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Advertising guru Martin Sorrell has questioned the prospects of Donald Trump’s newly public Truth Social platform, saying it was currently “unfathomable” that clients would want to buy ads on the site.
The British businessman told CNBC on Wednesday that the former U.S. president’s social media platform has yet to prove its financial viability in an already challenging advertising market.
“It’s a bit unfathomable. What are the revenues there?” Sorrell, founder and executive chairman of digital marketing firm S4 Capital, said when asked if clients were likely to advertise.
Trump Media & Technology Group (TMTG), the company behind Truth Social, went public Tuesday after merging with shell company Digital World Acquisition in a deal known as a special purpose acquisition (SPAC).
Shares jumped more than 50% during a volatile first day of trade, before ending the session up 16%, giving the company a market cap of around $7.85 billion, according to the Associated Press.
The listing pocketed the presumptive Republican presidential candidate a paper fortune of over $4 billion for his 58% share of the company at a time when he faces mounting legal challenges. He was on the hook for a $454 million bond in a civil fraud case, but the fee was reduced to $175 million Monday following an appeal.
The fanfare comes even as the company has struggled to demonstrate a path to profitability.
“It sort of defies reality, at least at the beginning,” said Sorrell said, who is also the founder and former CEO of ad agency WPP.
A spokesperson for TMTG firmly dismissed claims that the share price move defied logic when contacted by CNBC.
Truth Social lost $10.6 million in the first nine months of 2023 on revenues of $3.4 million. According to Semafor, the company has now lost at least $57 million since its inception in 2021, when it was created by Trump in defiance to his blacklisting from Twitter following the Jan. 6 Capitol attack.
It has also said that it may never disclose key performance data, such as sign-ups, ad impressions and average revenue per user — metrics critical for advertisers to assess potential market opportunity.
That could make the sell even more challenging as major social platforms vie for a share of ad spend in a still challenging economic environment, Sorrell said.
The ad exec on Wednesday warned that budgets were likely to remain constrained in 2024 after reporting a fall in S4 Capital revenues for 2023.
“The social platforms, from an advertising point of view, are not big advertising features,” he said.
Citing Alphabet, Meta and Amazon as the three major ad platforms in the West, and Alibaba, Tencent and Bytedance as the big players in the East, Sorrell said it could be difficult for other names to take market share. Even Twitter under its new X branding and management has seen ad revenues halve.
“TikTok is the only one that has really broken through,” Sorrel said, estimating that TikTok accounted for around one-fifth of owner Bytedance’s around $90 billion 2023 ad revenue. TikTok is now facing a potential ban in the U.S. amid national security concerns.
Still, Sorrell caveated his comments by saying that Trump could prove a formidable competitor, both in business and politics.
“You can never count President Trump out — either electorally or in terms of social platforms,” he said.