TikTok’s Countdown: Data and Insights for eCommerce Brands to Navigate Through the U.S. TikTok Ban Legislation

As you’ve probably seen in the news by now, recent legislative developments pose significant implications for TikTok. On Wednesday, April 24th, President Joe Biden signed into law a legislative package that, among other provisions, could potentially lead to a TikTok ban in the U.S. unless its Chinese owners divest their stakes within a year. This move has stirred considerable discussion among stakeholders, particularly regarding the future of TikTok in the U.S. market.

Will TikTok face an outright ban? Unlikely.

The legislation in place gives ByteDance, TikTok’s parent company, 9 to 12 months to sell or be banned, so brands still have about a year to advertise with TikTok. At MikMak, we have observed firsthand the meteoric rise of TikTok as a pivotal platform for social commerce. The social platform sees the second most eCommerce traffic in the MikMak Shopping Index, just behind Meta.

With 1 billion monthly active users and just under 50 percent of American social media users being active on the app, TikTok has become a major player in the social commerce space. In fact, it has seen more growth in terms of traffic and brand investment than any other social platform in the MikMak Shopping Index year over year. With this unsurmountable growth since its rapid rise to popularity in late 2018, MikMak believes a divestiture to a U.S. entity is the most likely outcome. 

Potential U.S. buyers could include tech giants like Microsoft, Adobe, Salesforce, Amazon, Walmart, and even Meta. Such a shift would not only protect free speech concerns and ensure U.S. control over data, but also continue to facilitate growth for millions of businesses leveraging TikTok for their marketing efforts.

What if TikTok were banned?

Despite the looming threat of a ban, the resilience of major advertisers is notable. Historically, brands have adapted by reallocating their investments to other channels, including programmatic and CTV advertising, in response to various crises. Smaller businesses and creators, who have reaped significant benefits from TikTok’s viral nature with minimal investment, would likely feel the impact more acutely.

MikMak Founder and  CEO, Rachel Tipograph, spoke more on this topic recently in an interview with Bloomberg Technology: 

Being nimble with your advertising efforts as a brand is key to combating the ramifications of a potential ban. Advertise across many channels, and by using MikMak Insights, you can quickly see which channels and platforms perform best for your brand. This allows you to reallocate your ad spend accordingly and save time and money during times of uncertainty.

TikTok continues to evolve the world of commerce

TikTok's foray into eCommerce, particularly through TikTok Shops, underscores its strategic pivot towards becoming a dominant commerce platform.

Should TikTok divest to a U.S. company, we at MikMak anticipate a strategic shift in TikTok's approach to eCommerce, moving from trying to own the end-to-end shopping experience with TikTok Shops to functioning more as a traffic referral source to major retailers like Amazon and Walmart. This would likely enhance profitability for brands and streamline their marketing efforts.

Despite the talk of the ban, many eCommerce brands in the MikMak Shopping Index have seen tremendous growth in their traffic on TikTok recently, indicating a surge in media spend on the platform. In particular, the Beauty category has seen the most significant growth on TikTok, surging by 71.7 percent in the past three months. The MikMak Shopping Index has also seen notable increases in traffic to Grocery and Toy brands during this time period as well.

By using MikMak Commerce for Media, brands can make their media shoppable on TikTok, empowering consumers to shop where and how they want with online and in-store retailers, displayed based on geolocation and inventory.

Being close to the data will keep your brand growing at the speed of commerce

Given the uncertain future, brands should continue to leverage TikTok while preparing for potential shifts and diversifying their media investments to include a broad mix of social and digital channels.  Since we still have 9 to 12 months of TikTok before a potential ban or vestiture, there is time to advertise with TikTok and strategize accordingly. 

As we navigate these transformative times, staying informed and agile will be key to capitalizing on the dynamic opportunities within the digital commerce landscape. To delve deeper into the intricacies of social commerce and gain cutting-edge eCommerce insights, we encourage brands to explore our State of Social Commerce Report for 2024, or schedule a demo with MikMak today to learn how your brand can access useful insights to plan media spend for the future.