Should advertisers plan on a TikTok ban?

Author: Mike Hayward

 

The headline scared TikTok fans and ad agencies alike: U.S. lawmakers introduce bill to ban TikTok

Even more worrisome for TikTokit's a bipartisan bill co-sponsored by Marco Rubio, ranked as one of the most effective Senators when it comes to getting bills passed. 

A separate bill sponsored by Senator Josh "Fist Up, Tail Tucked" Hawley passed just days later banning TikTok on any government-issued device.

The U.S. military has had such a ban in effect since 2020.

President Biden was early on the "ban TikTok" trend tooin 2020, his staffers were ordered to delete TikTok from their devices. But Biden also revoked Trump's executive order banning TikTok quickly after taking office.

 

So which way is the TikTok ban swinging? 

I'm betting on the platform that gave us Corn Kid to be here in the U.S. through 2023 and beyond.

One reason is the mostly ignored news in June announcing the finalization of TikTok's move to Oracle servers in the U.S., with 100% of U.S. traffic hosted by Oracle. A move to directly address the lawmakers' main concern. 

Oracle is not a small company, nor is this a small deal. It's said to potentially be worth over $1 billion in revenue for Oracle per year. And we know big money begets favorable political legislation.

TikTok has almost 8,500 employees in the U.S., too. That's dwarfed by Facebook, but 1,000 more than Twitter prior to The Great Musk Purge. And TikTok has a slew of lobbyists with close ties to powerful leaders on both sides of the aisle

None of this is to say national security risks with tech aren't real. U.S. tech companies are part of the problem though. Google already sells consumer data to Chinese companies, despite being essentially banned there. Meta has been caught sharing data with Chinese companies in the past and it's public knowledge China scrubs Twitter and Meta properties to harvest data on foreign targets. And of course, we witnessed Russia use Facebook data to directly influence the 2016 elections.

All of this strongly suggests TikTok isn't going anywhere.

Regardless of political saber rattling, I expect a huge jump in brand advertising on the platform this coming year. In 2022, it rose 184% to $5.96 billion. Its U.S. ad business is projected to eclipse YouTube's by 2024. That's astounding growth. 

Even more telling, according to a study by Retailwire, advertiser who were on both TikTok and Meta had an average TikTok CPM 39% lower than on Meta properties including Facebook, Instagram, Messenger and Audience Network. 

 

What I'm betting against when it comes to the future of TikTok 

  1. TikTok gets a country-wide consumer ban (seven states have banned it for governmnet employees on government tech). See all of the above for reasons why.
  2. TikTok is forcibly sold to a U.S. company. This was floated as Trump's preferred option, and rumors of Microsoft nearly buying it surfaced in 2020. China has a GDP that's larger than Japan, Germany, the UK and India combined. U.S. companies want access to Chinese consumers. Forcing a Chinese company, especially the hottest and fastest growing social platform, to sell itself to a U.S. company in order to do business here? China wouldn't take that lightly, and it would establish a precedent for how U.S. and China treat outside companies that successfully reach their respective markets.
  3. A launch of a U.S.-based TikTok alternative...that actually works. As history has shown us, platforms are what they are. Facebook can add more photo features, but it's not Instagram. Instagram can add more video features, but it's not TikTok. Elon even floated bringing back Vine to Twitter to compete with TikTok. But Twitter will still be...for thin-skinned billionaires who just aren't that funny. 

What I am firmly betting on, besides TikTok avoiding a full-blown ban, is that something new will come along in the years ahead that steals the cool kids from TikTok. But it won't be a TikTok clone. Whatever it is, it'll initally be dubbed a platform "just for teens" until it gains momentum and matures into the next big advertising opportunity.

Until then, TikTok is that big opportunity. For 2023 at least.