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Behind the Numbers: an EMARKETER Podcast
Behind the Numbers: Tik-Tok: The Latest on Trump’s Extension and Deal Talks
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- [00:01]
Marcus
Connected Media by United Airlines is the world's first airline traveler media network, delivering seamless, high impact advertising across every touch point in the journey. With best in class tech measurement and personalization, Connective media enables brands and travelers to make connections. Discover more@konnectivemedia.com Konnectiv with a K. Hey, gang. It's Monday, April 21st. Jasmine, Marissa and listening. Welcome to behind the numbers, an E marketer video podcast made possible by connective media by United Airlines. I'm Marcus. Today we'll be discussing TikTok. Join me for that conversation. We have two people. Let's meet them. We start with our vice president and principal analyst covering social media based out in Cali, it's Jasmine Emberg.
- [00:52]
Jasmine Emberg
Hey, Marcus. Hey, everyone.
- [00:54]
Marcus
Hello there. And we also have with us for the first time on the show one of our analysts who writes for our marketing advertising briefing, living on the other coast in New York, it's Marissa Jones.
- [01:02]
Marissa Jones
Hi, everyone. Excited to be here. First time.
- [01:05]
Marcus
Hello. Welcome in. Welcome. In today's fact, each year worldwide there are 10 deaths attributable to shark attacks, compared with 150 deaths worldwide caused by falling coconuts. So you're 15 times more likely to die. This is bleak, isn't it? Just reading this now for the first time from a coconut hitting you in the head, then getting attacked by a shark, according to the Australian Institute of Marine Science. I feel like the folks working here aren't taking their job seriously. Who's tracking this? Do some work.
- [01:48]
Jasmine Emberg
Does this mean that people who are afraid of sharks, including myself, should now be more afraid of coconuts?
- [01:54]
Marcus
You should, yeah. And just in case you're wondering where most coconut's coming from, Indonesia, the Philippines and India, responsible for most of coconut production. So steer clear.
- [02:04]
Jasmine Emberg
Good to know.
- [02:05]
Marcus
I know. You're welcome. Another reason to hate coconut flavored things.
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Jasmine Emberg
Do you not like coconut flavored things?
- [02:11]
Marcus
I knew you were gonna say that for some reason. I just knew it. No, they're horrible.
- [02:18]
Jasmine Emberg
I love coconut flavored things, but I don't like coconut milk. Yeah, still.
- [02:23]
Marcus
Okay.
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Jasmine Emberg
I mean, and the more coconuts I eat, the fewer there are that can fall, you know?
- [02:27]
Marissa Jones
I don't like coconut flavored things.
- [02:29]
Marcus
Saving people one coconut at a time. Sorry, Marissa.
- [02:32]
Marissa Jones
I don't like coconut flavored things mostly, but I do like pina coladas, so.
- [02:36]
Marcus
Okay, deal. That works. Well played. Anyway, today's real topic, who will eventually buy TikTok? Trump extends TikTok's sell by deadline again, writes Bobby Allen of NPR. On April 4, the president gave the short form video app another lifeline by granting it a 75 day extension saying, quote, the deal required more work to ensure all necessary approvals are signed. It already got one extension back in January, pushing it to April. The new deadline is mid June. Congress passed the ban last year with bipartisan support because it was worried that American TikTok users data could be accessed by the Chinese government, since TikTok's parents is based in China. Marissa, why did the Trump administration extend TikTok's sell by dates again?
- [03:32]
Marissa Jones
So there's a lot of different ways to look at it, and there's definitely a lot of reasons and ways to interpret it. My main interpretation of why he wants to keep extending it and keep trying for a deal, even as problems between China and the US escalate, even as a deal becomes more murky, is that keeping TikTok alive is a great way to really curry favor with younger generations, Gen Z especially, who are very heavily populating this app, but who might be some aspects of Gen Z might be less prone to be approving of Trump. This is a way for him to kind of position himself in a different light. And we see that in that the amount of Americans who support a TikTok ban overall is going down. It has, especially since 2023. It's decreased nearly 20% to less than a third of Americans who now want a TikTok ban to happen. So I think.
