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X owner Elon Musk is trying another tactic to boost ad spend in the app, this time by pressuring potential SpaceX investors to also buy X ads and subscribe to xAI’s Grok tools.
As reported by the New York Times, Musk has told banks, law firms and other advisers working on the upcoming SpaceX public offering that they need to be paying customers of xAI and advertise on X in order to win favor for his business.
As per the New York Times: “Some of the banks have agreed to spend tens of millions on the chatbot, and they have already started integrating Grok into their I.T. systems, three of the people said.”
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X owner Elon Musk is trying another tactic to boost ad spend in the app, this time by pressuring potential SpaceX investors to also buy X ads and subscribe to xAI’s Grok tools.
As reported by the New York Times, Musk has told banks, law firms and other advisers working on the upcoming SpaceX public offering that they need to be paying customers of xAI and advertise on X in order to win favor for his business.
As per the New York Times: “Some of the banks have agreed to spend tens of millions on the chatbot, and they have already started integrating Grok into their I.T. systems, three of the people said.”
The New York Times said that Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley are expected to work on the offering, while law firms Gibson Dunn and Davis Polk are also advising on the deal.
SpaceX is a leader in satellite connection and is looking to sell potential investors on projects such as orbital data centers for artificial intelligence projects. In addition, Musk has also outlined the potential for humanoid robots, which are being developed in conjunction with Tesla, and could be another business opportunity.
In February, Musk announced on X that SpaceX is planning to build a self-sustaining base on the moon, which Musk said could be up and running within 10 years. That could be a key step towards eventual travel to Mars, which remains a longer-term vision for SpaceX.
Musk’s predictions, however, tend to be highly optimistic, and it’s not clear how achievable any of these goals are. Even so, Musk’s cult of personality has won him many supporters, including rich investors who might be keen to latch onto the SpaceX IPO.
This could end up being a boon for X, especially if it brings more ad dollars to the platform and helps make the app a more sustainable stand-alone proposition.
It’s difficult to say how well X is performing because as a private entity, the platform isn’t required to provide in-depth data on usage or general performance. That could change with a SpaceX IPO because X is now part of the broader SpaceX/xAI business. Though it’s still unlikely the company will provide significant insight into usage or ad revenue data.
Fewer users and ongoing questions about brand safety are apparently prompting more caution from potential ad partners and these factors combined have caused X’s revenue to decline since Musk took over the business in 2022.
Forcing potential SpaceX investors to take up X ads is another step along similar lines. It will be interesting to see if Musk is able to bully enough of them to boost the platform’s ad performance in any significant way.
