TikTok's uncertain future in the U.S. could be a win for Snap, especially as the ban calls into question the billions of dollars that currently drive the short-video app's advertising business.
The ban on TikTok, which has been brewing since former President Donald Trump's tenure, finally came to a head this year, prompting marketers to develop contingency plans as a precaution. TikTok fought back by filing its own lawsuit to block the latest bill from taking effect. The bill would require Chinese parent company ByteDance to sell TikTok or face a ban in the United States. For now, everything is in limbo with litigation. But if all goes badly, Snap hopes to cash in on TikTok's profits.
“Right now, with the uncertainty around TikTok, people are looking, 'Where else are we investing so much of our time?'” said Patrick Harris, Snap's president of the Americas. “But we know that if you invest the time, you can get consistent returns and help continue to advance and grow your business in a meaningful way. That's the path we're on.”
Snap spent the past quarter positioning itself for growth, working to woo advertisers with recent incentives, improved ad products and a new brand campaign to promote those services to consumers and marketers. Though the recovery from red to black was slow, Snap's advertising business is on track to bring in nearly $1.2 billion in Q1 2024, following $1.36 billion in Q4 2023 and $1.19 billion in Q3 2023.
Harris said the platform still has room to grow, expanding its advertiser base across all segments from small businesses to large enterprises. That said, the TikTok ban could be the next chapter in Snap's ongoing efforts to capture more ad dollars.
“Advertisers are now seriously looking for alternatives to the duopoly,” Harris added.
It's not just Snap. It appears that Google is also considering the benefits of this ban as its top priority. According to Business Insider, the tech giant is encouraging advertisers to spend more on YouTube in response to the ban.
Digiday spoke to four agency executives for this article, and none of them had heard directly from Snap, Google or other major platforms about the TikTok ban. But ever since TikTok started gaining larger market share, there has been a target on its back. For example, Meta launched Reels, Snap launched Spotlight, and YouTube launched Shorts, all of which are direct parallels to TikTok's short-form video format. Even LinkedIn is said to be testing a new TikTok-like video feed.
“They're not just going after TikTok dollars, but are aggressively positioning themselves as an alternative to paid social, and most of the best-performing ad units these days are video-based,” Katya Constantine, founder of performance marketing shop Digishop Girl, told YouTube via email.
Short-form videos are the industry's latest hot commodity and are featured as a major theme in this year's New Front. So it's no surprise that platforms are focused on promoting their own versions of TikTok to generate ad revenue, said Jennifer Cole, chief media officer at ad agency VML.
“I wouldn't say we're being inundated with incentives,” Cole said in an email, referring to TikTok's competitors vying for ad dollars from video ads.
It's hard to read the tea leaves given the legal back and forth between TikTok and the US government. So, for now, it's business as usual as the brand maintains a wait-and-see approach.
“Brands and agencies are also putting contingency plans in place in case something were to suddenly change with TikTok,” Cole said. “Usually there's a plan A and a plan B. Now we need plans A, B, C and maybe D. We want to be prepared.”