- [04:27]
Marcus
And that's percentage points, right? It went from 50% to close to about 32% from spring 2023 to the summer of 2024.
- [04:36]
Marissa Jones
Yep.
- [04:36]
Marcus
So that's from pure research, please.
- [04:39]
Jasmine Emberg
No.
- [04:39]
Marissa Jones
Yeah, so it's already going down a lot. So keeping TikTok around is a way to kind of feed into what the more popular opinion is surrounding the app, which is that it shouldn't. So for a president who might seem controversial, who might be struggling with some demographics to gain their favor, this is a good way to show and to make it seem like he's doing something good in their favor.
- [05:03]
Jasmine Emberg
Yeah, yeah. I mean, I think Marissa is absolutely right. I mean, TikTok, according to Trump, played a really big role in getting him reelected. And it's obviously really popular among young people. And Trump wants to remain popular among young people himself too. But the reason this one or this deadline in particular was extended again was because TikTok has now also become a bargaining chip in a larger geopolitical battle between the US And China. So just, you know, a couple of days before the deadline, Trump was announcing tariffs, really heavy tariffs on China. And when ByteDance came out and gave a statement, or, I'm sorry, when TikTok came out and gave a statement on, you know, the deal, just the day before the deadline, they talked about how they had been in discussions with the US Government for a quote, unquote solution, but also that that solution would still need to be approved by Chinese law. And then later, Trump said that they had actually been making really good progress towards a deal until China stepped in after the tariff announcement and backed out of the deal. I don't think it really came as a surprise to anybody, though, that there was this extension. And I imagine we'll probably keep saying seeing this deal punted down the line and we could actually end up in a scenario where TikTok kind of remains in limbo for much longer than any of us could have anticipated or really wanted.
- [06:30]
Marcus
What's interesting is the extension might not be legal because the federal TikTok ban law upheld by the Supreme Court allows for one 90 day reprieve, but only if there's a deal on the table and a formal notification to Congress is made. And as associate law professor at the University of Minnesota, Alan Rosenstein was saying that Trump's actions violate that, so it's going a bit against that. The tariffs absolutely put a halt to this. As Jasmine mentioned, also, it was a key person involved in the deal who was let go. National Security Council official who was helping to coordinate the TikTok deal. And Mr. Trump might not have known that they were involved in brokering the deal. So that might have also slowed things down as well.
- [07:16]
Jasmine Emberg
The first point you made is so important, right, because this law is still on the books. And so really all this is saying is Trump is directing these companies not to. Or directing the Attorney General not to enforce the law. Exactly. So, you know, like we saw right after the shutdown, App stores, for example, didn't put the app back in for download until, you know, a little bit later than after the app actually came back online. So a lot of this is dependent on whether these companies that host TikTok actually trust Trump not to enforce the law. For now, it seems like that is the case. We haven't seen TikTok removed from app stores, but all of this is still very much in flux.
- [08:01]
Marcus
Yeah, I want to circle back to something Marissa, you were talking about, which was how people feel about the band. As you mentioned, share of Americans supporting a TikTok ban has gone down from 50% to 32% in a year and a half, from 2023 to 2024. What's interesting about that figure though, or about those numbers is the share of folks who are unsure has climbed from 28% to 39%. So most people are unsure. 39%, 32 support, 28 opposed. So it's very close. But you're talking about the younger users, a lot of which of whom use TikTok. How the TikTok users feel. 61% of TikTok users oppose the ban in August of last year, versus 10% who supported one. For non users, it's flipped 42% supporting, 15% opposing. Pew Research study also asking why Americans want it banned. Among supporters of a TikTok ban, eight in 10 were concerned over users data security being at risk as a major factor for their decision, which is one of the things that the government says one of the main reasons that it's pursued this ban. Americans cared a lot less about this narrative that TikTok was addictive, less than half of people citing that it wasn't, even the top three reasons overall. So that's how people feel. But Jasmine, turn to attention to creators. There's an Atlantic article writing that this drama is getting tiresome. It's just an Apple, and many Americans, at least those who are old enough to vote, don't actually care that much about it. In January, Kate Lindsay, who writes for the publisher, said, quote, it's a lot of fanfare and suspense over an app that, well, just isn't all that important. Close quote. Does she have a point? And do TikTok creators care about a ban anymore?
