in 2025, X’s ad business still lags behind its previous levels.

In the broader social media landscape, platforms like Meta-owned Instagram and TikTok are competing for a larger share of the ad market. However, the overall advertising market could be impacted by factors such as U.S. tariffs and ongoing economic uncertainty. Research firm MoffettNathanson recently revised its U.S. advertising growth forecast, lowering it from 6.9% to 5.8%, citing the disruptive changes brought on by the new administration.

Outlook for X

Despite these challenges, X’s hiring of NBCUniversal’s former advertising chief, Linda Yaccarino, as CEO in 2023 signals a strategic effort to revitalize its ad business. As X looks to grow its advertising revenue, the platform is focusing on broadening its advertiser base and navigating the complexities of an uncertain economic environment.

Instagram to Dominate Meta’s U.S. Ad Revenue by 2025, Report Predicts

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Instagram is poised to generate over 50% of Meta Platforms’ U.S. advertising revenue in 2025, driven by its improved monetization strategies, according to research firm Emarketer.

Why It Matters

Instagram’s short-form video feature, Reels, has emerged as a key competitor to ByteDance’s TikTok and YouTube Shorts. As users increasingly engage with short videos, advertisers are shifting their focus to this format, providing Meta with an opportunity to boost revenue through more targeted ad placements.

The potential implementation of a TikTok ban in the U.S. could further accelerate Instagram’s growth. If enacted, platforms like Reels and YouTube Shorts are expected to attract advertising budgets previously allocated to TikTok, opening new revenue streams for Meta.

Key Insights

  • Video-First Platform: Jasmine Enberg, principal analyst at Emarketer, highlights that Instagram has transformed into a video-first platform. Users now dedicate nearly two-thirds of their time on Instagram to watching videos.
  • Reallocated Ad Budgets: Enberg also predicts that Instagram could capture over 20% of TikTok’s U.S. advertising dollars if the ban takes effect in 2025.

By the Numbers

  • In 2024, Instagram’s ad revenue was primarily driven by its Feed and Stories features, which accounted for 53.7% and 24.6% of its revenue, respectively.
  • By 2025, revenue generated by Reels, Explore, and Threads is expected to rise, collectively contributing 9.6% of Instagram’s total ad revenue.

Context

The shift toward video content aligns with broader trends in digital media, where short-form videos have proven highly effective in capturing audience attention. Reels’ growing popularity offers Instagram a competitive edge, particularly as regulatory uncertainties loom over TikTok.