Advertisers are Bullish on TikTok Despite its Uncertain Future in the US

(Photo Credit: Solen Feyissa/Unsplash)
(Photo Credit: Solen Feyissa/Unsplash)

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Everybody loves TikTok, right? Well, except for the American, Australian, Canadian, French, Danish, Norwegian, Latvian, Dutch, British, and Taiwanese governments.

So considering that the social media app is in regulatory crosshairs around the globe and facing a potential nationwide ban in the US, you’d think advertisers would be running for the hills. And you’d be wrong.

In the Hot Seat

American TikTokers account for 150 million active monthly users, the app’s biggest market. That’s made it difficult for major advertisers like Pepsi, Amazon, and Apple not to hop aboard the TikTok train despite the growing threat of derailment. The Financial Times reported that US advertising on the platform grew by 11% in March, according to data from app analytics group Sensor Tower. Some of that money could have been committed to marketing efforts before the recent grilling of TikTok CEO Shou Zi Chew by a US Congress that called to mind a Luddite relative asking you how to work “the Google” for the umpteenth time.

After reports came out that TikTok’s parent company, ByteDance, could be putting sensitive user data in the hands of the Chinese government, the app has become public enemy #1 for politicians across the aisle. It’s not a stretch to argue that TikTok is a national security threat, or that social media has negative effects on mental health, but that’s all just a thin coat of paint for what’s actually going on here. America and China are political and economic rivals, and Congress doesn’t want a Chinese-born app to rule the roost on US soil:

  • The Biden administration is demanding ByteDance sell TikTok to an American company or risk being banned in the states. There’s no official deadline, so it might all just be chest-thumping at this point.
  • Digital advertising makes up the bulk of TikTok’s $10 billion in global revenue. Insider Intelligence forecasts the platform to see more than $14 billion in revenue in 2023. But with the possible ban, the FT reported that some major media agencies are already advising their clients to shift their advertising efforts toward Meta and Google.

But given the ways of Washington, no need to rush. “There’s unlikely to be an executive order resulting in an immediate ban that would impact advertisers,” Joshua Lowcock, chief media officer of UM Worldwide, told the FT. “Even with bipartisan support the legislative process will be protracted — giving marketers ample time to plan alternative strategies.”

Backup Plan: Let’s say TikTok is cast out of American society. In that case, ByteDance would probably push one of its many other apps like Lemon8, which has been gaining plenty of attention recently. What’s the difference between the two? Not much. Lemon8 looks like a cross between Pinterest and Instagram with plenty of the short videos TikTok is known for. It’s similar to China’s Little Red Book app, which has become a powerhouse in the live shopping world. The app had 290,000 downloads in the US, most of which came in March, the Associated Press reported. As with weeds, you take down one social media app and another will just take its place.