Some Advertisers Slowly Test Other Platforms Ahead of TikTok’s Congress Testimony

As TikTok faces a possible U.S. ban for national security reasons, with CEO Shou Zi Chew testifying before Congress this week, analysts suggest advertisers explore other platforms to reach their audiences.

“But there is no need for immediate action just yet,” said Insider Intelligence analyst, Jasmine Enberg.

The U.S. accounts for roughly half of TikTok’s worldwide ad revenues, per Insider Intelligence estimates, so the platform has a strong incentive to reach an agreement with the U.S. government to avoid a ban. According to data from Pathmatics, the top 1,000 U.S. advertisers boosted their spending on the video platform by 66% to $467 million from September to October 2022.

Since the news of the potential ban broke last December, some advertisers have been testing additional social platforms, including Meta, Snap, Reddit, and even the resurgent Tumblr since the TikTok ban broke out mid-December last year, according to sources.

“It’s always prudent to have a contingency plan and not to be over-invested or reliant on a single platform,” said Joshua Lowcock, global chief media officer at UM Media, which is avoiding pre-emptive changes to in-market activity until an executive order or law is passed.

TikTok has faced a challenging few weeks due to concerns that the Chinese government is using the app to spy on Americans and collect data. As a result, bipartisan bills have been introduced in D.C. that could lead to a ban of the app in the U.S. President Biden supports the bills and has given ByteDance an ultimatum to divest from the app or face a ban. However, this could upset the app’s 100 million American users, 80% of whom are of voting age.

Snap and Twitter for audience reach

Before regulatory oversight, analytics company OptiMine Software benchmarked marketing performance for leading global brands across all channels and found 50% of these brands increased their investment in TikTok in the last twelve months. Less than 20% decreased their ad spend on the platform due to higher CPM rates compared to other platforms and low campaign performance led to the ad pullback. The survey included hundreds of brands across the North American region.

But due to regulatory pressure, brands are preparing for a potential TikTok ban by exploring alternative platforms. OptiMine CEO Matt Voda says that brands are testing Snap and Twitter to reach similar audiences. OptiMine’s brand partners allocate less than 5% of their overall paid social advertising budget to TikTok, while Snap accounts for less than 10% and Twitter is less than 1%.

“This scenario planning is focused on where we can take that 5% and reallocate it and not suffer a performance loss,” said Voda.

TikTok’s plan to defend turf falls short

Chew will testify before Congress for the first time this week, which could shed light on the app’s future in the U.S. Chew is expected to highlight an increase in active U.S. users to 150 million from the previously reported 100 million.

Its lobbying strategy will primarily showcase an economic argument that banning TikTok could bring financial hardships to U.S. creators that rely on the platform for income. Meanwhile, TikTok has allegedly recruited several dozen creators to hold a news conference in Washington ahead of Chou’s testimony.

Still, analysts are skeptical of the platform’s efforts.

“There is little TikTok CEO Shou Zi Chew can say on Thursday that will change U.S. lawmakers’ minds,” said Enberg.

TikTok is also banking on Project Texas—a colossal $1.5 billion corporate restructuring plan—aimed to redeem U.S. confidence in the app’s operations and security by establishing an in-house committee approved by the U.S. government.

But convincing lawmakers that TikTok doesn’t influence U.S. public opinion as long as the app has ties to China is an impossible task, added Enberg.

A senior Democratic strategist advising TikTok told NBC News that out of the app’s 150 million U.S. users, 138 million are 18 or older with an average age of 31, making them eligible voters. This means a ban could impact Biden’s 2024 reelection bid. However, Biden also appeared in a TikTok video with Irish singer Niall Horan on St. Patrick’s Day at the White House.

“The bigger issues at play are around data collection, use, misuse and abuse and, potential national security implications,” said Lowcock. “This conversation is ongoing across our clients, and it underscores the need for a Federal privacy law.”