These Companies Could Take TikTok Ban to the Bank

These Companies Could Take TikTok Ban to the Bank

Although Snapchat, Instagram Reels, and YouTube Shorts are poised to overtake TikTok as the market leader for young people,

The fastest-growing social media app in the country, TikTok, could be banned in the United States. This would benefit platforms like Snapchat, Instagram, and YouTube while forcing advertisers to adjust their spending plans by billions of dollars.

TikTok, owned by China’s ByteDance, currently accounts for 2% of the $94 billion in digital advertising spend in the United States; this share is anticipated to increase over the course of the following year. Last year, it generated $10 billion in international advertising income, and in 2023, it might generate more than $18 billion. It has fewer Americans using it than any other social media platform save for Facebook and Instagram.

Competitors hoping to draw TikTok’s 150 million American users and its advertisers would profit if it left US soil. The U.S. would likely give ByteDance three to six months to spin out the three-year-old company, so the app’s demise won’t occur anytime soon, but Wedbush Securities estimates that the chances of an eventual ban are 90%.

Of course, if the app is purchased by a Big Tech company like Apple, Microsoft, or Oracle, it might come back. According to Wedbush analyst Daniel Ives, TikTok’s lauded algorithm could be a problem. According to a recent article by Ives, “detaching the algorithm from ByteDance would be an extremely hard procedure with intense attention from US regulators.”

Yet not all users want it back with a vengeance. A Cowen Study of 2,500 social media users in December found that 37% of respondents stated they wouldn’t look for a replacement.

But there’s little doubt that competitors are honing their swords. Here are some financial stats and benefits of the TikTok rivals that might gain from a ban:

Instagram

While having the same parent company as Facebook, Instagram is more comparable to TikTok in the perspective of advertisers due to its younger user base and Reels feature. Instagram is owned by Meta Platforms (META).

According to a Cowen survey, 25% of TikTok users would switch to Instagram Reels if TikTok was outlawed. This percentage increases to 37% among TikTok’s newest adult users.

Digital marketers who use social media to advertise their products frequently use Instagram. Instagram delivers the biggest return on investment, say 33% of social media marketers, according to a HubSpot poll.

Snapchat

According to the Pew Research Center, youthful users have historically preferred Snapchat (SNAP), with the percentage of American teens using the app expected to increase to 59% in 2022 from 41% in 2015. Only TikTok had a greater surge in teen usage.

Even so, Instagram is more popular among teenagers and is more likely to pick up the users lost to TikTok; only 3% of respondents said they would switch to Snapchat in the event of a TikTok ban.

With revenue growth slowing to 12% in 2022 from 64% the year before, Snapchat might have lost some of its competitive edge in the social media sector.

Pinterest

Pinterest (PINS) has established itself as a successful social commerce platform, with 15% of all U.S. users making a purchase on the network in 2022, despite the fact that it may not be among the social media market’s titans.

In TikTok, social commerce has surged recently. A purchase was made on the website by 23% of American users (27.3 million) in 2022, an increase of 73% over the previous year.

Yet, Pinterest has emphasized shopping as a key part of its business by developing tools that speed up the purchasing process and increase ad loads when a user exhibits purchase intent. As a TikTok substitute, social commerce marketers may turn to Pinterest.

YouTube

Last year, TikTok outpaced Youtube in terms of daily time spent on the platform.

In the most recent quarter, YouTube’s advertising revenue declined for the second time ever, falling 7.8% to slightly under $8 billion.

YouTube Shorts, which was created to compete with TikTok’s short-form videos, still surpassed a milestone of 50 billion daily views in the fourth quarter of 2022, an increase of 66% from the first quarter, even while ad spending was down.

In an effort to compete with TikTok in the case of a ban, Youtube started sharing money with the makers of its Youtube Shorts earlier this year.

Facebook

The majority of parent firm Meta’s more than $100 billion in yearly income still comes from Facebook. Even still, growth has slowed, and in 2022, North American ad revenue is expected to decline by nearly 2% to $52.6 billion.

The slower growth coincides with Facebook losing users between the ages of 18 and 24, exactly the demographic that TikTok advertisers are trying to target. In that market, 1.6 million users left Facebook in 2022, and the app also lost 2.1% of its viewership between the ages of 26 and 41.

With 81% of users in Gen Z, TikTok is clearly the preference, while only 56.2% of this group used Facebook.

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