X Hinted at Possible Deal Trouble in Talks With Ad Giant to Increase Spending

Advertising giant Interpublic recently signed an advertising deal with X and other agencies are also in negotiations with Elon Musk’s social-media platform, following hints of possible trouble.

Linda Yaccarino is the chief executive officer of social media platform X. Photo: Bridget Bennett/Bloomberg News

A lawyer at advertising conglomerate Interpublic Group fielded a phone call in December from a lawyer at X. The message was clear, according to multiple people with knowledge of the conversation: Get your clients to spend more on Elon Musk’s social-media platform, or else.

X CEO Linda Yaccarino has made comments that seemed like similar warnings in conversations with Interpublic executives, according to people with knowledge of those talks.

Interpublic leaders interpreted the communications from X as reminders that the $13 billion deal to merge Interpublic with rival Omnicom Group could be torpedoed, or at least slowed down, by the Trump administration, given Musk’s powerful role in the federal government, some of the people said. They also had a front-row seat to Musk’s continued criticism of advertisers that ditched X since he bought it in 2022, when it was known as Twitter.

Interpublic has recently signed a new annual deal with X for potential client spending, people familiar with the agreement said.

“We do not make spending commitments on behalf of clients to any partner or platform, and decision-making authority always rests with the client, ” an Interpublic spokesman said. Yaccarino and representatives from X didn’t respond to requests for comment .

Days after the Interpublic-Omnicom merger was unveiled, Rep. Jim Jordan. chairman of the House Judiciary Committee, launched a probe and said the tie-up raised anticompetitive concerns. Interpublic and Omnicom work with an ad trade group that the committee investigated last summer, and which the committee determined in a July report might have violated antitrust laws by withholding ad spending from social-media platforms and media outlets.

X filed a federal antitrust lawsuit in August, accusing the World Federation of Advertisers, an ad trade group, and several big brands such as candy maker Mars and CVS Health, of co-ordinating an illegal boycott of X following Musk’s $44 billion takeover of the platform in late 2022.

The trade group shuttered an initiative dedicated to safeguarding marketers from harmful content after the suit was filed. It has said that the lawsuit misconstrues the purpose and actions of its responsible media efforts.

X upped the ante in early January by alerting the court that it planned to add more names to the lawsuit, which left advertisers fretting for weeks over whether they would be next. On Feb. 1, X added about a half-dozen more advertisers to the litigation.

“Some of the advertisers we work with have expressed that they feel there is an implied threat from X that they could be added to the lawsuit if they don’t return to X,” said Ruben Schreurs, chief executive officer of Ebiquity, a consulting firm that works with advertisers.

That legal threat has hung over the industry, including in sideline conversations during CES in January, a major event that attracts top advertisers, agencies, and media and tech companies.

Yaccarino and her top staff met with executives from several large ad companies including Omnicom Group and Dentsu during the conference, according to people familiar with the matter. During a meeting with WPP executives, Yaccarino pushed the firm to sign an annual upfront deal, according to people familiar with that meeting, and later sought for spending commitments above prior levels, one of the people said.

Ad companies often sign deals with media and tech firms to set annual spending targets, which enable them to secure better ad rates and perks for clients. The pacts typically allow for agencies to adjust if client demand drops. While advertisers control spending, the brands often follow agency recommendations on where to direct their money. Some agencies that had annual agreements with X let them expire after the client exodus in 2022.

WPP is still negotiating with X and Publicis Groupe, the world’s largest ad company by net revenue, is in the process of signing a nonbinding annual ad pact, according to a people familiar with the matters. The push for agency agreements follows a flurry of brands returning to spending on X, including Amazon, the Journal reported. The rebound may also be driven in part by fear over the ongoing federal antitrust lawsuit and Musk’s growing power in Washington.

“We now see brands returning in quite significant numbers, because the easiest route is to just spend a minimum viable amount on the platform,” said Ebiquity’s Schreurs. “Not because they want to advertise there and run their ads adjacent to the content on X, but because they are afraid of legal and political ramifications of not doing so.”

DOW JONES