One of the biggest stories in marketing heated up on December 6. A federal appeals court in Washington, D.C., upheld a law that could lead to the banning of TikTok in the United States unless its Chinese parent company, ByteDance, divests ownership of the app.
The ruling by a three-judge panel from the U.S. Court of Appeals for the District of Columbia Circuit affirmed that the law is constitutional, rejecting TikTok’s arguments that it violated First Amendment rights and unfairly targeted the platform. The court emphasized that the government acted to protect national security and limit potential data access by a foreign adversary, namely China.
The law, signed by President Joe Biden in April 2024, requires ByteDance to sell TikTok to a non-Chinese entity by January 19, 2025, or face a nationwide ban. TikTok has argued that such a sale is unfeasible due to technological and commercial challenges and has denied allegations of sharing user data with the Chinese government or manipulating content on Beijing’s behalf. The platform plans to appeal the decision to the Supreme Court.
This ruling represents a significant victory for the U.S. government amid longstanding concerns over TikTok’s potential national security risks. The decision sets up further legal battles and leaves TikTok’s future in the U.S. uncertain.
This is a major development that could have huge implications for advertisers. TikTok has continued to grow as a driver of consumer culture, challenger to Google’s leadership in search advertising, and commerce destination. During Cyber Week 2024, TikTok performed exceptionally well, particularly through its e-commerce platform, TikTok Shop. The platform saw massive user engagement, with over 7 billion posts featuring hashtags like #tiktokshopblackfriday and #tiktokshopcybermonday.
TikTok Shop tripled its U.S. sales on Black Friday, surpassing $100 million, and experienced a 165% year-over-year increase in shoppers during the period between Black Friday and Cyber Monday. TikTok also demonstrated strong growth in paid social advertising during Cyber Week. Its ad impressions grew by 52%, highlighting its increasing importance as a platform for commerce-focused advertisers targeting younger audiences.
But could the incoming Trump administration change TikTok’s fortunes for the better?
What Happens Next?
The future of TikTok in the United States hinges on several key developments following the federal appeals court’s ruling. Here’s what happens next:
Supreme Court Appeal
TikTok and ByteDance are expected to appeal the ruling to the U.S. Supreme Court. If the Court agrees to hear the case, it could issue a stay on the enforcement of the law while deliberations proceed. However, it is uncertain whether the Supreme Court will take up the case or allow the lower court’s decision to stand.
Divestiture Deadline
If ByteDance does not sell TikTok to a non-Chinese entity by January 19, 2025, the app will face a ban in the U.S. This would prevent app stores like Apple and Google from offering TikTok and bar internet hosting services from supporting it, effectively rendering the app unusable over time.
Potential for Deadline Extension
The law allows for a one-time 90-day extension if significant progress is made toward divestiture. This decision would likely fall to President Biden before leaving office or President-elect Donald Trump after his inauguration on January 20, 2025
President-Elect Trump’s Role and Policy Uncertainty
President-elect Trump, during his campaign, expressed opposition to banning TikTok and vowed to “save” the app. However, his administration remains divided on the issue, with some advisors advocating for a ban and others opposing it due to TikTok’s influence and popularity. Trump could:
- Direct his Justice Department not to enforce the ban.
- Negotiate alternative solutions with ByteDance or Congress.
- Extend the divestiture deadline if progress is evident.
President-Elect Trump could pursue a deal with ByteDance or Congress to find a middle ground that addresses security concerns without banning the app outright. For instance, TikTok’s “Project Texas,” which proposes storing U.S. user data domestically with Oracle oversight, might be revisited as a potential solution.
Potential Disruptions
If no resolution is reached, TikTok’s millions of U.S. users will need to migrate to alternative platforms for communication and content sharing. A ban would also disrupt businesses and creators who rely on TikTok for income and marketing.
The next critical steps include potential Supreme Court intervention and decisions regarding divestiture or enforcement of the ban.