- [09:48]
Jasmine Emberg
Yes, TikTok creators care about a ban anymore. But the larger point holds. I think people are tired of this drama. I mean, a lot of people, creators included, feel really gaslit. I mean, we've been here before, and I think there is this sense of disbelief that the ban is actually going to happen. And in the meantime, nothing has really changed for creators or for users or for advertisers. Right? And most of them have been dealing with this now for, you know, up to a year when we first started talking about this specific ban. And many of them have, you know, worked to diversify their strategies, their platforms, their revenue streams. But ultimately right now, it's the same position that we've been in for a very long time. And on top of that, you know, I think a lot of people are more concerned about larger issues with the economy. Right? And so if you are a TikTok creator, including many TikTok creators who essentially run small businesses on the platform, what does it matter if TikTok disappears if they don't have any products to sell in the first place. There are a lot larger issues at play here and I think on the list of priorities for many of them, TikTok is lower than their wallets.
- [10:58]
Marcus
Yeah, yeah, that's probably what they're saying, isn't it? Even if you care about this 60%, that points, you know, priorities one through 10, if this is 11, you care about 90 through 65% as much. So it's just, it could be you care about it a lot, but in the order of things to care about in the world right now, it's just a bit further down on the, on the, on the list.
- [11:19]
Marissa Jones
Yeah. And Jasmine, you mentioned, you know, this band, this band has been going on for about a year now. People have been preparing for it, but I think for creators, I think they've been maybe even since before then, diversifying their strategy, looking for content that they can post on TikTok that also stretches to other platforms like YouTube Shorts and Instagram reels that are going to gain a lot of attention if Tic Tac does eventually get banned. Because a ban has been been talked about for so long, you know, for five years now we've been talking about is Tick Tock going to be banned. Let's ban TikTok for two prep from two different presidents. We've been hearing it. So I think creators care because they do get a lot of their earnings through TikTok. Some creators might struggle to generate the same number of audience members that they have on TikTok on other platforms. So I do think they care, but I do think it's not something that is necessarily stressing them out as much anymore because they've been preparing for it for quite some time now.
- [12:21]
Jasmine Emberg
Yeah, I think that's absolutely right. I mean, diversification has been the name of the game for creators for a long time and I think the potential of a TikTok ban has of course added more urgency to that. I think the reality is also that a lot of creators, especially established creators, are already diversified. You know, they are on multiple platforms, they're posting their TikToks on Instagram Reels and YouTube shorts. And I think the broader lesson out of all of this turmoil and uncertainty is one, you should be doing that if you're not already, and two, to be migrating to platforms, to channels where you have a little bit more control over your content, your audiences and monetization. And I think that is a shift that we're seeing, if not yet in practice, at least in mindset among creators.
- [13:05]
Marcus
Yeah, there was a quote from one I think maybe sums up a lot of the sentiment quite well. Terrell Wade, a comedian, actor and content creator with 1.5 million TikTok followers saying, quote, I'm glad there's an extension. But to be honest, going through this process again feels a bit exhausting. Every time a new deadline pops up, it starts to feel less like a real threat and more like background noise. That doesn't mean I'm ignoring it, but it's hard to keep reacting with the same urgency each time. Close quote. And Chloe Veltman of NPR saying the prevailing emotion among creators seems to be a despondent shrug of whateverness because you can't control it. And so there's other things to worry about that you maybe can control. Let's talk about who might buy it, what deals are out there if this ever gets done. Jasmine, what kind of companies are in the running to buy all of TikTok US operations or a slice of it?
- [14:03]
Jasmine Emberg
There's a lot, Markus. There are so many potential interested buyers.
- [14:08]
Marcus
Start with who's not interested? Just me.
