TikTok faces government scrutiny and brand safety concerns
Despite its overwhelming popularity with younger users, there is growing concern around TikTok, including: a potential ban in the United States; user privacy; its relationship to the Chinese government; and, brand safety for advertisers. Should advertisers increase their investment due to rising usage, or is the landscape so fraught that it should be reconsidered?
Popularity & Usage
In late 2019, TikTok surpassed Facebook in popularity among young teenagers. The overall U.S. user base is lower than other social networks (45MM vs. FB’s 175MM or Snap’s 84MM - eMarketer), but experienced 20% growth this year and explosive usage during peak stay-at-home orders
It's become a business challenge to Facebook and Snapchat. TikTok’s ad platform opened up to self-serve advertisers this month, allowing small to mid-sized advertisers access that was not previously available. TikTok's ad products (including targeting) are relatively elementary, but will improve over time as it adjusts to advertiser demands. TikTok has been aggressively courting ad world veterans who will ultimately help shape the platform as it advances. And while advertising is relatively nascent on the platform and isn’t a direct challenge to Facebook/Snap’s business just yet, it’s overwhelming popularity with Gen Z will eventually steal market share as those users age up.
User Privacy & Data
In the U.S., the government has made public comments about banning TikTok due to its parent company’s (ByteDance) ties to China’s government and military, along with concerns about potential violations of children's privacy. But it’s unclear whether or when they could take this decisive action.
There is current legislation working through the Senate to ban TikTok on government-owned devices
India banned the app last month in retaliation for broader geopolitical disputes, and TikTok has pulled out of Hong Kong due to new data gathering legislation
TikTok says it doesn't store U.S. user data in China (only in the U.S. and Singapore) and doesn't share such data with its Chinese parent company, but:
All Chinese Internet companies are compelled by the country’s National Intelligence Law to turn over any and all data that the government demands, and that power is not limited by China’s borders
TikTok is currently medium- to high-risk for brand safety. They have made good strides forward, including human review of machine-screened content, but it continues to be one of the riskier platforms to advertise on.
Each advertiser will have its own risk tolerance levels and business objectives, any media investment should be considered within those parameters as there is no one correct answer.
The current field of global advertising platforms is limited, and lack of competition can mean poor accountability, choice, and value for clients. It may be worthwhile to continue investing in TikTok and exploring how it can fit in your media mix, while pressing them to meet baseline standards for brand safety
Consider the flexibility of platform budget, in case decisive action is taken against TikTok and/or new information is discovered about the platform’s data practices
GroupM continues to push TikTok to implement higher brand safety levers like exclusion/inclusion lists or 3rd party verification. This remains a paramount concern among agencies and advertisers and will eventually hinder TikTok’s growth if unaddressed
There is no agreement between GroupM and TikTok on global terms; until one is agreed, only platform proffered protections are available