NEW YORK: TikTok advertisers were in no rush to shift their marketing budgets after a US appeals court upheld a law on Friday (Dec 6) requiring a divestment or ban of the popular Chinese-owned short video app, citing TikTok’s continued survival despite years of threats.
Chinese tech firm ByteDance must sell TikTok’s US assets by Jan 19 or the app that is used by 170 million Americans will face an unprecedented ban that jeopardises billions in ad revenue. TikTok and ByteDance had argued that the law is unconstitutional and violates Americans’ free speech rights. The ruling is expected to be appealed to the US Supreme Court.
With TikTok’s future in the US uncertain, advertising executives said brands are maintaining their activities on the app, while ensuring they have a plan B.
“Advertisers have not pulled back from TikTok, though several are developing contingency plans for potential reallocation of investment should there be a ban,” said Jason Lee, executive vice president of brand safety at media agency Horizon Media.
Horizon is working with clients to prepare for a variety of scenarios if the app is sold or banned, Lee said.
Meta Platforms, owner of Facebook and Instagram, stands to gain the majority of TikTok’s ad revenue if the app is banned, followed by Alphabet’s YouTube, said Erik Huberman, CEO of marketing agency Hawke Media. Both companies have introduced short-form video features in the past few years to compete with TikTok.
Still, “there’s no decision to make until there’s a decision to make”, he said.
TikTok’s US ad revenue is expected to reach US$12.3 billion this year, according to estimates from research Emarketer. By comparison, analysts on average expect Meta Platforms’ advertising revenue in 2024 to reach about US$159 billion, according to LSEG data.
The potential boon for rivals propelled stocks on Friday.
Meta Platforms shares rose to an all-time record high of $629.78 earlier on Friday, and were up 2.3 per cent at US$622.85 in late afternoon regular trading.
Alphabet shares were up 1.1 per cent at US$176.21. Trump Media & Technology, which operates the Truth Social app and is majority-owned by President-elect Donald Trump, rose 3 per cent to US$34.78. Shares of Snap, owner of messaging app Snapchat, rose 1.89 per cent to US$12.40.
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