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As TikTok faces intensifying backlash, should advertisers abandon ship?

As TikTok faces intensifying backlash, should advertisers abandon ship? Blog Feature

Stephanie Baiocchi

Director of Community & Events, Speaker, Co-Leader of the Chicago HubSpot User Group, Host of ‘The IMPACT Show’ Podcast

July 21st, 2020 min read

The bans on TikTok have come flooding in over the past few weeks — as has news about the app and its practices regarding data collection and storage. 

First, India’s government banned TikTok along with nearly 60 other Chinese-made apps. This was closely followed by the U.S. Army and Navy banning service members from using the app on government devices.

Now, a bill is in progress to ban federal employees from having TikTok on their government devices as well. Even Wells Fargo and Amazon asked staff to uninstall the app (though Amazon later claimed its request was sent by mistake). 

With all of this negative political publicity surrounding TikTok and its questionable data practices, it remains a popular app. So, should it still be a part of your advertising strategy? 

Why is TikTok being banned?

TikTok is a popular app owned by Chinese company ByteDance. Users create short videos that are watched by an estimated 800 million users globally

The initial accusations against the app are related to the excessive tracking of and data collection by ByteDance. The data is, according to a 21-page analysis by Penetrum, “partially if not fully stored on Chinese servers,” which goes directly against what ByteDance has said about its data storage practices. 

(In a statement posted on its site, TikTok said it stores all U.S. user data in the United States.) 

And while TikTok is led by an American CEO, many are still highly suspicious of the actions of parent company ByteDance since it has yet to provide concrete information about how it protects data of American users, and how much of this data is made available to the Chinese government.

While the amount of data tracked and stored is disproportionate with what is needed to run the app, the inconsistencies in how the data is managed are an even bigger cause for concern. 

Last year, TikTok was under scrutiny by the United States government regarding China’s 2017 national intelligence law, which contains sweeping language that requires companies to comply with intelligence gathering operations.

At the same time, ByteDance was being investigated for its data practices, TikTok was also accused of instructing moderators to censor videos that featured a number of political themes. 

TikTok continues to claim it does not censor content and that its operations are “not subject to Chinese law.” 

Still, President Trump has said a nationwide ban is something his administration is considering.  

The same goes for India, who has banned the TikTok (along with other apps) over national security concerns — but the announcement came just days after a violent clash at the India/China border heightened tensions between the two countries. 

ByteDance was also sued by the US Federal Trade Commission (FTC) and the Korea Communications Commission (KCC), in separate lawsuits, for violating child privacy laws through its data collection practices.

In an agreement with the FTC, TikTok paid $5.7 million, which was the largest civil penalty the FTC had ever issued in a child privacy case. The KCC’s fine was about equal to about $1.4 million

More accusations regarding privacy concerns with TikTok continue to arise.

Social media's shaky history with data privacy 

Think back to when Cambridge Analytica was accused of harvesting data from millions of Facebook profiles, which was then used to influence the 2016 Presidential election.

This type of influential targeting wasn’t limited to the U.S

Before it came to light how the data was being used, this scandal began as just a data privacy issue. Cambridge Analytica had purchased Facebook data on tens of millions of Americans without their knowledge — and the company was not the only one to do so. Facebook allowed third-party apps to access data from users’ profiles and friends for years. 

In 2012, when talking about the third-party app access, Facebook CEO Mark Zuckerberg even wrote “I just can’t think of any instances where that data has leaked from developer to developer and caused a real issue for us.”

It wasn’t until accusations that Cambridge Analytica used the information they collected without users’ permission to create personality profiles for the 2016 US election that people began to truly see the tangible danger of these questionable data practices. 

Note: if you want to learn more about this check out The Great Hack on Netflix. I highly recommend it. 

But did users delete their Facebook accounts? Some did, most did not. 

Why not? Well, unfortunately, most people are just not that worried about their data privacy. Either they feel there’s nothing too personal available on their profiles or that a data breach is not going to directly affect them. 

According to IMPACT's own survey, some Facebook users just felt the benefits of the platform outweighed the risks. For instance, one member of our Facebook group IMPACT Elite, Kaitlyn Casso, said “Not only will all of my memories disappear [if I delete my account] but I have found a new love for Facebook groups this past year.” 

Some users also feel social media a vital part of their business strategy. Elite member Paul Wolfer said “I feel like my life would improve if I deleted my Facebook account, but I've really grown my side business a lot with it (and Instagram), so as much as I have issues with it, I feel kind of stuck.”

And as long as there are still massive amounts of users on a platform, there will be advertisers giving that platform money.

Will TikTok be held responsible by users?

Will the bans and accusations decrease TikTok's number of users, resulting in less ROI from ads on the platform?

According to a Pew Research Center survey, 44% of users ages 18 to 29 said they deleted the Facebook app from their phone following the Cambridge Analytica scandal. This doesn’t necessarily mean they deleted their accounts, though. 

Will the same hold true for TikTok? Will enough people care about their data privacy and the long-term potential risks to abandon an incredibly popular and, for many, profitable app? Or will the benefits, again, outweigh the potential harm to be done? 

Aside from the bans, we’re not seeing a mass exodus of users from the app, and the biggest TikTok creators are staying put.

At least 40 TikTok creators have more than 10 million followers and, unlike with other apps where known celebrities create profiles, these creators were completely unknown prior to TikTok. This means it’s much less likely they’ll leave the app that made them famous and is currently making them money.

TikTok creator and influencer Arman Rathod made enough money through ad sponsorships to support his family during the pandemic. Now, because he’s located in India where TikTok was banned, he can’t even access the app.

Is this an opportunity for other apps?

However, interest in competing apps is growing.

Another app, Byte, which is very similar to the previously-popular app Vine, has seen an immediate surge in downloads, hitting over 600,000 global downloads in a single day last week. 

(Byte has no relation to TikTok owner ByteDance.) 

Pulling established creators away from TikTok will be challenging, especially those who came to fame through the app. However, Byte plans to pay new creators on its app up to $250,000 for videos through its partner program, thereby hoping to lure top creators from TikTok. 

An Indian rival to TikTok called Roposo is also boasting 500,000 new users an hour.

Meanwhile, Facebook plans to launch Instagram Reels in the U.S. and 50 other countries. Reels allows users to create 15-second videos set to music, just like TikTok. 

Should brands still advertise on TikTok? 

With 800 million active users worldwide, TikTok can be highly profitable for advertisers in a variety of markets. 

The TikTok Creator Marketplace allows brands to target their advertising using a variety of filters (location, topic, age, gender, reach, etc.) to choose ones that align with their audience. They can also browse popular TikTok influencers through filters for reach and top audience segments, and can even toggle between talent fees with options for a suggested fee or the option to negotiate a fee. 

Plus, last month TikTok announced TikTok for Business, which includes access to a self-service ad platform with options for everything from brand takeovers to in-feed video advertisements and branded effects. 

If you choose to continue to advertise on TikTok, you should take the time to understand what you can of the platform’s data practices. This should be the case with any platform or company you spend money with, whether it’s Facebook, Google, or something completely new. 

Whether the TikTok bans are a matter of politics or privacy concerns (or both), as new platforms arise advertisers need to be prepared to go where their customers go.

But at the same time, you must consider what you might be risking in the process — and if it’s worth the risk. 

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