TikTok Ban’s Silver Lining

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Last week, the TikTok divestment/ban bill made it through Congress and was signed by the President. 

It’s happening - and, interestingly, age demographics had little to do with it. But I digress. We’re here for the silver lining - and there IS a silver lining.

If TikTok is banned, it will be catastrophic for anyone whose business is largely driven by TikTok.

HOWEVER…

If you’ve been following Creator Logic for a while, you might have noticed something:

While TikTok is often a Creator’s biggest audience, it’s rarely a Creator’s biggest revenue driver.

And for Creators whose revenue is largely driven by other audience sources, like Instagram and YouTube, this ban is likely to be a BIG net positive!

Why?

In 2023, on TikTok, brands in the US spent:

• $986.6 million on influencer marketing

• $3.8 billion on ads 

That’s $4.8 billion dollars pumped into the US Creator Economy through TikTok - and it was set to increase in 2024.

Brands were expected to spend another $250 million on TikTok influencers in 2024, and ad spend projections were as high as $8.7 billion - more than doubling.

That’s another $5 billion that would have entered the space this year, totaling $9.9 billion!

So if TikTok is banned, isn’t that terrible?

Well, yes - if you are getting money only via TikTok.

If you’re getting money from any other platform, though, you may be in a better position.

See, brands aren’t just going to cancel those budgets. That’s not how corporate budgets work.

If they can no longer deploy those influencer and ad spends to TikTok…they’re most likely going to just spend on other platforms.

That’s right - that’s an additional $5 billion dollars that are likely going to get pumped into Instagram, YouTube, Snap, and Facebook short-form ecosystems.

$1.2B of that will go to influencer marketing - aka brand deals.

If the $1.2B in expected influencer spend is split evenly across all the three major short-form platforms, spending on brand deals will increase:

• 18% on Instagram

• 37% on YouTube

• 40% on Facebook

It’s hard to predict if that means more Creators will get deals or the size of deals that would have already happened will go up - it will probably be some combination of both.

By the way: Even a small fraction of this spend on Snapchat could transform the influencer marketing ecosystem there. Brands only spent $40M on Snapchat in 2023, so just 4% of TikTok’s spend going there would more than double the size of its brand deal market.

The other $8.7 billion will be split mostly across Meta platforms (Instagram + Facebook) and YouTube, with Meta platforms taking the bulk.

If TikTok’s market share is split evenly between Meta and YouTube:

• YouTube’s ad revenue will grow 39%

• Meta’s ad revenue will grow 11%

Put Meta aside, because they suck and don’t share much revenue with Creators.

YouTube shares 55% of revenue on Creator videos with Creators.

That’s a nice infusion into the AdSense revshare ecosystem, especially for Shorts, which hasn’t lived up to anyone’s Creator monetization hopes thus far.

It’s hard to predict what the effect of such a bump in ad spending on YouTube will be:

Will ad CPMs increase because of the additional competition by brands who are spending?...

Or will ad CPMs stay the same or even decline because the additional views and videos coming from a banned TikTok will create new supply for that brand spending?

My bet is that it will be a net benefit for the Creators on YouTube, driving Shorts CPMs up over time as the number of options for short-form advertisers decreases.

Takeaway: Keep calm and focus on other platforms.

Treat the possibility of TikTok getting banned the same as you might if TikTok shadowbanned you: make the platform a secondary priority and start focusing elsewhere. When creating Shorts, start considering the meta of YouTube or Instagram (...or Facebook, I guess) as the main creative driver, prioritize engaging with the communities on one or all of those platforms. Continue to post on TikTok, as a hedge, but treat it as a lower priority. 

It’ll be easy to go back to operating in a TikTok-first way if the ban is overturned, but you’ll be way behind on building your business elsewhere if you don’t start now and the ban goes through.

I’d love to hear your thoughts on this so feel free to reply - I get all your responses!

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Written by Avi Gandhi, edited by Melody Song,
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