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TikTok is the latest tech platform facing regulatory heat around allegations of its data sharing. While those are sensitive claims for the U.S. administration—and user privacy has become a growing concern—history has shown it will have a limited negative impact on advertisers’ spending on the platform.
“At this point for most advertisers, the audience on TikTok is just too good to resist,” Insider analyst Jasmine Enberg told Adweek.
While other platforms are seeing declines in time spent, 2024 projections show that U.S. adults will spend nearly 20% of their social media time on TikTok. The platform, owned by Chinese tech company ByteDance, is becoming an increasingly vital tool in the performance marketer’s arsenal. Meanwhile, TikTok’s U.S. ad revenue is expected to grow to $6.83 billion this year, from $5.03 billion in 2022, per Insider Intelligence. To that, its users are projected to grow to 102.4 million in 2023. Last year, TikTok saw a total of 95.8 million users.
Still, U.S. lawmakers want to hear from the company. In March, CEO Shou Zi Chew will go before the House Energy and Commerce Committee to testify on the video-sharing app’s privacy and security practices and the concern the Chinese government could access the data of millions of users.
“TikTok has knowingly allowed the ability for the Chinese Communist Party to access American user data,” Rep. Cathy McMorris Rodgers, chair of the House Energy and Commerce Committee, said in a written statement.
Regulators are getting more aggressive with their scrutiny of Big Tech this year. TikTok has been in yearslong negotiations with the Committee on Foreign Investment (CIFUS) over its security measures. The app recently attempted to increase its transparency protocols to placate lawmakers while drawing the attention of some marketers. Although a growing number of states have banned the download of TikTok on government devices, the chair of the Senate Intelligence Committee, Sen. Mark Warner, is considering a bill that goes beyond those measures.
Not immune to the weak economic climate
Concerns of an economic downturn loom large. Market analysts anticipate struggles with the ad economy ahead of this week’s Big Tech earning calls.
This month, a survey of 50 ad buyers, who collectively spend about $23 billion annually by investment firm Cowen, showed that companies expect a slight increase in ad budgets of just 3% year over year, down from 7.5% in 2022.
Insider Intelligence lowered its TikTok ad spend forecast for 2023 by $1.92 billion. In March, 2022, the market research firm predicted TikTok’s U.S ad revenue to be $8.75 billion. That number is now at $6.83 billion.
“There are a few ad dollars to go around, and TikTok isn’t immune to that challenge,” said Enberg.
While it’s unclear what will take place within Chew’s congressional testimony, it will be another consideration for marketers about where they put their spend. Even previous algorithmic concerns like TikTok’s heating feature, where the company’s staff can boost videos to get them onto more feeds, did not alter advertisers’ spend on the platform.
“TikTok is a wildcard this year because of these [regulatory] concerns. Still, it’s the fastest-growing social network in terms of ad spend,” said Enberg.
