TikTok Faces Sales Or Ban Threats In The US, Advertisers Prepare Reserve Plans

Advertisers use a lot of TikTok to market products. (photo: x @TikTokComms)

JAKARTA - Advertisers who use TikTok to market products to young consumers are preparing a backup plan if this short video app is sold or banned in the US. However, they are waiting for signs of an action by the US Senate before changing the marketing budget.

Republicans in the US House of Representatives voted on Wednesday March 13 to force Chinese tech company ByteDance to sell TikTok in approximately six months, or face a ban. This is the biggest challenge for companies that have long faced questions about national security concerns.

According to advertising experts, YouTube's Meta Reels and Shorts, TikTok's biggest competitor, is predicted to get an ad budget if the app is banned. TikTok itself did not respond to the plan. The company stated that it would use their legal rights to prevent bans, which they thought would "take billions of dollars from the pockets of creators and small businesses."

"The interest around legislation is greater than previous national efforts to limit or sell TikTok, and advertisers are paying close attention to its development," said Jasmine Enberg, principal analyst at research firm Insider Intelligence.

"If this bill continues, it will make us more vigilant," said Jack Johnston, director of senior social innovation at Tinuiti, a digital marketing firm that has worked with brands such as Revlon and Elf cosmetics.

However, three digital marketing firms, including Tinuiti, said they advise clients to maintain a business' approach as usual to TikTok, noting that this viral app has survived some previous attempts to limit its availability in the US, including executive orders from former President Donald Trump in 2020 to ban it.

Although the ad budget was planned months earlier, brands could quickly place or attract ads on social media to respond to events. Videos on TikTok can quickly trigger new trends in music, fashion, and beauty, and brands have flocked to the app in hopes of becoming part of major cultural moments.

Insider Intelligence estimates TikTok will generate an ad revenue of US$8.66 billion (Rp 136 trillion) in the US this year.

The high bet involved banning major apps like TikTok made a total ban impossible, a digital advertising firm told clients on Wednesday, who declined to be named to discuss the conversation. The sale of apps is more likely, and a period of about six months will help brands prepare themselves," said Johnston.

"If apps are sold during the holiday season, sales periods are critical to many companies, then there will be a bit more urgency for brands that rely on this time in a year for most of their income," added Johnston.

Even if the marketing budget is diverted to Reels and Shorts, there is no guarantee that competing features can perform the same as TikTok. While most (TikTok users) are also active on other platforms, there are most of them using TikTok as their main media consumption channel. Reels and Shorts are two logical offers out there that are most similar to TikTok's content format, but that doesn't mean it's where users will flock, "Johnston said.