TikTok Ban's Impact on Advertisers: Insights from Yahoo Finance

Recently, MikMak founder and CEO Rachel Tipograph was featured on Yahoo Finance alongside Catalysts hosts Seana Smith and Madison Mills, as well as fellow guest, ROTH Capital Partners' Managing Director, Rohit Kulkarni, to discuss the potential implications of a TikTok ban on the advertising industry. As TikTok faced a key court hearing in its ongoing battle to block a U.S. law that could ban the app, many are speculating on how this will affect advertisers and TikTok’s competitors like Meta and Snapchat.

Kulkarni noted that the odds of a TikTok disruption, whether through a ban or forced sale, are increasing. “If you look at Snapchat and Meta stock, there is an implied probability that a TikTok disruption is more likely than not in the next four months,” Kulkarni shared. He added that this could result in “eyeballs and money moving away from TikTok,” benefitting other social platforms like Meta and Snapchat.

Rachel Tipograph provided a unique perspective from an advertising standpoint. She revealed that MikMak's data shows brands are still heavily investing in TikTok, despite the looming possibility of a ban. “We've seen a 60 percent year-over-year growth in TikTok traffic on any given day. TikTok is our second most trafficked channel after Meta,” she explained. “Advertisers don’t seem to be scared about a ban at all and continue to invest,” Tipograph told Yahoo Finance.

TikTok continues to grow, despite the threat of a potential ban 

Despite the regulatory threats, TikTok’s growth trajectory remains strong. TikTok continues to attract users and brands alike, especially in the Personal Care and Beauty sectors, where MikMak data shows significant engagement. Data from the MikMak Shopping Index showed that recently, TikTok accounted for 20.6 percent of MikMak’s total traffic, just second behind Meta’s 65.4 percent.

Tipograph emphasized that TikTok’s ability to capture attention goes beyond traditional social media. “TikTok has the power of television in terms of its ability to capture mindshare, with an algorithm that supercharges conversion much like Amazon,” she said. This combination of entertainment and commerce is one reason brands are eager to invest in TikTok, even in the face of uncertainty.

Small businesses will feel greater effects from a TikTok ban 

While larger advertisers may be able to pivot if TikTok is banned, smaller businesses could face more challenges. “The brands that would be most impacted are small to medium-sized businesses,” Tipograph said, noting that TikTok is one of the last places where organic content can still thrive without significant paid spend. For these smaller players, TikTok’s viral nature allows them to gain traction without the heavy financial investment often required on other platforms.

TikTok Shop, a fast-growing marketplace within the app, is another area where smaller businesses are flourishing. If TikTok were banned, these businesses would lose a key channel for driving sales. TikTok Shop is expected to generate $17 billion in U.S. revenue this year, and early adopters are already seeing the benefits of this emerging eCommerce feature.

What’s next for advertisers?

If TikTok were to be banned, major advertisers would likely shift their budgets to other platforms, including Meta, Snapchat, and even emerging channels like Pinterest. “In an election year, brands really care about brand safety,” Tipograph mentioned. Platforms that offer more control and less controversy, like Pinterest, could become more attractive to advertisers, particularly those seeking a safe campaign environment.

For brands currently investing in TikTok, the key takeaway is to remain flexible and diversify ad spend across multiple platforms. At MikMak, we've seen that while TikTok remains an important channel, it's essential for advertisers to stay informed about regulatory developments and be prepared to adapt their strategies as needed.

Know what channels your consumers are on with MikMak

As social commerce continues to evolve, it's crucial to understand how each platform performs to effectively reach your shoppers. Keep investing wisely, diversify your ad spend, and take advantage of the opportunities platforms like Meta and TikTok offer. MikMak Insights can help brands develop a data-driven approach to their omnichannel strategy, ensuring they are prepared for any market shifts.

For a deeper look into this discussion, watch the full interview on Yahoo Finance.