Reports of X CEO Linda Yaccarino tying appeals for increased advertising commitments to X lawsuits and Congressional oversight reads as extortion and requires advertisers and agencies to take steps to maintain their fiduciary imperative to direct media investments.

Let’s back up… Over the past 6 months: X filed a federal antitrust lawsuit in August, alleging the World Advertising Federation and several large advertisers colluded to deny X advertising dollars. In October, the Judiciary Committee notified Dentsu Group about concerns for anticompetitive activity concerning its brand safety initiative, Dentsu Coalition. In December, the Judiciary Committee contacted both Omnicom Group and Interpublic of Companies, raising anticompetitive concerns for their proposed merger could impact advertising spend on platforms like X. On February 1, X notified the court of its intention to add several large enterprises to its existing anti-trust lawsuit. The Wall Street Journal reported last week that X chief executive Linda Yaccarino made appeals for large advertising commitments from both advertisers and agency holding companies, alluding to X’s lawsuit and congressional oversight.

Whether intentional or not, X’s actions threaten the solvency of the advertising industry because they:

  • Contradict common-sense media practices. Publishers have no right to advertising dollars unless prior commitments are made. And advertisers have every right to make media choices. A free-market economy necessitates that the best publisher win, and a lesser one work to earn a spot on an advertisers’ media plan. Testing campaigns across publishers and tech products is how advertisers and agencies continually look for ways to reach and engage their target audiences. The growth of TikTok as an advertising platform is due, in part, to advertisers, agencies, and the publisher testing and learning in the name of media choice.
  • Compromise advertisers’ and agencies’ fiduciary responsibility. When investing media dollars, advertisers and agencies have a fiduciary obligation to company and shareholder value. Agencies make publisher recommendations to advertisers and, in turn, advertisers make business decisions based on a publisher’s efficacy — to deliver targetable audiences at scale, with efficient rates, and on-brand context. If media investments don’t meet those standards, advertisers and agencies are responsible to shift media dollars. Bud Light’s influencer campaign targeting the trans community conflicted with its brand and core customers’ values, making it a questionable use of media dollars.

But just as agencies and advertisers have a right to media choice, so does X have a right to pursue legal action. And the US House Judiciary Committee has the right (and constitutional obligation) to conduct oversight. The courts will adjudicate, and Congress’s lawful oversight will continue.

Advertisers: Here’s How To Protect Your Right To Media Choice

Forrester recommends three actions for advertisers to keep control of media choice:

  1. Lean into non-binding advertising commitments with X. This might sound counter-intuitive but hear us out: Proactively make an “endeavor” deal with X that gradually increases advertising spend to a specified goal or target — identifying tiered spending thresholds that you must meet based upon the publisher (in this case X) also meeting specific requirements. Structure the deal contingent around X addressing three fundamental platform capabilities: (1) improved audience targetability to allow advertisers to pinpoint audiences; (2) better filtering to allow advertisers greater precision in selecting contextual environments. These filters should include language, violence, pornography, news, and political spectrum. (3) APIs that align with how agencies purchase digital media enabling for more efficient activation and optimization. The good news? X appears to have the technology and engineering savvy to meet these requirements making for a win-win-win for advertisers, agencies, and X.
  2. Explore principal media solutions for X upfront deals. Consider using agencies’ principal media capabilities to meet commitments to increase X inventory. For those not in the know, principal media is a buying tactic in which an agency purchases advanced inventory at a sizeable discount in order to re-sell that inventory to its clients. Most principal media programs involve client opt-ins, audit rights, clear benefits (like cost or performance), separate contracts, and labeling on plans. In other words, principal media solutions are highly scrutinized and often bring financial benefits to the advertiser and agency. In this instance, X will need to provide increased inventory levels at a substantial discount in order to fit within the principal media pool the agencies manage. When this happens, it’s another win-win-win for all three stakeholders.
  3. Require X to meet media performance thresholds. Structure your partnership with X to include performance requirements that unlock continued or increased investment. Leverage incrementality testing to prove whether X can deliver equivalent or more value than other media platforms. Media professionals are tasked every day with building media plans that balance reach, efficiency, and impact. When placements don’t perform, they optimize—meaning they move the investment to new tactics, audiences, or channels. X isn’t exempt from this same level of scrutiny. Historically, X (including when it was “Twitter”) hasn’t been of material significance on most media plans for several reasons: the reach isn’t notable, their ad products lack performance, and targeting capabilities are nascent. If X wants more ad dollars now, it needs to prove the platform’s efficacy. Make them earn their spot on your media plan, just like any other publisher.

In our capacity as a neutral adviser to our clients, Forrester offers this guidance solely as a means to help advertisers, agencies, and publishers navigate the changing marketplace and confront its business significance. Forrester believes that “media choice” is a fundamental underpinning of the advertising industry and we urge organizations like the ANA, 4As, and WARC to advocate for this.

If you’re a Forrester client and would like to discuss this further, set up a Guidance Session with Jay Pattisall and Kelsey Chickering.