TikTok ad spend growth slows as US ban looms

The news: Ad spend growth on TikTok has tapered off since the US passed a ban on the app. While ad spending in March, one month before President Biden signed the ban into law, was up 19% year over year, growth fell to 11% in April and 6% in May, per Adweek reporting citing MediaRadar data.

Furthermore, four of TikTok’s top 10 spenders significantly reduced outlays on the app from March to April: Target, DoorDash, Bayer, and Procter & Gamble decreased month-over-month spending by 30%, 25%, 20%, and 10%, respectively.

The ban’s impact: The April law gave TikTok parent ByteDance until January 2025 (with a possible 90-day extension) to sell off the app to a US buyer or face a ban. TikTok has sued the US government claiming the ban violates the First Amendment, making it likely that the process will take much longer to play out.

  • TikTok has enormous reach among social media networks: US adults spend more time on TikTok than any other social platform, with Gen Z leading the pack. Its growing global reach and the uncertainty surrounding a ban deadline hasn’t stopped TikTok from striking major partnerships with music publishers, artists, and retailers.
  • But Adweek’s report makes the reality clear: As long as the possibility of a ban exists, advertisers are likely to divert spending to other platforms in case they lose access to TikTok come 2025. The reduction in spending from top partners and slowing growth since the ban legislation shows that the shift is already taking place.
  • While advertisers might be looking to invest elsewhere, users are still spending large amounts of time on TikTok. US usership will grow 6% this year, per our forecast, with markets like the Middle East and Asia-Pacific delivering double-digit growth. However, time spent on TikTok—and social media as a whole—is slowing and expected to plateau by 2025.

Our take: Just as advertisers are devoting spending to post-cookie alternatives, brands are also testing other ad channels in case TikTok gets forced out of the US. The most obvious beneficiaries of a TikTok ban would be Meta and Google, who run their own short-form video platforms.

TikTok’s prominent place in culture and broad reach to young, engaged consumers makes it a valuable channel for advertisers. But it may be best to experiment with alternatives now rather than be caught in the lurch if the ban comes to pass.

First Published on Jul 8, 2024