What’s the Economic Impact of a TikTok Ban?


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The potential for a nationwide TikTok ban within the U.S. has been swirling for a number of years. While several states banned the app on government devices, Montana became the primary state to ban the app on all devices last week.

Earlier this month a former executive at ByteDance, the parent company that owns TikTok, came forward alleging the corporate shared the info of U.S. users with the Chinese government amongst other accusations in a wrongful termination lawsuit.

While there has not been any evidence to support this claim, it could fuel the safety concerns surrounding TikTok and other ByteDance-owned platforms within the U.S. While many conversations surrounding a TikTok ban have focused on the safety impact, today we’re going to debate the economic impact of the proposed ban.

On the surface, it appears a full ban could have a negative economic impact. Since 2019, businesses have come to depend on the app as a foremost marketing driver, leveraging TikTok for growth and customer acquisition that encourages spending in multiple sectors.

Since its launch in 2017, TikTok has had a meteoric rise in growth and recognition and has quickly develop into a key platform for marketers and businesses. Per a 2022 survey by Capterra, over half of small businesses found success promoting their offerings organically on TikTok, and 78% had a positive ROI running paid ads on the app.

With those sorts of stats, it’s no surprise corporations have been willing to take a position. In 2022, the platform brought in $9.9 billion in promoting revenue, a 155% increase over the prior yr.

Though de-influencing has been a buzzy term on the app, TikTok effectively drives consumer decisions. In keeping with a TikTok consumer spending study:

  • Customers spend 14% more when TikTok was a component of their buyer’s journey.
  • 37% of TikTok users have immediately purchased a product after seeing it on the app.

How TikTok Fuels Tourism

Travel content is a preferred area of interest on TikTok and plenty of tourism boards have used the app to achieve recent visitors. In keeping with a survey conducted by MGH, 60% of TikTok users were keen on visiting a recent area after seeing content about it on the platform. Per the identical survey, 35% of users have actually visited a recent destination after seeing a TikTok video about it.

So what are local marketers planning on doing if the app is fully banned nationwide?

Pivot. Tourism marketers in states where TikTok usage has already been banned or limited (similar to Montana and Virginia) have pivoted to share short-form video content on Instagram Reels and YouTube Shorts as a substitute.

How could a TikTok ban impact small businesses?

TikTok has evolved from a video-sharing app to a robust search engine, with 40% of young adults within the U.S. turning to the app to look for businesses as a substitute of traditional search engines like google like Google.

Small businesses have tapped into the discoverability power of TikTok to get in front of those potential customers. In keeping with TikTok, over 5 million American businesses are lively on the platform. Taking the platform’s ad revenue and organic traffic into consideration, GoBankRate reports a complete ban could cost the U.S. economy $6.8 billion.

Then there are the content creators and influencers.

The creator economy has exploded over the past decade and was value $104.2 billion at the top of 2022. The most recent estimates predict the creator economy will top a half trillion dollars by 2027, but will that be the case without TikTok?

In a 2021 Fortune article Seth Kean, CEO of ROI Influencer noted brands earned $7.2 million for each $1 million they spend on influencer marketing on TikTok, a 24% higher return than influencer marketing spend on other platforms. If TikTok goes away, advertisers will likely look to other platforms to fill within the gap, though the spending could also be lower and spread across various platforms.

To best prepare for this, content creators (especially those whose foremost platform is TikTok) would greatly profit from diversifying the platforms they distribute content to. Just like the tourism boards mentioned earlier, content creators can repurpose their short-form video content to platforms like Reels and YouTube Shorts, and concentrate on owned media channels similar to podcasts, blogs, email newsletters, and gated crowd-funded platforms like Patreon.

Not only do successful content creators help promote and market products from other corporations, but some create jobs for other members of their teams by employing editors, assistants, and managers. If the platform of selection for some top creators goes away, the roles that support creators is also in jeopardy.

While we don’t know what the long run holds, if a nationwide TikTok ban is enacted consumer spending behaviors will likely shift and the creator economy might be primed for a significant pivot.

Elsewhere in Marketing

The most recent marketing news and strategy insights.

Google will begin disabling third-party cookies for Chrome users in Q1 2024 as a part of its cookie depreciation plan.

AI apprehensiveness: though tech firms are moving full-speed ahead with AI, consumers remain skeptical.

Taking a break from the bird app: 60% of lively Twitter users have taken a break from using the platform over the past yr.  

Don’t call it a comeback: in a recent study, Facebook has shown an uptick in popularity amongst content creators, surpassing Instagram on the subject of creator satisfaction.


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