By Sheila Dang and Chibuike Oguh
NEW YORK (Reuters) – TikTok advertisers are not rushing to shift their marketing budgets despite a U.S. appeals court’s recent decision to uphold a law that mandates the divestment or ban of the beloved Chinese-owned video app. The judgment underscores TikTok’s resilience amidst persistent threats.
Chinese tech conglomerate ByteDance must divest TikTok’s U.S. operations by January 19 or face an unprecedented ban impacting 170 million American users and billions in advertising revenue. Both TikTok and ByteDance have argued that the law infringes upon the constitutional right to free speech.
In communication with advertisers, Blake Chandlee, TikTok’s President of Global Business Solutions, stated that the company intends to seek an injunction halting any ban until the U.S. Supreme Court can review the matter.
While TikTok’s future remains uncertain, advertising professionals confirm that brands continue their engagement with the app, albeit with contingency strategies in place. Jason Lee, Executive Vice President of Brand Safety at Horizon Media, commented, ‘Advertisers have not pulled back from TikTok, though several are developing contingency plans for potential reallocations of investment should there be a ban.’
Horizon Media is actively preparing clients for various outcomes, but many believe the app’s ongoing popularity diminishes the likelihood of brands abandoning it prematurely. Lance Wolder, head of strategy at digital advertising firm PadSquad, remarked, ‘At the end of the day, advertisers won’t abandon the ship unless their customers do first.’
Estimates from Emarketer suggest TikTok’s U.S. ad revenue could reach $12.3 billion this year, in stark contrast to anticipated advertising revenue of around $159 billion for Meta Platforms in 2024, according to LSEG data. Analyst Jasmine Enberg pointed out, ‘The loss of TikTok in the U.S. would cause a major shakeup, benefiting rivals while negatively impacting content creators and small businesses reliant on the app.’
The potential for increased revenue for competitors, such as Meta and Alphabet’s YouTube, resonated positively in the stock market. Following the ruling, Meta’s shares reached record highs, while Alphabet’s stocks also experienced an uptick.
