The Chinese-owned firm TikTok is once again threatened with a potential ban in the U.S. due to national security concerns, so advertisers are looking for any reassurances from the viral app that helped usher in a surge of short-form video across social media.
Advertisers will be keenly monitoring Chief Executive Officer of TikTok Shou Zi Chew’s appearance as well as the response of lawmakers when he comes before Congress for the first time on Thursday, multiple ad firms told Reuters.
According to research firm Insider Intelligence, TikTok’s U.S. ad income will increase from $780 million in 2020 to $6.83 billion this year.
According to a report on Tuesday, the app, which is owned by ByteDance in China and is enormously popular among younger users, currently has 150 million monthly users in the United States.
The Biden administration is under pressure from lawmakers to impose a ban on the app due to worries that American user data may end up in the hands of the Chinese government.
Representatives of TikTok have recently adhered to the company’s talking points when speaking with ad purchasers. Employees of TikTok have emphasized ongoing plans to isolate and store US user data domestically. In an initiative known as Project Texas, the data will be kept in a new division called U.S. Data Security (USDS), which will be overseen by the American tech company Oracle.
Last week, sales executives from TikTok were reached by at least one significant advertising agency in an effort to gather more specifics about the company’s data protection procedures. Although TikTok gave an outline of Project Texas, the executive at the advertising business who declined to be named to discuss a private discussion claimed that TikTok was unable to respond to more specific inquiries about how it would shield U.S. user data from the Chinese government.
According to Darren D’Altorio, vice president of social media at the advertising firm Wpromote, TikTok issued an email on Tuesday informing users that a new website for USDS had been built. The email also contained answers to frequently asked questions regarding the project.
The business stated that Project Texas “prevents unauthorized access to such data, including no permission mechanism by which U.S. data would be shared with the Chinese government” in a part of the email headlined “May the Chinese government seek TikTok U.S. user data?”
According to a TikTok spokeswoman, the firm engages in “open, fact-based, and continuing discussion” with advertisers. This dialogue includes sharing regular updates and responding to inquiries about the steps we’re taking to provide a reliable entertainment platform for users and brands.
Media buyers claimed that despite talk of a ban, the majority of advertisers have not altered their TikTok spending plans because the topic has been discussed since 2020 without resolution.
According to written testimony filed by the House of Representatives Energy and Commerce Committee, TikTok CEO Chew intends to inform lawmakers on Thursday that the business has never shared and will never share user data with the Chinese government.
But, it is a crucial time for TikTok, whose relevance to advertisers has grown tremendously over the past two years since then-President Donald Trump initially considered banning the app.
According to D’Altorio, the resurrected TikTok concerns appear to have grown swiftly over the past several weeks, taking some businesses off guard.
Since 2020, certain clients that are publicly traded firms have been hesitant to purchase ads on TikTok, and this reluctance has only increased. They claim that they won’t touch it, he continued.
The maker of Reese’s Cups has prepared a backup plan in case TikTok is blocked in the United States, according to Vinny Rinaldi, head of media and analytics at Hershey Co.
According to Rinaldi, Hershey spends the least amount of money on TikTok compared to other social media sites, but it’s a “growing area (that is) functioning effectively.” If TikTok is stopped down, he wagers that users would go to YouTube.
According to Adam Telian, vice president of media services at marketing firm New Engen, which has worked with The Home Depot and Google Fiber, the current state of affairs also makes some smaller brands with a specific demographic hesitant to try with ads on TikTok.
“People are hesitant to make that commitment and investment at a time when they’re not sure TikTok will still be around,” he said.
TikTok has kept releasing new tools for Madison Avenue even as unrest in Washington grows. It unveiled a tool last month to make it simple for marketers to turn their original TikTok videos into advertisements.
Erik Huberman, CEO of Hawke Media, a marketing firm that has worked with Red Bull and Alibaba, advised advertisers who are utilizing TikTok and experiencing good results from their commercials to stick with it.
Companies with TikTok followers will find it challenging to take a break until Washington takes meaningful action, according to D’Altorio.
“A ban isn’t a ban until it’s a ban,” he said.
(Adapted from Latestly.com)