How the TikTok ban threat is affecting advertisers and creators

Advertisers and creators are grappling with what happens next after the anti-TikTok bill cleared its first hurdle in the U.S. on Wednesday, throwing the future of the highly influential app into doubt. There have been threats to TikTok’s existence in the U.S. before, but now the company is more embedded in culture and marketing, making more ad dollars than ever, ad agency leaders said. “This caught people slightly off guard,” said one social media specialist at an ad agency, who spoke on condition of anonymity. “We are certainly thinking about recommendations for clients and the pivots we may have to make.” Also read: How creators are preparing for a potential TikTok ban See all of Ad Age’s 2024 Agency A-List winners here The agency works with numerous brands that have TikTok strategies, as the app has become a core part of how brands build communities on social media. This agency exec said that at least two brands, one in financial services and a wireless provider, had just solidified plans for their TikTok strategy this year. But TikTok’s future is less certain after the U.S. House of Representatives voted on Wednesday to ban the app in the U.S. if its Chinese-based owner ByteDance doesn’t sell the platform within six months, stemming from concerns over its ties to the Chinese government. The divestment bill still has to clear the Senate before it can officially be passed (President Joe Biden has said he would sign the legislation if passed by both chambers). Given how popular TikTok is in the U.S., advertisers and creators fretted about the future. “It’s an integral part of our media planning, our clients’ budgets, and a key part of our social strategy,” the ad agency exec said. “It would have a massive domino effect, and the impact on brands and agencies would be significant.” Also read: Top 5 brand TikToks you need to know about right now Ban talk A movement to ban TikTok started in 2020, when then-President Donald Trump tried to force the company to sell citing national security concerns. Top lawmakers and U.S. intelligence officials have also raised concerns about TikTok’s influence on U.S. media and culture. Indeed, many brands could confirm that the app has a strong hold on consumers, as viral moments on TikTok can propel a brand or creator to popularity. Rivals have tried to mimic the success of TikTok: Meta has Reels; Google, YouTube Shorts; and Snap, Spotlight. TikTok has tried to rally its avid fanbase to lobby for the app and has criticized the latest bill, saying it would affect 170 million people and 5 million small businesses on the platform. TikTok is expected to generate $8.7 billion in ad revenue in the U.S. this year, a 31% increase compared to 2023, according to eMarketer. It will account for 10.5% of U.S. social media ad spend, according to eMarketer. “This bill is an outright ban of TikTok, no matter how much the authors try to disguise it,” TikTok said in a public statement it shared with Ad Age this week. “This legislation will trample the First Amendment rights of 170 million Americans and deprive 5 million small businesses of a platform they rely on to grow and create jobs.” This week, TikTok executives had one-on-one meetings planned with top partners at SXSW in Austin, Texas; major brands and ad agencies attend the annual tech, film and music festival. Creators especially are concerned about the potential for the U.S. to ban the app, according to James Nord, CEO of Fohr, the influencer marketing agency. “This year alone, we’ll pay out more than $20 million to influencers on TikTok,” Nord told Ad Age. “Most creators with a big following on TikTok don’t usually have large audiences elsewhere, given how hard it is to grow on other platforms like Instagram. So, they’re talking about putting small businesses and entrepreneurs out of business, about wiping out years of work, over political posturing.” Also read: Agencies are hiring TikTok full-time Ad agencies appear to be taking the latest anti-TikTok wave in stride. “The conversation has been obviously focused on influencers and the impact to the creator economy in the U.S.,” said one top ad exec from a major agency. “But there’s a lot of headwinds to this really becoming law. Brands are taking it seriously, but there is a ‘let’s see’ attitude.” Advertisers are prepared for any contingency because TikTok has been in jeopardy before, said another top agency exec, who also spoke on condition of anonymity. “There have been multiple scares,” this exec said. “But our core business, on behalf of brands, is to find where consumer attention exists, and if that attention jumps from TikTok, we jump with it.” There is hope for TikTok, because the company has made strides to disentangle its business from foreign ownership. TikTok developed what it called Project Texas, where it moved U.S. data to Oracle and promised to store all consumer information within the U.S. “They’re actually very well positioned in the event TikTok has to become a U.S. entity,” said the agency exec. “It’s very turnkey to go and do that because of Project Texas.” This time feels different Still, TikTok’s ownership structure is part of an international tussle between the U.S. and China. Chinese officials blasted the bill on Wednesday, saying it was “bullying” behavior. The latest anti-TikTok movement did bubble up rapidly; last week, a House committee passed the bill with unanimous, bipartisan support, and then it sailed into passage on Wednesday. Biden has said he would sign the law if the Senate passed it and on Wednesday, Sens. Mark Warner and Marco Rubio, who have been vocal about their TikTok concerns, sent a joint press release lending support to the bill. “The conventional wisdom in the past has been that they’re going to make noise about banning TikTok,” said Jason Harris, CEO of ad agency Mekanism, “but because half of America is on it, it’s too big in our society, that it didn’t seem like a reality that it would just go away … this time it feels like something is really going to happen.” Mekanism works with multiple brands on strategy, creative, social media, and media planning. “From a business standpoint we just assume it will get sorted out,” Harris said, “because it’s so ingrained in culture here that it will live on, and we’ll still be able to do brand deals on TikTok.” If TikTok is forced to head off into the sunset, then brands would apply what they learned over the past few years to other platforms, Harris said. Contributed: Gillian Follett

How the TikTok ban threat is affecting advertisers and creators

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