The potential ban of social media app TikTok in the US could impact the advertising world.
Social media and TikTok advertising in the US have been buzzing – though it might not be buzzing for much longer, for a large part of the video-sharing app’s audience.
On March 13, 2024, the US House of Representatives pushed (in a 352 to 65 vote) to pass a bill that could lead to a nationwide ban against TikTok. The legislation named Protecting Americans from Foreign Adversary Controlled Applications Act, if enacted, would give TikTok about five to six months to separate from its Chinese parent company, ByteDance, or else app stores in the US (such as Apple and Google) would be banned from hosting TikTok on their platforms.
That means TikTok must be sold to a buyer that guarantees ByteDance no longer has control over TikTok or its algorithms that recommend content to users.
It’s still uncertain what happens to the bill in the Senate, but the chamber is taking its next steps to review the legislation. US President Joe Biden has expressed that he would sign the bill if it reaches his desk.
This comes after lawmakers supporting the bill expressed national security concerns over TikTok, citing the Chinese government could use its intelligence laws against TikTok’s parent company ByteDance, forcing it to hand over data from US users.
Other politicians also argue that China could use TikTok’s powerful algorithm to feed its users political propaganda or run disinformation campaigns. Others also raise concerns over the mental health and safety implications of TikTok use among US youth.
TikTok, on the other hand, thinks it’s a ploy to shut down the social media giant in the US. It has pushed back with a lobbying campaign that includes app notifications urging TikTok creators to call members of Congress. TikTok CEO Shou Zi Chew also published a video on social media platform X, warning users of the harmful consequences of the legislation if the US enacts it, as well as reassuring creators that TikTok has been keeping users’ information safe from outside manipulation.
Advertisers put on notice
TikTok’s potential US ban would certainly impact consumers as well as the social media app’s continuous growth. According to eMarketer data, a majority of US Gen Z (ages 15-26) social media users prefer using TikTok over Instagram for various activities – such as watching short clips, watching live streams, and viewing long videos.
Additionally, another report by eMarketer suggests that roughly half of US teens ages 13 to 17 use TikTok (49%) and YouTube (54%), and it continues to be the overall favorite social media platform among teens, beating Snapchat, Instagram, and X.
Many US teens spend roughly 2-4 hours a day on social media for entertainment, communication, education, and informational purposes. This also includes learning new information about products and services via ads and commercials. Many US teens are exposed to advertising on TikTok and other social media platforms.
That said, the news of a potential TikTok ban could shake things up for US advertisers, creators, and marketers. Many marketers and brands turn to the social media giant for their digital strategies. TikTok advertising spend reached nearly $4 billion in 2023 according to MediaRadar.
Tech and media experts say the controversy surrounding TikTok should be a warning bell for companies who have been utilizing and associating themselves with the platform. Pierre-Loïc Assayag – CEO and co-founder of influencer marketing platform Traackr – says advertisers and social media stakeholders should be on alert.
Marketers should consider the business risk of continued association with TikTok – regardless of the legislative outcome – and search for better opportunities.
With those relying on TikTok advertising facing uncertainty, it opens doors for competitors. Digital advertising alternatives like Meta, YouTube, and Google Ads would benefit from a potential US ban of TikTok, as it reduces competition in the social media space (especially in the video content segment).
Insider Intelligence suggests that if the TikTok ban ensues, Meta could take between 22.5% and 27.5% of TikTok’s US ad revenues, generating between $1.94 billion and $2.38 billion in potential incremental ad revenues in 2025.
YouTube could also net another $1.24 billion to $1.53 billion in ad revenue. Factoring in $410 million to $500 million of those TikTok ad revenues going to Google’s display and search business, YouTube and Google’s parent Alphabet could net $1.74 billion to $1.94 billion in total from TikTok’s US exit.
Other platforms such as X, Pinterest, Snap, and LinkedIn, all stand to benefit, but to a far lesser extent. The same is true for connected TV and retail media players like Amazon, Netflix, Disney, and Walmart.
This also brings to light another important marketing strategy: advertisers should immediately ensure their media mix is diversified.
As Assayag states “It’s never a good idea to put all of your eggs in one basket. This is especially true in rapidly changing spaces where legislation hasn’t caught up to innovation. So while brands continue to invest in TikTok, they [should be] sure to invest their time, resources, and budget in diverse ways.”
With the flexibility and diversity of social media platforms, the marketing shift may not be as difficult. Previously, it was difficult to translate TikTok content to other platforms. Now, you can cross-promote TikTok videos onto Instagram Reels or YouTube shorts. Multi-channel, cross-channel, and omni-channel marketing has never been easier.
The battle for TikTok could be a long one
This isn’t the first time the social media phenomenon has faced such a controversy. In 2023, Montana lawmakers tried to pass a state law banning TikTok but were ultimately blocked by a federal judge on grounds it likely violated the First Amendment.
Furthermore, the potential US ban poses economic and financial consequences. According to a study issued by financial consultancy Oxford Economics, TikTok drove $14.7 billion in revenue for small-business owners last year and contributed $24.2 billion to U.S. gross domestic product. The study also found that TikTok supports at least 224,000 American jobs, with more than 7 million American businesses marketing or selling their products through TikTok, according to the company.
US lawmakers should consider these points seriously should they push through with the ban.
TikTok says it will exercise its legal rights before it considers a sale of its US operations. Even so, there would be technical and legal hurdles in selling the company. However, former Treasurer Secretary Steven Mnuchin expressed that he is putting together a consortium to buy the platform.
It’s likely possible that firms investing in TikTok advertising may see little to no change in their strategies should the US ban not come to fruition. Advertisers could still stick by the app amid the threat of a US ban, with media buyers expressing to Reuters that the government’s scrutiny over the app has yet to impact their plans.
While the situation is far from over, advertisers can monitor the situation and note the risks to which they might be exposed. If TikTok is able to veer away from ByteDance, we could see the maintaining of the social media status quo – and US advertisers and creators continuing their use of the platform.
A matter of time for TikTok advertising
Regardless of what happens, it’s a moment of reflection for companies everywhere on the role TikTok advertising plays, especially for those heavily relying on the social media platform for their marketing efforts. This could be a turning point for many; to stop putting all their eggs in one basket and start diversifying and pivoting their advertising strategies towards other platforms.
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