July 20, 2024

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TikTok advertisers prepare contingency plans as US ban looms

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Agencies representing TikTok’s biggest advertisers are drawing up contingency plans as the US prepares to ban the popular video app, including seeking break clauses in their marketing contracts.

ByteDance, TikTok’s Chinese parent, has been given until January to either divest its US business or face a ban on the app by US lawmakers, who are concerned about security because of its links to China.

The social media platform, with more than 1bn global users, has become a key part of the marketing strategies for many brands given its huge popularity, particularly with younger audiences who are less likely to engage with traditional advertising such as TV.

TikTok generated $16bn in sales in the US last year, predominantly from advertising, people with knowledge of its finances have told the FT.

However, multiple advertising bosses say their teams were now drawing up alternative plans for next year should TikTok be removed from the US, one of the world’s most important advertising markets.

One advertising executive said the ban threat was already having a chilling effect on spending by some brands. The person said that they had quizzed company executives about what would happen if the US blocks the site.

“They didn’t have a good answer on how they sell ads in the US right now,” the ad boss said. “How does anyone believe that they’re going to be able to do what they’re doing in six months time?”

He added that the agency was drawing up contingency plans, including a “kill clause” to escape any financial commitments in the event of a ban. Brands and their agencies typically sign contracts committing to spend a certain amount on advertising in advance to secure prominent slots or volume discounts from media platforms.

“You have to keep a little distance,” this person said. “You’re not at a loss for places to promote. It…

2024-06-23 16:00:40

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