By Gary Symons
TLL Editor in Chief
The threat of a TikTok ban just got a lot more real, leaving brands, influencers and businesses scrambling to find a ‘Plan B’ for social media influence.
The US House of Representatives passed a bill Wednesday, March 13, that would require TikTok’s parent company ByteDance to sell the social media platform or face what amounts to a total ban in the United States.
The bill was passed in a rare show of unanimity by Republicans and Democrats, with 352 for and only 65 against. However, the bill may not be as easily passed in the Senate, where a number of Senators have expressed some reservations. Senator Elizabeth Warren spoke for a number of Senate Democrats in saying she believes the bill may be too broad and too punitive against a single company, when there have been issues with misinformation and foreign election interference on a number of social media platforms.
“We need curbs on social media, but we need those curbs to apply across the board,” Warren said.
That said, the Biden White House is very much in favor of a ban on TikTok, putting more pressure on Democratic senators to pass the bill. Speaking for President Joe Biden, the White House press secretary Karine Jean-Pierre says the Biden administration wants “to see this bill get done so it can get to the president’s desk.”
The bill as passed gives the Chinese company ByteDance just 165 days to divest its shares in TikTok. If it fails to do so, the US would bar app stores such as the Apple App store and Google Play from hosting the TikTok app. Companies would also be banned from providing web hosting to apps owned or controlled by ByteDance.
The passage of the bill is the most serious threat to TikTok since the popular short-form video app debuted in North America. US politicians allege the company could share sensitive user data, politically censor content, or use the app to spread misinformation or try to influence the US elections in November.
TikTok has repeatedly stated it has not and would not share US user data with the Chinese government. There is currently no hard evidence that TikTok has done so, and the company has condemned the move as an assault on American constitutional rights.
TikTok condemned the proposed bill as an infringement on the right to express oneself freely.
“This legislation has a predetermined outcome: a total ban of TikTok in the United States,” the company said. “The government is attempting to strip 170 million Americans of their Constitutional right to free expression. This will damage millions of businesses, deny artists an audience and destroy the livelihoods of countless creators across the country.”
However, with the US gunning hard to ban the app, those who depend on it most are scrambling to find alternatives. For example, a ban on TikTok would have a major and direct impact on thousands of small and medium-sized businesses (SMBs), hundreds of major brands, and of course, the many thousands of influencers who make a living on the platform. While there are alternatives for short-form video, including Instagram Reels and YouTube Shorts, there’s no question that the income for millions of people in the US would be affected by a ban on TikTok.
“TikTok is a hugely popular app,” Matt Navarra, a social media industry analyst, told ABC News. “There would be a noticeable impact.”
So, who’s affected, and how bad will the impact be?
Some of those answers can be found in a fresh report released in March 2024, from economic think tank Oxford Economics, which undertook a major study of the app with TikTok’s participation.
“Our modeling suggests that SMB (Small and Medium Business) investments in paid advertising and marketing on TikTok drove $14.7 billion in revenue in 12 selected sectors in the US in 2023,” the report says. “SMBs on TikTok also placed a significant value on the free services provided by TikTok, which help them to grow organically. These two value streams together supported a $24.2 billion contribution to US GDP in 2023.
“SMBs’ use of TikTok also supported 224,000 jobs in the US in 2023. Of those, 98,000 were jobs supported directly within SMBs using TikTok.”
In the event of a ban, Oxford says the impacts will be felt across the country, but particularly in California, Texas, Florida, New York and Illinois.
From the point of view of brand sectors, Oxford says the food and beverage category will be hardest hit, as TikTok contributed $6.4 billion towards US GDP and 73,000 jobs in 2023. The second largest hit would be to businesses in the health and wellness category, followed by business services.
In total, the Oxford Report concluded that TikTok’s US operations supported an additional $8.5 billion contribution to GDP, $2 billion in taxes, and a total of 59,000 jobs across the US economy in 2023. That is in addition to the revenues, taxes and jobs created by small and mid-sized businesses that depend on TikTok for marketing, and in some cases, for retail sales.
That latter aspect comes up due to TikTok creating its own online retail store, which many of these businesses used to boost their sales.
In the licensing world, TikTok has become an important player due to its great success in creating social media influencers who then partner with various brands for marketing campaigns and product launches. As well, top brands have been extremely successful in creating their own TikTok presence. Netflix is the top brand influencers on TikTok right now, with 22.9 million followers, followed by the NBA with 15 million, and the children’s programming network Nickelodeon with 12 million.
While there are alternatives to TikTok, experts in the sector like the influencer marketing company GOAT Agency say making the switch is not easy, and there’s no guarantee your followers on TikTok will come with you to Instagram or YouTube.
“Businesses would need to take their communities elsewhere, utilizing other video platforms like Instagram Reels and YouTube Shorts,” the agency said in a statement. “Whether fans would follow them depends on the brand’s relationship with their audience. One thing’s for sure; starting from scratch would be hard and could cost brands a lot in resources.”
The GOAT Agency does say the process will be easier for larger brands, and much harder for small brands who don’t have the marketing dollars to pursue, find and communicate with their followers if TikTok does indeed cease operations in the US.
For those bigger brands, the company says the key will be to diversify their social media approach.
“Larger companies utilizing TikTok may find a ban easier to handle,” GOAT says. “Bigger budgets mean smoother transitions to other social media platforms and further advertising to regain their community. Bigger brands also inherently tend to have existing followings elsewhere that they would be able to piggyback on. With better resources, these companies could set up shop on other platforms and build in similar content to what their TikTok profile was known for.
“Yes, it’s easier said than done, but diversifying your platforms will give you more legroom if a ban were to go ahead. And it’s better to be ahead of the game now than to wait for any more news to come through.”
Social media experts are already advising their clients to boost their exposure on other platforms, and particularly on Instagram and YouTube, both of which offer short-form video features. That makes sense for most companies, but doesn’t necessarily help existing partnerships in which brands are working with a TikTok influencer who will lose millions of fans if TikTok ceases to operate in the US, and nor does it help those who have boosted their sales through TikTok’s online ecommerce platform.
In those cases, transition will take longer and be more painful, but starting now will certainly lessen the pain if in fact the ban takes place.
There’s also the question of whether a switch to other platforms will get the same results. TikTok has been successful not just because of its content, but because of its tools for user engagement and ecommerce. The firm Capterra conducted its own study in 2023 to find out which platform provided the best results for SMBs, and concluded TikTok has a clear advantage.
Among other things, Capterra found that among SMBs that market on TikTok and at least one Meta platform, 96% say they get the most engagement on TikTok. As well, they found that among brands that run paid ads on TikTok, 51% have achieved positive ROI, and 45% are breaking even.
On the down side, small and mid-sized businesses that are selling products through TikTok Shop have not necessarily found it the answer to their online sales challenge. Almost half, at 45%, said achieving a decent return on investment from TikTok Shop has been “challenging.”
Impact on a brand will differ by company, but according to the social media expert Navarra, the key is to simply prepare for the worst as the debate rages on in Washington, and the very real possibility of a court challenge from TikTok.
“There’s a long road to go before we get as far as a ban,” Navarra says. “This is moments old. Anything could happen in the days and weeks as the news gets fleshed out and we see the reaction to it by Bytedance, China and the parties opposed to it. It’ll be watchful waiting.”
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