Will TikTok’s “Made in China” label cost MarTech billions?

• TikTok’s uncertain future could reshape the brand’s digital footprint, consumer engagement strategy and MarTech landscape
• this A potential ban would cost the U.S. GDP $24.2 billion, requiring rapid adjustments to marketing methods
• We explore why marketing leaders must plan for contingencies through agile content strategies and practices to adapt to changing regulations

What happened Vegas China, stay Vegas China, is this still the case?

Yes, we’re changing the idiom because we know who it works best for (and it’s not Hollywood). Chinese-made TikTok faces the threat of a ban from the U.S. House of Representatives over data privacy concerns and ties to the Communist Party.

If its parent company ByteDance, also known as “App Factory”, does not spin off TikTok to a U.S. entity within six months, the short-form video app may lose 170 million users.

With an expected revenue loss of $8.66 billion, TikTok’s creators called the potential ban the “death of the American dream,” Kamala Harris clarified, “They are not planning to ban TikTok, but to deal with its ownership question.”

First, the death of the cookie and now the “will they? won’t they” drama of the TikTok ban has advertisers worried about the impact on MarTech, advertising and technology legislation in general.

I said, let’s investigate.

FYP: TikTok’s connection to China

Although TikTok is 60% owned by U.S. entities, what creates trouble is the 1% stake (golden shares) owned by the Chinese government, which legally binds ByteDance to help the Communist Party gather intelligence.

Current executive Shou Zi Chew sidestepped questions about TikTok’s status as a Chinese entity at a 2023 congressional hearing, saying TikTok was founded in China and was “global” in nature.

In addition, the governments of Canada, Europe, France and New Zealand have restricted the use of TikTok on government-owned devices, citing data privacy concerns.

TikTok’s Socioeconomic Impact

As consumers and marketers, we have watched TikTok become an integral part of society and drive the attention economy.

This social media app has changed the face of product discovery, redefined consumer-brand friendship, revolutionized content creation, and cemented the prominence of social search.

People use the platform to learn, inform purchasing decisions through product reviews, and seek entertainment and happiness. I can’t think of another social media platform where users are buzzing about #NewFinds, #TikTokTaughtMe and #TikTokMadeMeBuyIt.

According to a report by Oxford Economics, TikTok contributed $24.2 billion to U.S. GDP in 2023. While the financial, healthcare and regulated industries have not been keen to venture into the platform, the fate of TikTok will significantly impact e-commerce, retail, gaming, food and beverages, business services, automotive and FMCG brands.

Why marketers and software buyers love TikTok

TikTok is not only built on data and unique algorithms, but also driven by the creativity of its community. (Pinterest, are you listening?)

It helps brands cross single sales barriers, provide omni-channel marketing capabilities, and fill the trust deficit of the real era.

While major brands such as Chipotle, Lululemon, Target and Ulta Beauty are actively investing in TikTok, the platform is home to 7 million businesses and is critical to the survival of about 40% of small and medium-sized enterprises. A closer look revealed that 32.6% of the audience were millennials and Generation Z (25-34 years old) with purchasing power.

TikTok advertising has proven to be a pipeline to grow sales for SMBs and enterprises. In an age of banner blindness, ad blockers, and compliance, TikTok provides an ecosystem where people are willing to buy and discover new products.

To fully understand TikTok’s marketing performance and attribution, I looked at what software buyers said about TikTok ads.

G2 takes

TikTok Ads has a G2 rating of 4.1/5, showing that users find great value in seamless ad management, simplified retargeting, and similar audiences. Advertisers also appreciate the variety of easy-to-setup video ad formats for creative testing.

TikTok ads help businesses build brand awareness, capitalize on peak seasons, expand marketing pipelines, engage new audiences, and create high-quality user-generated content (UGC).

An interesting takeaway was to learn how IT services and consumer goods companies are finding success on short video platforms.

Users prefer TikTok over Meta because it offers affordable ad inventory and offers more precise targeting.

These comments prove that marketers stand to lose hugely if a TikTok ban happens, and we’ve only scratched the surface.

What happens when we lose our magic?

Businesses and the marketing world at large view TikTok’s premature demise as a severe loss of young people. They have invested millions of dollars in TikTok marketing strategies, and they plan to remain committed to the platform until a permanent decision is made.

Marketing forecasts will go awry, leaving brands and agencies facing uncertainty around budgets, spend, audience engagement and advertising. Smaller social media agencies and TikTok specialized entities may experience a decline in cash flow and will struggle to survive unless they shift to providing omnichannel marketing services.

There’s a lot to unpack when it comes to TikTok’s fate: Audiences will migrate, jobs will be lost, and new technologies will emerge. On the other hand, experts expect Meta, Snapchat and YouTube to be the winners in this scenario. With the majority of Gen Z and Millennials actively consuming Instagram Reels, Meta benefits greatly. There may also be a new social media platform that satisfies the same desire to become famous quickly.

Here’s what our experts predict.

A TikTok ban could negatively impact experts and worsen global job market prospects.

How to prevent drama on your marketing investments

Diversity remains king of the castle. Advertisers and marketers must invest in Instagram, Meta, and marketplace to offset TikTok’s deficit.

A quick comparison of these platforms shows that Instagram is currently in the lead, making it the top choice when attention and advertising dollars shift.

source: G2

Video marketing doing more with less will be a key lever for diversification. Agile content strategies and video optimization practices will help marketers minimize waste and maximize performance. This will help scale engagement with similar groups on Reels, LinkedIn Videos, and YouTube Shorts.

Attention spans are fickle, and brands cannot simply disappear just because a social platform disappears. Asset optimization will become critical as more and more advertisers will spend multiple dollars to get the same attention and retention.

Marketers need to find ways to export valuable ad targeting data so they can have it securely on cloud storage systems. They need to integrate this data into marketing attribution and analytics software to provide predictive models, audience segments and expand customer interaction touchpoints.

This not only improves operational efficiency but also serves as a single source of truth for disparate data sources and marketing platforms.

But don’t just take it from me.

Avoid falling into the trap of “I’ll double down on the highest performing platform” as this may result in a higher CPC (cost per click).

TikTok ban or TikTok joke?

Due to data privacy and geopolitical considerations, the United States took the lead in praising India for banning TikTok in 2020, but will the “Land of the Free” follow suit? Is this a real data protection issue or a conspiracy to squeeze out foreign players competing with US platforms? When TikTok is banned in India, Reels and YouTube clips emerge as winners and history may repeat itself.

Despite skepticism and government regulation, the common theme between Google’s cookie death and TikTok’s potential ban is the shift toward privacy-first technology platforms.

Because wherever consumers go, brands follow and technology innovates.

Don’t miss out on the latest and greatest technology thought leadership. Sign up now for the G2 Tea newsletter and get the hottest content in your inbox.