US government mulls banning advertisements on TikTok

Source: Global Times Published: 2020/8/12 21:33:40

A girl takes pictures during a TikTok filming session in Vilnius, Lithuania, Aug. 10, 2020. The TikTok filming session was organized by local social media star "The Trending Gang" on Monday in Vilnius, attracting hundreds of followers and fans. (Photo by Alfredas Pliadis/Xinhua)

The US government is reportedly threatening to ban all advertising on the popular video sharing platform TikTok as it is forcing the app owned by a Chinese tech company to be sold to a US buyer.The latest move will wipe out the majority of TikTok's revenues in the US market. 

According to a Reuters report on Wednesday, US President Donald Trump's executive order banning TikTok could make advertising on the platform illegal. 

Facing the crackdown, TikTok said it will continue to honor planned ad campaigns and work with influencers to migrate to other platforms in the event of a ban, Reuters reported in another report, citing a memo sent by TikTok to certain ad agencies. 

Zhang Yi, chief analyst at iiMedia Research, a Guangzhou-based analysis organization, said that the ban on TikTok's advertising would strangle most of the platform's revenues as, for short-video apps, advertising should account for more than 80 percent of their revenues. 

Statistics revealed by SensorTower showed that TikTok earned business revenues of about $180 million in 2019, surging more than fivefold on a yearly basis. 

In just the fourth quarter of 2019, TikTok earned $88.5 million, rising sixfold from the year before. Advertising and in-app purchases accounted for most of the revenues. 

According to Zhang, TikTok's surging advertising revenues show that the platform is in an early"explosive growth phase," with users growing at a very high speed. 

He predicted that such growth would also bite into the advertising revenues of US internet giants like Facebook, which could be one of the triggers for the US' ban on the popular app. 

"For advertisers, the effectiveness of their advertising on platforms like Facebook have more or less reached a bottleneck, while TikTok provides an alternative marketing channel which can help them reach new, younger users at, I presume, lower costs," Zhang told the Global Times. 

Global Times 


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