TikTok’s Future In The Spotlight: How Well Is The App Performing After The US Ban Threat
The news about TikTok’s future being dark after a potential ban in the US had many questioning what was next. And now, we can safely say that it’s not as bad as many had anticipated.
The company’s ad spending YoY has been on the rise, but the recent ban announced by President Biden that is soon to be implemented has really cooled things down since March.
The app is also not doing too well in terms of user growth, especially when we consider the youth who are the leading users through which the app profits. This was confirmed through stats rolled out by five sources recently.
We saw ad spending go up 19% YoY and then talk about the ban led to a fallback of 11% in March, followed up by 6% in April.
Another study highlighted how 9 out of 20 ad domains witnessed a rise in ad spending MoM starting April. This was delineated in the latest report by Sensor Tower.
We had so many consumer services including the likes of companies such as Stanley Steemer and Vistaprint having the greatest American rise in ad spending that was up by more than 115%. This was followed up closely by the likes of jobs and education, finance, and last but not least real estate and IT.
Furthermore, four out of 10 TikTok advertisers reduced spending when compared to the past month. This entailed Target, DoorDash, Bayer, and even P&G. We are appalled that advertisers see great value in investing in TikTok, despite the ban.
One executive spoke to ADWEEK about how the only way through which advertisers would consider exiting TikTok is if all users were forced to leave due to the ban. Other than that, there is a lot that the app has to offer including the massive amount of attention that TikTok provides to the masses so it’s a lucrative deal to stay invested with TikTok at all times.
Still, we have to discuss how some brands ended up shifting gears and focus from TikTok’s upper objectives to the likes of investment goals and returns to better ad spending as per the first agency executive’s remarks.
Ad spending does seem to fall YoY but that has to do with the ban which led to people getting triggered to mindsets based on performance only and obviously, Meta is far superior in that regard than TikTok.
But other experts are not losing out on hope just yet. They feel advertisers as well as users are more committed and resilient than what many may have assumed them to be.
When the CPMs were compared over the past few months, we saw a 7% rise in March of this year and that rose at a steady pace throughout April and May. This indicates a growth in advertising as well as interest and more competition as we speak which steadily raises prices.
Interestingly, many platforms saw CPM declines between May 2023 to 2024 but the TikTok app saw a major rise of 19% YoY. Furthermore, the app recorded a rise in user engagement and a 27% rise in CTR for April when compared to March, which is when the ban was announced.
TikTok is still losing out on its youth user base. The app recorded 170 million users across America for the first time but seeing user rates decline, especially among the newer generation is worth a mention.
Those between the 18 to 24-year age bracket have declined the most, going from 35% last year to 25% this year. Interestingly, those between the 35 to 44 year age group had an increase from 16% to 19% over just two years.
TikTok’s CEO did admit in front of Congress that the average age for a TikTok user in America was over 30.
Reports from eMarketer explain how there is a slight decline in the time spent across the TikTok app. Today, it stands at 51 minutes while it was 52 in the past. And users that come under the overzealous category such as those belonging to Gen Z are now spending less time on the app than what we saw one or two years back. So a ban is certainly aiding to this decline and not doing the app a favor.
Image: DIW-Aigen
H/T: Adweek
