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TikTok advertisers would seek to competitors if US Senate pushes forward on ban

A person arrives at the headquarters of Tik Tok after the U.S. House of Representatives decisively approved a measure that would give TikTok's Chinese owner ByteDance approximately six months to sell the U.S. assets of the short-video app or risk a ban, in Culver City, California, U.S., March 13, 2024

March 15 (mod1s) - Advertisers that look on TikTok to promote to young customers are creating backup plans with social media competitors in the event the short-form video app is sold or banned in the U.S., but many are waiting for signs of Senate action before moving marketing dollars.
 
House Republicans voted Wednesday to compel Chinese internet startup ByteDance to sell TikTok in about six months, or risk a ban, one of the most serious hurdles to the business that has long faced worries about national security issues.

The White House has pushed the Senate to adopt the measure and U.S. President Joe Biden has committed to sign it.
 
Meta's Reels and YouTube's Shorts, TikTok's major rivals, are expected to be the benefactors of advertising dollars if the app is blocked, ad analysts said.
 
TikTok did not reply to a request for comment. The firm has stated it would enforce its legal rights to block a ban, which it argues would "take billions of dollars out of the pockets of creators and small businesses."

"The momentum around this legislation is greater than in previous national efforts to curtail or sell off TikTok, and advertisers are keeping a sharp eye on developments," said Jasmine Enberg, principal analyst at research company Insider Intelligence.
 
If the law proceeds, "it would put us more on alert," said Jack Johnston, senior social innovation director at Tinuiti, a digital marketing business that has worked with companies including Revlon and Elf cosmetics.

Still three digital marketing firms, including Tinuiti, told Reuters they are advising clients to keep a "business as usual" approach to TikTok, noting the viral app has survived multiple previous attempts to restrict its availability in the U.S., including an executive order from then-President Donald Trump in 2020 to ban it.
 
While advertising expenditures are prepared months in advance, corporations may immediately put or withdraw advertisements on social media to react to events.

Videos on TikTok may swiftly start off new trends in music, fashion and beauty, and businesses have rushed to the platform in hopes of being part of important cultural events. Insider Intelligence forecasts TikTok will earn $8.66 billion in U.S. ad revenue this year.
 
The significant implications associated with blocking a popular app like TikTok make an outright ban improbable, one digital ad business warned clients on Wednesday, refusing to be identified to disclose the talks.
 
A sale of the app is more probable, and the approximately six-month timescale would let businesses prepare, Johnston added.
 
If the app is sold during the Christmas season, a vital sales period for many firms, "then there is a little more urgency for brands that rely on this time of year for a bulk of their revenue," Johnston noted.
 
Even if marketing dollars are moved to Reels and Shorts, there's no assurance the rival features could perform the same as TikTok.
 
"While a substantial fraction (of TikTok users) are also active on other platforms, there is a solid proportion that utilize TikTok as their main media consumption route. Reels and Shorts are the two obvious products out there that most nearly fit TikTok's content style, but it doesn't imply that this is where consumers would flock to necessarily," Johnston said.

Source: https://www.reuters.com/

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