TikTok Takedown? TikTok’s advertising landscape amid legislative challenges

TikTok Takedown?
TikTok’s advertising landscape amid legislative challenges

In the fast-evolving world of social media advertising, TikTok has emerged as a powerhouse, capturing the attention of 100 million+ Americans thanks to its engaging, highly influencer-driven content. However, U.S. legislative concerns around user data security have cast uncertainty over its trajectory. Following passage of a bill by the House of Representatives, the Senate has now approved a measure compelling ByteDance, TikTok's parent company, to divest the app. Following this approval, President Biden enacted the measure into law. The recently passed law allows ByteDance nine months to divest the app or encounter a ban across the United States. Also, the President has the authority to offer an extension of 90 days, extending the divestiture period to a full year, provided he acknowledges a viable route to divestment and “significant progress” has been made towards its realization.

Now, TikTok and its parent company ByteDance have filed a lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit to challenge the legislation enacted by President Joe Biden. The lawsuit contends that this law infringes on several constitutional rights, including those protecting free speech under the First Amendment. According to a report by Reuters, the companies argue that selling TikTok is unfeasible from commercial, technological, and legal perspectives. They assert that the legislation will inevitably lead to TikTok's closure by January 19, 2025, thereby "silencing the 170 million Americans who utilize the platform for unique forms of communication unavailable on other platforms."

Is a sale feasible? Market analysts have valued TikTok's U.S. operations in the tens of billions of dollars, a valuation that narrows the field of prospective buyers. And antitrust questions might prevent Meta and Google from stepping in as buyers. Also, the Chinese government could present obstacles to the sale. Given China's export laws seem to encompass TikTok's content recommendation algorithm, they could wield influence over whether ByteDance can proceed with selling or licensing this aspect of the app.

Despite these challenges, many brand marketers are taking a wait-and-see approach. What is important for brand owners to know at this juncture? We sat down with MPG’s Tripp Standa, VP of eCommerce & Digital Media, and Lisa Kent, President of MPG FleXforce® and a seasoned brand marketer, to better understand the situation and gain their perspectives. They urge marketers to plan now in order to be able to pivot later and maintain engagement.

Strategic Implications for CPG Marketers

Given this backdrop, how should you prepare?

Lisa and Tripp share the strategic implications and contingency plans they feel are important for CPG marketers to consider:

Plan for changes in how younger audiences alter consumption habits. Prepare to shift influencer strategies to alternative platforms where target consumers are likely to migrate. Consider diversifying into platforms like YouTube, Instagram, and Snapchat. Keep in mind that each platform provides a different experience, so campaigns will need to be reconfigured before being repurposed.
Broaden the scope of the brand’s influencer network across diverse social media platforms.Re-evaluate existing influencer collaborations to ensure relevance outside of TikTok, as those focused primarily on that platform may experience shifts in their value and audience reach should a ban or prohibitory measures occur.
Track target consumers’ online behavior shifts. As major adjustments are expected to unfold gradually, it's prudent to monitor any shifts towards alternative platforms, and also identify forward-thinking influencers who are proactively growing their presence elsewhere.
Explore brand building through TikTok competitor short-form video offerings, such as Instagram Reels and YouTube Shorts, and emerging platforms like Triller and Likee, among others.
Enhance Owned Channel Activity. Reevaluate opportunities to use owned properties like email, SMS, and mobile.
Diversify Marketing Methods. Consider alternative tactics, such as user-generated content or branded challenges, to hedge against potential influencer campaign disruptions on TikTok.
Adapt to Platform Evolution.As TikTok responds, expect algorithmic tweaks and updates to content guidelines. Regularly review content against TikTok’s current guidelines to ensure visibility and compliance.
Rethink Data Strategies. With the legislative push to ensure user privacy, it is critical to reevaluate data collection methods if not done already. Only gather data necessary for marketing purposes and do so transparently. Consumers should be informed how their data is used, with easy opt-out options. Explore technologically advanced solutions that protect user privacy while still enabling personalized marketing.

Pre-Legislation: Advertiser Optimism & Strategy Shifts

Before these recent legislative moves, advertisers anticipated the platform to gain 2-5 percentage points of market share in 2024, driven by a strategic shift of budgets from digital competitors and traditional linear TV. This expected gain highlighted TikTok's burgeoning role in the digital advertising sphere, outpacing platforms like Twitter and Snapchat, and even encroaching on Meta's territory in upper funnel budgets.

The platform's prowess in driving mobile app downloads cemented its position as a pivotal user acquisition vehicle. Despite some challenges in measurement and attribution, improvements such as the introduction of mobile app formats and collaboration with third-party measurement partners have been encouraging. Brand advertising dominated TikTok expenditure, with direct response advertising still finding its footing. The focus on brand visibility and engagement over immediate sales conversions spoke volumes about the strategic priorities of advertisers on the platform. However, the cost and complexity of creating compelling content emerged as significant hurdles. In response, TikTok responded with subsidies and creative tools, especially tailored for small and medium-sized businesses.

Post-Legislation: Caution & Strategic Realignment

Despite the looming legal challenges ahead, initial reactions suggest that TikTok's advertising plans remain generally stable in the near term, underscoring the platform's strategic significance in advertisers' media mix.

Should restrictions materialize, depending on how the situation further evolves, Meta is expected to could gain significantly, leveraging its extensive user base and sophisticated advertising capabilities to capture shifts in advertising budgets.