What the TikTok ban means for brands

Credit: Illustration by Tam Nguyen/Ad Age

TikTok advertisers are now in a state of limbo, much like the app itself, which was close to a deal to continue operating in the U.S. until the Trump administration issued a new order today that would essentially hobble its future.

Advertisers, agencies and marketing partners were sent scrambling to figure out what the latest Trump order meant for doing business with TikTok. Madison Avenue agency UM said the presidential edict was “vague” on how the TikTok ban affects advertising.

“We have not yet received advice from TikTok, so are currently advising impacted clients to seek their own legal counsel on whether it is appropriate, in the short term, to continue to advertise on TikTok,” a UM spokesperson said by email.

One agency executive, who spoke on the condition of anonymity, said that Trump’s order does not cover media buying, so ad campaigns seem to be OK to run. “I’m hearing media buying is not one of the actions prohibited by this order, but obviously we are being watchful as to how this will affect the platform’s desirability over the medium-to-long term,” the agency exec says. “For now, it’s still an incredibly relevant audience for brands that want to be part of culture.”

The TikTok uncertainty is not new for advertisers. Since August, the Trump administration has been waging a pressure campaign against the popular Chinese-owned app, threatening to ban it if it does not sell its U.S. holdings. The president and his advisors have labeled TikTok a national security threat, and they have tried to force the company to sell to Oracle, which was co-founded by Larry Ellison, a well-known Trump ally. Critics of the administration have said the shotgun merger appeared to be an example of “crony capitalism,” with Trump using the umbrella of national security to usher in a sweetheart deal to a political ally.

Ari Lightman, professor of digital media and marketing at Carnegie Mellon University, says the proposed Oracle deal raises “red flags all over the place.” The Trump administration is “using national security as a talking point, as an overarching smokescreen,” he says. “And they’re really trying to negotiate a business deal with a U.S.-based company’s interests in mind.”

Keep calm and carry on advertising

Lightman says that, ultimately, the Trump team could hammer out a backroom deal that spares TikTok. In the interim, there is little harm for brands to keep dabbling in the app, and it could be good practice for brands to explore the new creative energy inspired by TikTok’s short videos. “It’s good for brands to invest in the platform, because we will have another platform similar to it in the future,” Lightman says, pointing to apps like Triller that are starting to pop up to take TikTok’s place.

Since Trump threatened a ban, brands have reported pulling back on their ad campaigns. TikTok also worked clauses into ad contracts that limit brands’ financial liability in the event of any service disruptions.

On Friday, a TikTok spokesperson said the company will work with advertisers as a “trusted partner.” “We will continue to challenge the unjust executive order, which was enacted without due process and threatens to deprive the American people and small businesses across the U.S. of a significant platform for both a voice and livelihoods,” TikTok said in its email statement.

TikTok claims to serve more than 100 million users in the U.S., growing rapidly as the first major overseas social media company to catch on with American consumers. It’s also been growing as an advertising platform, catching the eye of U.S. retail giant Walmart, which has even been interested in buying a piece of TikTok.

Meanwhile, the National Football League and Major League Baseball have been active on TikTok, while brands like Chipotle, Guess Jeans and NBCUniversal have run campaigns on the platform.

On Friday, TikTok’s fate was still being worked out. Trump’s Commerce Department issued an order that would crush TikTok’s ability to keep running smoothly in the U.S. The order also affected WeChat, another popular Chinese app, but it has less cache among the general public in the U.S.

The new U.S. order would prevent people from downloading TikTok on Apple and Google devices come Sunday. The tens of millions of people who already downloaded TikTok would still be able to use it, but they would no longer receive software updates to devices in the U.S., which would ultimately lead to its obsolescence.

The administration then set a deadline of Nov. 12 to impose further restrictions on TikTok if it does not meet demands of the administration. TikTok has been caught between Washington and Beijing, where the Chinese government has imposed its own demands that would limit its ability to sell technology to U.S. firms. TikTok has worked out a plan to hand over control of its U.S. operations and data on U.S. consumers to Oracle, while giving the cloud computing company a minority stake in the overall business.

“We’ve already committed to unprecedented levels of additional transparency and accountability well beyond what other apps are willing to do,” TikTok said on Friday.

Goodwill hunting

TikTok has tried to leverage goodwill among its vibrant creator community to show why it deserves a place in the U.S. social media landscape. TikTok has promised to spend up to $2 billion to support the talented video creators that populate the platform.

TikTok also has promised to create tens of thousands of jobs in the U.S., building offices in Los Angeles and New York City. TikTok has been a refuge for Madison Avenue workers looking to help expand its agency services and marketing departments.

On Friday, that future was also in doubt. TikTok fans discussed how the creators and users of the app might still be able to keep active even if it’s banned. Some people were considering how they might even switch phone plans to Canada to keep receiving TikTok updates, bypassing U.S. restrictions.

There was also talk about how Virtual Private Networks could be the answer to circumventing a ban. Nicole Greene, senior director and digital marketing analyst at Gartner, says that brands will need to rethink their willingness to work with TikTok, though, even if millions of users find a way around the ban.

“There will be ramifications for marketers,” Greene says. “Do you still want to be involved in that? You need to think as a brand, do you want be active on a platform where the government is saying this is not properly protecting the data and privacy concerns of consumers?”

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