Why marketers are not deterred by TikTok’s uncertain future

TikTok is gobbling up more and more ad dollars, poised for another serious gain this year, even in light of its latest bouts of turbulence. 

This week, the House of Representatives is working to fast-track a vote on yet another TikTok ban, reinstating last year’s calls for the short-form video app to part ways with ByteDance, its China-based parent company. A committee approved the measure in a 50-0 vote last Thursday, moving it forward to the House. Notably, TikTok is still reeling from its fall out with Universal Music Group, which pulled songs from the platform leaving swaths of viral videos without sound at the beginning of February. Advertisers say they’re keeping close watch, but remain undeterred in shelling out ad dollars for now.

The proof is in the numbers. Spending on TikTok was at nearly $1.2 billion in Q4 of 2023, 43% more than the $805 million spent during Q1 of 2023, according to ad intelligence platform MediaRadar. 

This time last year, agency spending on the platform had plateaued as brands struggled with what to make of the app, according to Digiday research. That has since changed as TikTok has proven itself to be more far more than a dance app, but a cultural zeitgeist.

“They’ve [TikTok has] demonstrated that they know their audience, that they know how to deliver content that can catch fire with the audience, and that’s been something that, as advertisers, we are latching on to,” said Jennifer Kohl, chief media officer at VML ad agency. 

But just as advertisers are cozying up to TikTok, the music industry and U.S. government is looking to part ways with the platform.

The House is requiring China’s ByteDance to divest from TikTok within six months or face a ban should Congress decide to ban it the coming days. It’s a push that started last year, stalling with the app’s heavy lobbying that has continued into this year. TikTok served users a message last week, urging them to call Congress about this year’s looming ban. (TikTok did not respond to a request for comment.) While dubbed a creator’s “worst nightmare” last year, advertisers this year say they’ll deal with it when, and perhaps more importantly, if the government makes good on its threat.

“We’ve experienced this in the past and none of our clients pulled spend,” Dana Busick, group media director at Crispin Porter + Bogusky creative marketing agency, said in an email. “We continue to closely monitor these movements and if a ban seems imminent we always provide our clients with plans on how to shift budget and pivot.”

The TikTok music problem

Then there’s the music. Advertisers have long since been banking on TikTok’s music and viral sounds for a chance to go viral. General Mills, for example, had this strategy last year. The standoff between Universal Music Group and TikTok left bad blood between the two, with TikTok stating that “Universal Music Group has put their own greed above the interests of their artists and songwriters” in a press release. Again, agency execs say they’ll wait to see if there’s a fallout before siphoning away client ad dollars.

Related Insights

TikTok is undoubtedly seeing growth, going from an experimental channel to a line item in media plans. But as TikTok’s future is rendered uncertain in light of a government ban and music fallout, agency execs say they’re proceeding with caution, careful to not put all their eggs in TikTok’s basket.

“The government keeps threatening the ban and I don’t know that anything’s really fully succeeded … but we are having that conversation just to make sure,” said Haley Austin, director of digital media and senior media lead at Buntin ad agency. “That’s why TikTok really doesn’t have a ton of spend associated with it right now. Because in case it did go away, [we] wanted to make sure that that’s not the strategy that we’re hinging on.”

Currently, an estimated 25% of client social ad spend goes to TikTok, per Austin. In comparison, Instagram sees an estimated 50%.

Historically, this has been the case, in which TikTok’s ad spend has paled in comparison to Meta’s products, which has a host of proven ad formats, measurement and conversion capabilities. But TikTok has been hedging its bets over the last year and advertisers are taking notice. Last September, TikTok landed its biggest milestone to date with TikTok Shop, an e-commerce feature. The platform was also testing ad formats to sell search against as more people turn to TikTok to start their search instead of Google.

“We’ve seen a lot of clients migrating budget to TikTok from other platforms this year due to increased popularity of the platform and the ability TikTok has to provide integrated paid social campaigns with 360 activations and extensions,” said Busick. She declined to offer specific dollar amounts, but said client spend on TikTok has increased 11% year-over-year in Q1 of this year with more increases planned for the remainder of the year. 

Beyond its ad offerings, TikTok’s coveted Gen Z audience, popularity and viral video-inducing algorithm, continues to keep it in the spotlight for advertisers. The effects of the the music roll back and potential government ban have yet to be actualized, but advertisers aren’t pulling back from the platform yet as it continues to build momentum. 

“That was our testing phase last year. This year, we’re able to go into the planning, knowing where our audience is, how we’re going to reach them and able to contribute more money towards that,” said Chelsea Babbitt, social media account supervisor at GS&F ad agency.


More in Marketing

Nike eyes marketing moment at the Olympics, as industry execs sound off on the brand’s challenges

The Olympic moment comes at a time that is all too critical for a brand like Nike, which some industry experts say is pressured to improve its standing among consumers after seeing a dip in sales as of late.

GoDaddy shifts gears: CMO Fara Howard talks about-face from provocative Super Bowl ads to focus on small businesses

GoDaddy is moving away from its quintessential sports-related spots to focus on small businesses and entrepreneurs, according to CMO Fara Howard.


Marketing Briefing: How the Democratic presidential election upheaval will impact the political ad market

While the communication strategy for the Democrats already included robust digital and social media placements that have become table stakes, those efforts will likely only increase in the weeks to come.