TikTok’s uncertain future in the US could be a win for Snap, especially as TikTok’s ban puts into question the billions of dollars currently driving the short-form video app’s advertising business .
The ban on TikTok, which began during former President Donald Trump’s tenure, finally went into effect this year, leaving marketers on alert and making contingency plans. TikTok has fought back with its own lawsuit seeking to block enforcement of the latest legislation that would mandate a sale of TikTok to its Chinese parent company ByteDance or it would be banned in the United States. For now, everything is in litigation. But if all goes to hell in the handbasket, Snap wants to cash in on TikTok’s loot.
“Right now, the uncertainty around TikTok is making people look at, ‘Where else can we invest less time in?'” said Patrick Harris, Snap’s president of the Americas. “But we know that if we invest the time, we can get consistent returns that will help us continue to move the business forward and grow in a meaningful way, and that’s the path we’re on.”
Snap has been poised for growth in recent quarters and has sought to attract advertisers with recent incentives, improvements to its advertising products and new brand campaigns to promote those services to consumers and marketers. Although the recovery from deficit to profitability has been slow, Snap’s advertising business is expected to grow from $1.36 billion in the fourth quarter of 2023 to $1.19 billion in the third quarter of 2023 and in the first quarter of 2024. It earned nearly $1.2 billion.
Harris said the platform still has room to grow, expanding its advertiser base across all segments, from small businesses to large enterprises. That said, the TikTok ban could be the next chapter in Snap’s continued efforts to capture more ad dollars.
“Advertisers are now seriously looking for alternatives to this duopoly,” Harris added.
It’s not just snaps. Apparently, Google is also prioritizing the spoils of a possible ban. According to Business Insider, the tech giant is encouraging advertisers to increase their advertising spend on YouTube in response to the ban.
Digiday spoke to four agency executives for this article, none of whom had spoken directly to Snap, Google or other major platforms about the TikTok ban. But TikTok has been targeted since it began to gain significant market share. For example, Meta launched Reels, Snap launched Spotlight and YouTube launched Shorts, all in direct response to TikTok’s short-form video format. Even LinkedIn is said to be testing a new TikTok-like video feed.
“They’re not just going after TikTok’s revenue, but are actively positioning themselves as an alternative to paid social, where most of the top-performing ad units today are video-based,” Katia Konstantin, founder of performance marketing shop Digishop Girl, said in an email about YouTube.
Short-form videos are the industry’s latest hot commodity and are featured as a major theme in this year’s New Front. So it’s no surprise that platforms are focused on promoting their own versions of TikTok to generate ad revenue, said Jennifer Cole, chief media officer at ad agency VML.
“I wouldn’t say there’s a flood of incentives,” Cole said in an email, referring to TikTok’s competitors competing for ad dollars. Video advertising costs. ”
It’s hard to read the tea leaves given the legal back and forth between TikTok and the US government. So, for now, it’s business as usual as the brand maintains a wait-and-see approach.
“Brands and agencies are also putting in place contingency plans in case the situation on TikTok suddenly changes,” Cole said. “Normally you have Plan A and B. Now you need Plan A, B, C and maybe D as well. You want to be prepared.”
