Advertisers Stay On TikTok Even Though The Threat Of Prohibition Is Getting Closer

JAKARTA Advertisers on TikTok have not rushed to divert their marketing budget even though the US appeals court on Friday December 6 supports legislation requiring the sale of TikTok assets in the US or facing bans in January 2025. The decision threatens billions of ad revenues obtained by China-based ByteDance's app.

ByteDance is required to sell TikTok assets in the US no later than January 19, 2025 or face an unprecedented ban. TikTok and ByteDance argue that this law is unconstitutional and violates the right to free speech of US citizens.

In an email to advertisers last Friday, TikTok's Presidential Global Business Solutions, Blake Chandlee, stated that the company plans to file a "substitute to stop the ban on TikTok until the US Supreme Court has the opportunity to review it."

Although TikTok's future in the US is uncertain, advertising executives say brands remain actively advertising on the platform while preparing a backup plan.

"Advertisers have not withdrawn from TikTok, although some are developing contingency plans to re-allocate investments if the ban is actually enforced," said Jason Lee, Vice President Executive of Brand Security on Horizon Media.

Meta Platforms, owner of Facebook and Instagram, is expected to be the largest recipient of TikTok ad revenue if the ban goes into effect, followed by Alphabet's YouTube. Both companies have introduced short video features in recent years to compete with TikTok.

However, according to Lance Wolder, Head of Strategy on PadSquad, advertisers will likely not leave TikTok as long as active user bases remain. "In the end, advertisers will not leave the platform unless their customers do it first," he said.

TikTok's ad revenue in the US is projected to reach 12.3 billion US dollars (Rp195.1 trillion) this year, according to Emmarketer research. In comparison, Meta Platforms ad revenue in 2024 is estimated at around 159 billion US dollars (Rp2.5 quadrillion).

"If TikTok disappears from the US, it will lead to major changes in the social media landscape, benefiting Meta, YouTube, and Snap, but harming content creators and small businesses that rely on the app for livelihoods," said Jasmine Enberg, lead analyst at Emarketer.

The news of the potential ban on TikTok prompted the increase in shares of several technology companies last Friday. Meta Platforms shares hit an all-time high of 629.78 US dollars and closed up 2.3% in 622.85 US dollars. Alphabet shares rose 1.1% to 176.21 US dollars, while Snap shares, Snapchat owners, rose 1.89% to 12.40 US dollars.