With Biden signing the bill that either forces the sale of TikTok by its Chinese owner ByteDance or bans it completely, what next? We spoke to a few executives, and they shared their perspectives on what this means for the advertising industry.
A bill passed by the Senate and signed into law this week by Biden has many asking if this is the end of TikTok as we know it. The Protecting Americans From Foreign Adversary Controlled Applications Act allows TikTok to continue in the US if ByteDance sells it within nine months, which Biden is willing to extend to a year.
TikTok CEO Shou Zi Chew immediately responded and reassured users, creators, and advertisers that TikTok isn’t going anywhere, highlighting that the app isn’t going out without a fight. In fact, ByteDance promises to sue as they deem the ban to be unconstitutional.
We’d be lying if we said we didn’t see this coming, as surreal as it may feel. In a short amount of time, TikTok has grown to be the most resourceful and entertaining social media app of today. TikTok saw its numbers surge over the pandemic when people had much more idle time, and its growth has only continued to soar from there.
Tracer, a data intelligence platform, examined over 1 billion ad impressions from the week before last month’s House vote on March 13, 2024, so March 7-13, and before the vote, TikTok ad spend increased 40% from January to February 2024. Both click-through rates (CTR) and cost-per-click (CPC) saw no change in numbers in March post-vote compared to the period before. The fact of the matter is that users are unfazed by this legislation.
A week after the decision to move forward with the ban, TikTok saw a 20% surge in advertising expenditures. This shows that advertisers aren’t shying away from the app either; in fact, they are intensifying their commitment to TikTok despite its fate having not yet been determined.
As the saying goes, ‘With great popularity comes great scrutiny.’ The House’s sudden decision to ban TikTok in March, which caught TikTok executives off guard, is a testament to this. The strained relationship between our government and the ByteDance-owned company, exemplified by CEO Shou Zi Chew’s contentious court appearance with Senator Tom Cotton, further adds to the drama.
Of course, we had to ask a few thought leaders in the industry about this ban and what it means for advertising. Here is what they had to say.
Impact of the TikTok Ban on Millennial and GenZ Audiences
TikTok is currently Gen Z’s primary source of entertainment and social engagement, making up a large portion of the app’s content creators. Nearly 70% of Gen Z actively use TikTok, and Millennials are not too far behind, as 49% use it. In terms of content interaction, 40% of Millennial TikTok users use the app to discover new things. If we lose the short-form video content app, will marketers successfully reach younger audiences?
“TikTok has been an instrumental tool for transparency and freedom of speech for Gen Z and Millennials. The media consumption habits that we see on TikTok have been unmatched in the industry. If anything, we’ve seen GenZ and Millennials come out in support of TikTok and express their views on the ban. While there are many other social apps, the way TikTok values diversity and authentic conversations is unparalleled. I think we will continue to see GenZ and Millennials fight for their right to freedom of expression and speech to keep a forum like TikTok alive.” – Sujoyee Chatterjee, Senior Director Product Marketing
Fun Fact: Sujoyeeis actually joined Channel Factory from TikTok in 2023, she was formerly the Global Product Marketing & Strategy, Measurement lead.
“TikTok has proven to be an effective method of building audiences, especially for the younger generation of users. TikTok ban will likely revamp digital consumption habits across all audience types. As marketers, we will need to find a new way to access and intrigue these users. To mitigate the impact and risk of this platform ban, advertisers should diversify their efforts across platforms and explore partnerships to maintain the influence of these users. Focusing on additional social channels that offer shorter video styles will be something to consider pivoting to maintain that consumer engagement and revenue.” – Kiana Lupinacci, Senior Strategic Campaign Manager at Adtaxi
“This is such a compelling situation, albeit one with many unknowns. If Bytedance goes ahead and sells TikTok without the algorithm, the new owner would likely lose out on the engagement and addictive nature of the platform. Social media advertisers and marketers need to be readily able to adapt to any change that comes.
This starts with understanding what moves Millennials and Gen Z on TikTok or elsewhere – whether short-form video or interactive content. So why not apply this approach to all digital content and advertising to bridge the gap between the TikTok ban and engaging these key demographics.” – Daniel Meehan, Founder and CEO of PadSquad
A potential ban on TikTok could significantly impact advertising strategies and small businesses, particularly those targeting Gen Z consumers who increasingly rely on platforms like TikTok and Instagram for search and discovery. The latest Consumer Behavior Index (CBI) from SOCi highlights a pivotal shift in consumer behavior, with Instagram and TikTok surpassing Google as the top business search platforms among young people. For Gen Z, traditional search engines like Google are no longer the default choice, with 67% favoring Instagram and 62% opting for TikTok over Google Search, which ranks third at 61%. This shift underscores the growing influence of social media in shaping consumer preferences and purchase decisions.
