These Companies Can Take the Tiktok Ban to the Bank | Letest Update in USA 2023

A potential US ban on TikTok, America's fastest-growing social media app, will prove a boon to the likes of Snapchat, Instagram and YouTube -- and advertisers will have to recalculate billions of dollars in spending plans.

{tocify} $title={Select Topic}

Main Points

• TikTok's share of US digital advertising spending is expected to double to 4% by 2024.

• Analysts at Wedbush Securities estimate the probability of a TikTok ban to be around 90%.

• Nearly a quarter of TikTok users will turn to Instagram for short-form video content after the TikTok ban.

TikTok, owned by China's ByteDance, accounts for 2% of America's $94 billion digital ad spending, a proportion expected to double over the next year. It added $10 billion in worldwide advertising revenue last year and could exceed $18 billion in 2023. Among social media sites, it trails only Facebook and Instagram in the number of US users.

Removing it from US shores would be a major feat for rivals eager to attract TikTok's 150 million US users and its advertisers. While the app's disappearance won't be anytime soon, as the US will probably give ByteDance three to six months to spin off the three-year-old company, Wedbush Securities sees a 90% chance of a ban.

How Much Does U.S. Spend On Social Network Advertising?

Projections for annual social network ad

spending in the U.S. for 2021-2024 in USD billion.

Granted, the app could reappear if it were bought by a big tech firm like Apple, Microsoft or Oracle. According to Wedbush analyst Daniel Ives, TikTok's botched algorithm could be a sticking point. “Separating Algorithm from ByteDance will be a very complex process with a lot of scrutiny from US regulators,” Ives wrote in a recent report.

And not every user is eager to get it back. About 37% of respondents to a Cowen survey of 2,500 social media users in December said they would not be looking for a replacement.
Nearly a quarter of TikTok users will turn to Instagram for short-form video content after the TikTok ban.

Still, there's no doubt that rivals are sharpening their knives. Here's a look at the revenue and advantages of TikTok's competitors that stand to benefit from the ban:

Instagram

The photo-sharing site owned by Meta Platforms (Meta) may share a parent company with Facebook, but Instagram's young audience and Reels feature make it more akin to TikTok in the eyes of advertisers.

According to a Cowen survey, a quarter of TikTok users would turn to Instagram Reels if TikTok were banned. Among the youngest adult users of TikTok, this figure rises to 37%.

Instagram is also a favorite among digital marketers selling products on social media sites. According to a HubSpot survey, 33% of social media marketers say Instagram provides the highest return on investment.

What Social Media Platform is Best for Business?

Platforms with the best return on investment according to social media marketers.

Instagram's US advertising revenue is growing rapidly, with forecasts forecasting it to reach $39.7 billion in advertising revenue in 2023, up 220% from $12.4 billion in 2019.

Snapchat

Snapchat (SNAP) has historically been favored by younger users, with the share of US teens expected to grow from 41% in 2015 to 59% in 2022, according to the Pew Research Center. Only TikTok experienced a larger increase in usage among teens.

Still, Instagram trails Snapchat in popularity among teens and is likely to inherit TikTok's displaced users; Only 3% of respondents said they would turn to Snapchat in the event of a TikTok ban.

Snapchat may have lost some of its edge in the social media market, with revenue growth down from 64% in 2022 to 12%.

Pinterest 

While Pinterest (PINS) may not be among the giants of the social media market, it has proven to be an effective social commerce site, with 15% of all US users shopping on the platform in 2022.

Social commerce has exploded on TikTok in recent years. In 2022, 23% of US users (27.3 million) will make purchases on the site, up 73% from the year before.

Nevertheless, Pinterest has made shopping the center of its business with tools that streamline the buying process and boost ad loads when users display purchase intent. Social commerce marketers can look to Pinterest as a TikTok replacement.

Youtube

Last year, TikTok overtook YouTube in terms of average time spent on the platform per day.

YouTube's advertising revenue fell in the most recent quarter for only the second time in the company's history, falling 7.8% to just under $8 billion.

However, while ad dollars were down, YouTube Shorts—designed to compete with TikTok's short-form videos—miles 50 billion daily views in the fourth quarter of 2022, a 66% increase from the first quarter. reached the stone.

YouTube began sharing revenue with YouTube Shorts creators earlier this year, a policy that could help attract content creators (and their fans) in the face of a TikTok ban.

Facebook

Facebook still accounts for more than $100 billion in annual revenue from parent company Meta. Although growth has stalled, North American advertising revenue is projected to drop nearly 2% to $52.6 billion in 2022.

The slow growth comes as Facebook is losing users aged 18 to 24, exactly the audience advertisers want to reach through TikTok. In 2022, 1.6 million users in that market left Facebook, while the app also lost 2.1% of its audience aged 26 to 41.

TikTok is a clear favorite for Gen Z, attracting 81% of users in that demographic, while only 56.2% use Facebook.