This week, the House of Representatives is fast-tracking a vote on a further ban on TikTok, reviving last year's call for the short-form video app to break with its China-based parent company ByteDance. The committee approved the bill on a 50-0 vote last Thursday and sent it to the House. Notably, TikTok is still reeling from a dispute with Universal Music Group, which removed songs from its platform in early February, leaving snippets of viral videos without audio. Advertisers are keeping a close eye on the situation, but for now they say they are unflinching in spending on advertising.
The proof is in the numbers. Spending on TikTok reached about $1.2 billion in the fourth quarter of 2023, 43% higher than the $805 million in the first quarter of 2023, according to advertising intelligence platform Media Radar.
Around this time last year, agency spending on the platform had plateaued as brands struggled to decide what to do with their apps, according to Digiday research. Things have since changed as TikTok has proven to be more than just a dance app, it's a cultural zeitgeist.
“They are, [TikTok has] “They have demonstrated that they know their audience well and know how to deliver content that will interest them,” said Jennifer Cole, chief media officer at VML Advertising Agency. We have a firm grasp on that.”
But just as advertisers are loving TikTok, the music industry and the U.S. government are considering a break with the platform.
The House of Representatives has called on China's ByteDance to exit TikTok within six months or face a ban if Congress decides to do so in the coming days. The effort, which began last year, has stalled amid intense lobbying from apps that has continued this year. TikTok sent a message to users last week urging them to call Congress about this year's ban. (TikTok did not respond to a request for comment.) Last year was called creators' “worst nightmare,” but advertisers are hoping this year they'll know if governments address the threat and, perhaps more importantly, if governments address the threat. He said he would deal with the situation.
“We've been through this in the past, and every client spends less,” Dana Busick, group media director at Crispin Porter & Bogusky's creative marketing agency, said in an email. It was not raised,” he said in an email. “We continue to closely monitor these developments and always provide our clients with plans for how to change and pivot their budgets if a ban appears to be imminent.”
TikTok music problem
Then there's the music. Advertisers have long looked to TikTok's music and viral sounds for viral opportunities. General Mills, for example, adopted this strategy last year. The conflict between Universal Music Group and TikTok has left bad blood between the two, with TikTok stating in a press release that “Universal Music Group has prioritized its own desires over the interests of artists and songwriters.” Once again, agency executives say they will wait to see if there is any fallout before siphoning off clients' advertising dollars.
TikTok is definitely growing, moving from an experimental channel to an item on your media plan. But with TikTok's future uncertain given government bans and the impact on music, agency executives are treading carefully, being careful not to put all their eggs in TikTok's basket. It states that
“The government keeps threatening bans and I don't know if anything has actually been completely successful…but we are having discussions just to be sure,” said Bantin Advertising Agency Digital Media Director and Senior Media said lead Haley Austin. “That's why there isn't really a lot of spending related to TikTok at the moment. Just in case it goes away. [we] We wanted to make sure that's not the strategy we're stuck with. ”
According to Austin, an estimated 25% of its clients' social ad spend is currently spent on TikTok. This compares to an estimated 50% on Instagram.
This has been true historically, as TikTok's ad spend pales in comparison to Meta's offering, which has a wealth of proven ad formats, measurement, and conversion features. But TikTok has been risk-averse over the last year, and advertisers are taking notice. Last September, TikTok achieved its biggest milestone yet with its e-commerce feature, TikTok Shop. The platform was also testing ad formats to sell searches as more people start their searches using his TikTok instead of Google.
“This year, many clients are shifting their budgets from other platforms to TikTok due to the platform’s growing popularity and TikTok’s ability to offer integrated paid social campaigns with 360-degree activations and extensions. “I've seen it happen,” Busick said. Although he declined to provide specific numbers, he said customer spending on TikTok rose 11% year over year in the first quarter of this year, with further increases planned for the rest of the year.
Beyond advertising, TikTok continues to be a hot spot for advertisers due to its coveted Gen Z audience, popularity, and algorithms that drive viral videos. While the impact of music rollbacks and potential government bans has yet to materialize, the platform continues to gain momentum and advertisers have not yet backed away from it.
“That was a testing phase last year. This year we were able to work on our plan knowing where our audience was and how we were going to reach them, and we were able to put even more money into that. '' said Chelsea Babbitt, social media account supervisor at advertising agency GS&F.