For small businesses, a TikTok ban would disrupt a critical channel for engaging with younger audiences and building brand visibility. TikTok’s unique format has allowed businesses to showcase products and services creatively, leveraging trends and user-generated content to connect with potential customers. The seismic shift toward social search underscores the importance for businesses to adapt and invest in a diversified digital marketing strategy that aligns with evolving consumer behaviors, ensuring continued relevance and engagement. – Damian Rollison, SOCi’s director of market insights
What Will This Mean For the Creator Economy?
A potential TikTok ban could significantly impact the creator and broader US economies. It has become such a vital platform for content creators that many of them cannot even remember what life was like without it. Many creators have built their careers on TikTok, as the app influences consumer behavior and facilitates direct sales through influencer marketing. The disappearance of the app can certainly diminish the extensive reach and engaged user base that creators currently have access to.
“The impact on creators’ ability to continue to tell stories that connect with and enrich their communities is paramount. The pending TikTok ban underscores the need for creators to have a higher level of control over their connection to the audiences they build on third-party platforms and the urgent need to cultivate their own channels.” – Sheila Marmon, Founder and CEO of Mirror Digital
“The potential sale of TikTok underscores a pivotal moment for the creator economy and the digital advertising landscape and accentuates the value that comes when creators own their platforms and audiences. If TikTok changes its algorithm or content policies due to new ownership, we could see a significant migration of audiences, which could benefit platforms committed to creator freedom and authenticity, especially on the open web. This shift would not only redistribute where audiences engage but also compel brands to reassess their ad budgets to capture the most value from their investments. It highlights the enduring importance of websites in providing a reliable and controlled space for creators to connect with their audiences, free from the unpredictability of algorithm-driven platforms.” – Marla Newman, EVP Sales, Raptive
Legislative concerns surrounding TikTok’s ownership underscore the imperative for brands and marketers to diversify their social media advertising efforts. TikTok’s response mobilizing users to engage with legislators highlights the immediacy of ramifications, as well as the urgency for stakeholders to mobilize. For influencers and brands, diversifying their presence across alternate short-form video platforms – like Instagram Reels or YouTube Shorts – mitigates risks of revenue loss and reduces a reliance on TikTok. Mirroring adaptive strategies of successful influencers, diversification ensures message continuity in a dynamic digital landscape. – Chris Moreno, SVP of Paid Media, NP Digital
A Cybersecurity Perspective
On the cybersecurity front, the ban is necessary as TikTok is thought to raise several complex data privacy and national security issues. The primary cybersecurity concern that motivates calls for a TikTok ban is the potential for the Chinese government to access the personal data of US users, given that TikTok’s parent company, ByteDance, is based in China. There have been instances where China-based employees reportedly accessed non-public US user data, heightening these fears. However, it’s worth noting that there is no direct evidence that TikTok or ByteDance has shared this data with the Chinese government.
TikTok, owned by ByteDance, presents significant cybersecurity concerns for the United States, primarily due to the potential exploitation of its vast user base and the Chinese company’s access to user data. Beyond the immediate privacy implications, there are fears that TikTok could be leveraged as a tool for misinformation campaigns and data collection by foreign actors, particularly the Chinese government. The scale of TikTok’s user engagement, combined with China’s track record of aggressive cyber activities, raises the specter of sophisticated cyber threats targeting American users, including surveillance, data breaches, and manipulation of online discourse.
Moreover, TikTok’s popularity among both adults and children amplifies the potential impact of these cyber threats, as sensitive personal information could be compromised, and disinformation campaigns could spread rapidly. The platform’s interactive nature and extensive reach make it an attractive target for malicious actors seeking to undermine national security or advance foreign interests. As such, policymakers face the critical task of balancing the benefits of information sharing and social connectivity with the imperative to protect citizens from cyber vulnerabilities inherent in platforms like TikTok. Continued investment in cybersecurity infrastructure and regulations is essential to mitigate these risks and uphold the integrity of digital ecosystems in an increasingly interconnected world. – Lisa Plaggemier, Executive Director of the National Cybersecurity Alliance (NCA)
TikTok Isn’t Going Anywhere
TikTok and its supporters are actively lobbying against the ban, arguing that it would infringe on free speech rights and negatively impact small businesses, as Rollinson mentioned above, and creators who rely on the platform. The TikTok ban is still very much in play, with significant opposition and legal challenges expected regardless of legislative outcomes. However, some think that regardless of the pending legislation, TikTok is still here to stay.
“I don’t foresee TikTok going away completely; if forced to sell, there will be plenty of takers. If TikTok has shown us anything, short-form video is here to stay. It’s also a challenge for marketers to come up with new, shorter-form ways to reach them. The traditional 30-second video ad for a video that’s only 30-second will not work.” – Zack Rosenberg, CEO and Founder of Qortex
“Marketers need to be where the eyeballs are and the imminent ban is only raising the profile of the platform among the consumer audience, who aren’t showing any signs of sharing the concerns of our government. The ban also doesn’t make it illegal to use the platform and won’t eliminate it from the phones of existing users. So, I suspect marketers will closely monitor engagement to determine if the ROI of maintaining a presence there is impacted. If it isn’t impacted it will be business as usual, for most.” – Ken Gibbs