🌯 House Passes TikTok Ban; Senate Debates Next

AdMonsters Wrapper: The weekly ad tech news wrap up
This Week
March 18, 2024
Is the U.S. TikTok Ban Legitimate?
Can X Swoop In if TikTok Is Banned?
Target's In-House Ad Sales Strategy
Follow Up: Apple Reverses Decision To Terminate Epic Games Deal
House Passes TikTok Ban; Senate Debates Next
Last Wednesday, The House passed a bill demanding that ByteDance sell TikTok to another owner or the government will pull the plug for its 170 million users based in the U.S. Only 65 House members voted against the bill.

According to The Wall Street Journal, the bill blindsided TikTok executives. Sure, its CEO, Shou Zi Chew, had endured a difficult Congressional grilling, including a cringe-worthy exchange with Senator Tom Cotton, who couldn't quite grasp that Singapore is a different country from China. But then the Biden campaign opened an account on TikTok, which seemed like a good sign.

According to the WSJ, the company didn't realize that a coalition of China hawks in Washington and Silicon Valley spent the past year building support for the ban on the low end.

Now the bill, officially called the "Protecting Americans from Foreign Adversary Controlled Applications Act," heads to the Senate, and if it passes, President Biden has promised to sign it. As of this writing, the bill doesn't have the support it needs in the Senate, and maybe it's doomed given that former President Trump has reversed his position and now opposes it (in 2020, a TikTok ban was part of his stump speech).

We hear many reasons why Congress wants the ban – to stop the Chinese government from spying on U.S. citizens, fear of propaganda influencing voting, and other threats to national security.

We don't hear much about the consequences of tech bans- glass houses, tossing stones, and all that. We already see the E.U. ordering Google to sell some of its services to comply with the Digital Markets Act. However, Google announced it was making changes to comply rather than sell. What happens if the E.U. – or one of the emerging economic regions – decides to follow Congressional precedent and orders an American tech company to sell its search business to a local outfit or be banned?

And then there's the fact that 170 million Americans actually like TikTok, especially the younger generations who use it in place of search. Many of those users earn a living on TikTok, and a decent one at that. TikTok's creator fund is expected to grow to $1 billion, and many influencers here in the U.S. count on getting some of that money to pay their rent and put food on the table, which is why many say that a ban would be devastating. It's also why TikTok influencers, once again, flocked to D.C. to express their exasperation with Congress. It's not just influencers dependent on TikTok; there's a whole industry of support services catering to TikTok influencers or agencies, which is why one wonders if Congress understands the economic consequences of a ban.

"TikTok's influence on the economy transcends its role as a mere entertainment platform. It serves as a powerful catalyst across various sectors, impacting advertising, media, technology, and small businesses in profound ways," Natalie Andrews, Social Operations Manager at Adtaxi, said in an email to AdMonsters.

Perhaps members of Congress feel that TikTok users and influencers can simply switch to an American platform, like Facebook or Instagram, and continue business as usual. This is when one wishes elected officials are required to read books like Extremely Online by Taylor Lorenz. Audiences don't always follow influencers when a platform dies, and they're forced out of work.

Advertisers are still committed to the platform, spending $1.2 billion in Q4 last year, 43% more than the $805 million spent during Q1 of 2023. It's money well spent, Jennifer Kohl, CMO of VML ad agency, explained to Digiday: "They know their audience, they know how to deliver content that can catch fire with the audience, and that's been something that, as advertisers, we are latching on to."

Natalie Andrews agrees, telling AdMonsters, "TikTok has generated a community of users so unique to the platform that the sheer volume makes it easy for brands to find their niche. While other platforms such as Facebook and Instagram rely on a family and friends-first approach to generate engagement, TikTok thrives on an algorithmic approach to connect users from all over to introduce them to new interests, generating communities of users with potentially strong, long-term spending power. If the ban takes effect, brands and communities alike will lose out on this engagement and potential revenue." – SS
If TikTok Goes Away, There’s Always X
On March 8, Bloomberg News reported that Elon Musk's company, X, is gearing up to launch an app for Amazon and Samsung smart TVs this week to allow users to watch longer-form videos on a big screen. Controversy started immediately. Musk publicly wooed Don Lemon to bring his show to the platform and even agreed to sit for a 90-minute interview with him. But alas, the "free-speech advocate" wasn't happy with the questioning and unceremoniously fired him. The move didn't sit well with X News Daily, which said X should "aspire to be like YouTube, where criticism of the platform does not result in the termination of monetization opportunities" and that it wasn't a good look. According to Musk, Don Lemon is still free to use the platform, but won't be guaranteed minimum payments.

Last month, X upped its advertising game, enabling marketers to run ads before videos made by creators of their choosing. To attract more creators, X will implement a revenue share model (this past January, MrBeast posted his first video to X and hauled in $250,000 for his efforts).

But at CTV Connect 2024 last week, industry leaders wondered if it was too little too late. The streaming services to beat are Netflix and YouTube, thanks to those companies' wealth of first-party user data that can help advertisers hone in on the right audience. Amazon Prime also has a wealth of retail data to close the loop. Can X do that? -- SS and LdJ
Target Unveils Roundel Media Studio To Revolutionize In-House Ad Sales Strategy

More retailers are creating in-house ad businesses, with Target's ad arm, Roundel, becoming the newest addition. With Amazon and Walmart leading the trend, Target’s Retail Media Network, Roundel, is bringing some of its ads business in-house. With the introduction of Roundel Media Studio, brands can now buy search ads directly from Target's sales reps to broaden ad campaign options.

Previously, this capability was managed by Criteo, but now Target's program offers a streamlined approach. In response to advertisers' demands, retailers, like Target, are increasingly handling ad sales internally. Roundel will still collaborate with Criteo, but buying directly will cut fees, benefiting advertisers. Direct purchases also align with advertisers' required spending commitments. The program may also expand to include other ad formats.

Target's ad revenue growth remains modest compared to giants like Amazon and Walmart, but this could be their first step toward reaching new revenue heights.

But we do heed caution. Just last year, Jeremy Haft, Chief Revenue Officer at Digital Remedy, argued that the traditional in-house ad tech services approach is impractical and insufficient. The current programmatic landscape is very complicated, and any retailers looking to create an in-house ad tech business must make sure it doesn't fall into the common pitfalls. – AB
Follow Up
On March 6th, Forbes reported that Apple terminated its development account with Epic Games, claiming the company is “untrustworthy.” Two days later, following an inquiry by EU regulators, Apple reversed that decision, approving the game maker’s developer account in Sweden and allowing it to offer a competing app store on iPhones in Europe, as required under the Digital Markets Act (DMA). A top EU commissioner, Thierry Breton, warned on X “there is no room for threats by gatekeepers to silence developers” and identified Epic’s complaint as an issue of “priority.” – SS
One X Post
Reddit Under Fire For Selling User Data For AI Training
FTC investigating Reddit for the sale of user data to companies to train AI models: Reddit’s Sale of User Data for AI Training Draws FTC Inquiry
Worth a Listen
Don Lemon on the End of His X Partnership
Don Lemon chats with Kara and Scott about the interview with Elon Musk that led to the cancellation of his partnership with X. Don shares his thoughts on Elon, X CEO Linda Yaccarino, and more. Plus, the TikTok bill heads to the Senate, but will a ban actually happen? Kara and Scott have a few predictions.
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