New York: TikTok advertisers were in no rush to alter their marketing budgets after a US appeals court on Friday upheld a law requiring the divestment or ban of the popular Chinese-owned short video app, citing TikTok’s continued existence despite years of threats.
Chinese tech firm ByteDance must sell TikTok’s US assets by January 19 or face an unprecedented ban on the app used by 170 million Americans that threatens billions in advertising revenue. TikTok and ByteDance argued that the law was unconstitutional and violated Americans’ free speech rights. The ruling is expected to be appealed to the US Supreme Court.
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 haven’t pulled back from TikTok, although some are developing contingency plans for potential reinvestment should there be a ban,” said Jason Lee, executive vice president of brand safety at media agency Horizon Media.
Horizon is working with customers to prepare for different scenarios if the app is sold or banned, Lee said.
TikTok, owner of the meta platforms Facebook and Instagram, would receive most of TikTok’s ad revenue if the app were banned, followed by Alphabet’s YouTube, said Eric Huberman, CEO of marketing agency Hawk Media. Both companies have introduced short-form video features over the past few years to compete with TikTok.
Still, “there is no decision until there is a decision to be made,” he said.
TikTok’s US ad revenue is expected to reach $12.3 billion this year, according to estimates by research firm Emarketer. By comparison, analysts on average expect meta platforms’ ad revenue to reach about $159 billion in 2024, according to LSEG data.
A potential boon for rivals propelled stocks on Friday.
Shares of Meta Platforms hit an all-time high of $629.78 earlier on Friday, and were up 2.3% at $622.85 in late afternoon regular trading.
Alphabet shares were up 1.1% at $176.21. Trump Media & Technology, which operates the Truth social app and is majority-owned by President-elect Donald Trump, rose 3% to $34.78. Shares of Snap, owner of messaging app Snapchat, rose 1.89% to $12.40.