How Advertisers Could Be Affected by a Ban
A TikTok ban in the U.S. could have significant implications for advertisers, particularly those targeting younger demographics like Gen Z. Here are the main potential impacts:
Disruption to Advertising Strategies
TikTok has become a cornerstone for many brands’ advertising strategies, especially those applying its unique short-form video format and highly engaged user base. Losing access to TikTok would force advertisers to pivot to alternative platforms like Instagram Reels, YouTube Shorts, or emerging competitors.
In addition, TikTok’s seamless integration of ads into user experiences has been highly effective. Advertisers would need to adapt to platforms with different ad formats and user expectations, which could require innovation in creative strategies.
Increased Competition on Other Platforms
As advertisers shift budgets to platforms like Instagram, YouTube, or streaming services, competition for ad space is expected to intensify. This could drive up costs and force brands to produce higher-quality content to stand out in a crowded market. A TikTok ban could also create opportunities for smaller or newer platforms to gain traction, potentially reshaping the social media landscape and offering alternative advertising channels.
Impact on Influencer Marketing
Influencers who rely heavily on TikTok would face significant challenges, losing access to their primary audience and income streams. Brands that partner with these influencers would need to reassess their relationships and explore multi-platform strategies. Many influencers already have followings on other platforms like Instagram and YouTube. A ban would likely lead to a redistribution of audiences across these platforms, creating opportunities for advertisers to reconnect with users elsewhere.
Broader Implications
TikTok has been particularly effective at reaching Gen Z users. Brands targeting this demographic would need to carefully strategize how to maintain engagement on other platforms that may not replicate TikTok’s unique appeal. In addition, the disruption caused by a ban could spark innovation in how brands create and deliver content across digital platforms, potentially leading to new trends in advertising formats and strategies.
Bottom line: while a TikTok ban would disrupt existing advertising strategies, it also presents opportunities for adaptation and growth on other platforms. Advertisers will need to be agile, embracing multi-channel approaches and exploring new ways to connect with their audiences effectively.
What Should Advertisers Do?
We suggest that advertisers should take steps to adapt their strategies and mitigate potential disruptions:
Diversify Social Media Presence
Advertisers should strengthen their presence on platforms like Instagram Reels, YouTube Shorts, and Snapchat, which are likely to attract TikTok’s displaced users. New or smaller platforms could gain traction in the wake of a TikTok ban. Early adoption could provide advertisers with a competitive edge in reaching younger demographics.
Reevaluate Influencer Partnerships
Brands should work with influencers who have multi-platform audiences rather than relying solely on TikTok creators. This ensures continued access to their followers across different channels. In addition, partner with influencers to help them migrate their audiences to other platforms, maintaining engagement and loyalty during the transition.
Invest in Owned Media Channels
Advertisers should reduce reliance on third-party platforms by investing in owned media channels like email marketing, SMS campaigns, and branded apps. This can help maintain customer connections regardless of platform changes. And they should use their websites as hubs for engaging content, including videos and blogs, to capture traffic that might otherwise be lost due to TikTok’s absence.
Adapt Content Strategies
Platforms like YouTube Shorts and Instagram Reels have unique algorithms and user behaviors. Advertisers should tailor content specifically for these formats while maintaining the creativity and authenticity that worked on TikTok. Short-form video remains highly popular across platforms, so continuing to invest in this format is essential for capturing attention.
Monitor Consumer Behavior
Use analytics tools to monitor where TikTok users are moving and adjust advertising budgets. This will help ensure that campaigns remain effective in reaching target demographics. And evaluate the performance of ads on alternative platforms to optimize spending and maximize ROI.
Prepare for Increased Competition
With more advertisers shifting budgets to platforms like Instagram and YouTube, competition for ad space may increase, potentially driving up costs. Plan budgets accordingly and focus on creating standout content that resonates with audiences in an increasingly crowded digital landscape.
Stay Agile
Develop flexible marketing plans that can adapt quickly if the TikTok ban is delayed or reversed under the incoming Trump administration. And prepare for various outcomes (e.g., partial bans, extensions) by testing strategies across multiple channels now rather than waiting for definitive action.
True Interactive can help advertisers adapt to this fluid situation. We understand how to advertise across the entire digital world, including social media advertising. We can help you navigate the future with or without TikTok. Contact us to learn more.
