Major brands cut TikTok ad spending amid uncertainty over US ban

Amid growing uncertainty regarding TikTok’s future in the United States, several major brands have started to pull back on their advertising investments on the platform. With the US government’s potential sell-off mandate looming, which could see TikTok removed from the American market by January next year, advertisers are exploring alternative strategies, according to recent reports.

Insights from Adweek reveal that overall ad spending on TikTok saw a notable decline in April and May. MediaRadar data further underscores this trend, showing that four of TikTok’s largest advertisers have significantly scaled back their ad spending on the platform in recent months. Target, for instance, has cut its TikTok ad budget by 30%, DoorDash by 25%, while Bayer and Procter & Gamble have reduced their spending by 20% and 10% respectively.

This shift in strategy is understandable given the current uncertainty. If TikTok is indeed forced to exit the US market, brands will need to pivot their advertising efforts to other platforms. By reducing their TikTok ad spend now, these companies are likely hedging against the risk of losing a key marketing channel, preparing for a potential broader shift in their advertising strategies.

The question arises: should other businesses also reduce their focus on TikTok? There are two sides to consider. On one hand, TikTok remains immensely popular, and the reduced competition from major brands could provide a unique opportunity for smaller advertisers to capitalize on the platform’s vast audience. Continuing to invest in TikTok promotions in the short term might yield significant returns.

On the other hand, increasing reliance on a platform that faces potential removal from a major market carries risks. Should TikTok exit the US, businesses heavily dependent on the platform could find themselves scrambling to fill a significant gap in their marketing strategy and performance data.

Legal experts are largely pessimistic about TikTok’s chances of overturning the US government’s sell-off mandate, which is rooted in national security concerns. Although TikTok has launched a legal challenge against the mandate, the prevailing opinion is that the government’s case will likely stand. The alternative, a forced sell-off, seems unlikely given China’s public stance against such an action.

The political landscape could also play a crucial role in TikTok’s fate. If Donald Trump were to be re-elected, there might be a shift in policy, as he has expressed opposition to the sell-off bill. However, whether he could or would reverse the order remains uncertain.