NEW YORK, Dec 7 — TikTok advertisers were in no rush to shift their marketing budgets after a United States (US) appeals court upheld a law on Friday requiring a divestment or ban of the popular Chinese-owned short video app, citing TikTok's continued survival despite years of threats.
Chinese tech firm ByteDance must sell TikTok's US assets by January 19 or the app that is used by 170 million Americans will face an unprecedented ban that jeopardizes billions in ad revenue. TikTok and ByteDance had argued that the law is unconstitutional and violates Americans' free speech rights.
In an email to advertisers on Friday, which was seen by Reuters, TikTok's president of global business solutions Blake Chandlee said the company planned to seek "an injunction to stop the TikTok ban from going into effect until the US Supreme Court has an opportunity to review it."
With TikTok's future in the US uncertain, advertising executives said brands are maintaining their activities on the app, while ensuring they have a plan B.
"Advertisers have not pulled back from TikTok, though several are developing contingency plans for potential reallocation of investment should there be a ban," said media agency Horizon Media’s executive vice president of brand safety Jason Lee
Horizon is working with clients to prepare for a variety of scenarios if the app is sold or banned.
Facebook and Instagram owner Meta Platforms stands to gain the majority of TikTok's ad revenue if the app is banned, followed by Alphabet's YouTube, said marketing agency Hawke Media’s chief executive officer Erik Huberman. Both companies have introduced short-form video features in the past few years to compete with TikTok.
Still, "there is no decision to make until there's a decision to make," he said.
The app continues to have an active audience, making it unlikely for brands to step away prematurely.
"At the end of the day, advertisers will not abandon the ship unless their customers do first," said digital advertising firm PadSquad’s head of strategy Lance Wolder.
TikTok's US ad revenue is expected to reach US$12.3 billion (RM54.3 billion) this year, according to estimates from research firm Emarketer. By comparison, analysts on average expect Meta Platforms' advertising revenue in 2024 to reach about US$159 billion (RM702.6 billion), according to LSEG data.
"The loss of TikTok in the US would cause a major shakeup in the social landscape, benefiting Meta, YouTube, and Snap, while hurting content creators and small businesses who rely on the app to make a living," said Emarketer principal analyst Jasmine Enberg.
The potential boon for rivals propelled stocks on Friday.
Meta Platforms shares rose to an all-time record high of US$629.78 earlier on Friday, and were up 2.3 per cent at US$622.85 in late afternoon regular trading.
Alphabet shares were up 1.1 per cent at US$176.21. Trump Media & Technology, which operates the Truth Social app and is majority-owned by President-elect Donald Trump, rose three per cent to US$34.78. Shares of Snap, owner of messaging app Snapchat, rose 1.89 per cent to US$12.40.
— Reuters