- [14:12]
Jasmine Emberg
Just you don't have the money. I mean, so even just a couple of days before the ban deadline, we saw a couple of new companies throw their hat into the ring. Amazon was one of them. We also saw mobile technology company applovin throw their hat into the ring. There's also been a couple of different consortiums of companies. There's one that includes Oracle, which right now hosts a lot of and secures a lot of the data or the data for us, TikTok, along with Andreessen Horowitz. And there's another consortium that includes OnlyFans in a cryptocurrency company. Now, not all of these deals are being taken seriously, but I think the takeaway from having so many companies and so many different types of companies that are interested in TikTok is how important it really is to our digital landscape and how it really isn't just a social networking app. Right. I mean, Amazon wanting to buy TikTok means that, you know, it certainly takes TikTok seriously as an e commerce platform. And then of course there's, you know, the deal or the quote, unquote solution as TikTok framed it that the US government and ByteDance have been working on behind the scenes. And, you know, we have some details about that. Apparently it would be or it would give ByteDance less than a 20% stake in US TikTok, which is something that the law requires, but it would also allow them to lease the algorithm, which is a really interesting solution to me because it's unclear if that actually solves the national security concerns that lawmakers use to justify the ban to begin with.
- [15:56]
Marcus
Exactly. Yes. So they're talking about new investors would get 50% of TikTok's U.S. business. Current investors would get 30%. ByteDance's stake would fall to slightly below 20%. And that's because the New York Times article noting the law requires that no more than 20% of TikTok or its parent company be owned by people or corporations in so called foreign adversary countries, which includes China. And so ByteDance could sell TikTok or bring on new investors to reduce its proportion of investment, but leasing it. The whole point Jasmine's saying of this was to make sure that the Chinese government couldn't get access to that data. If ByteDance still owns a 20% slice, it doesn't seem to fix that issue. Marissa, what I found really interesting about this list of companies is how different they all are. Jasmine mentioned everyone from a mobile tech company like Applovin to retail or e commerce giant Amazon AI company perplexity. Jesse Tinsley, founder and CEO of Employer.com, youTube's most popular influencer. Mr. Beast, wants in on this as well. What did you make of this plethora of potential buyers of TikTok?
- [17:08]
Marissa Jones
Yeah, and I was actually going to mention Mr. Beast also potentially wanting in. I think it goes to show how much these buyers and potential investors see TikTok's potential compared to other apps. I think TikTok presents a really interesting opportunity to reach an audience that is more engaged with the content they're consuming than a lot of other platforms. So I think this kind of just represents that a lot of people think TikTok is something that can generate consistent value, which we've seen it do in the past.
- [17:40]
Marcus
Yeah, there was a really good quote from the Economist which kind of talks on that touched. Sorry, which kind of touches on that other point we were talking about with regards to leasing the algorithm. And the Economist saying that if by dance keeps control of the recommendation algorithm, it could theoretically still influence Americans. News Diet noting that quote even if TikTok is sold in its entirety, the government orchestrated process leaves Americans with an uncomfortable question. Part of the argument against the app being Chinese owned was that American users might then be fed politically biased content by a business that was in hoc to a government which considered itself above the law. TikTok users might look at the auction being run from the White House and wonder has that outcome been avoided since? Although TikTok and its would be acquirers are private companies, the White House is organizing the sale with Mr. Vance's office acting as an intermediary between the bidders and their target, as well as the Chinese government. So it's a weird old mess that seems.
- [18:46]
Jasmine Emberg
That's a great way to describe it, Marcus.
- [18:49]
Marcus
Yeah, I thought. Yeah, exactly.
- [18:50]
Jasmine Emberg
Sums it up perfectly.
- [18:54]
Marcus
If there is a permanent ban, Jasmine, what kind of an impact would a permanent ban, if a sale can't go through, have on small businesses and creators?
- [19:06]
Jasmine Emberg
Yeah, I mean, I would start by saying that if a permanent ban does go through, the creator economy overall is going to be just fine. It existed before TikTok, it will continue to exist after TikTok, should it come to it, even though I don't think it will with this particular ban. I mean, if you look at influencer marketing alone, it accounts for about 60% of all the revenues that US creators are generating from their activities on social media. And this year we're predicting that to be about $10 billion. With just for some context, that's actually slightly more than we predict that YouTube will generate a net ad revenues in the US so you can just see important creators and influencers have become to marketing strategies. But of that $10 billion, TikTok alone accounts for just under 1/5. So there's still plenty of, you know, influencer marketing activity happening with or without TikTok. That said, though, if you're looking at it from an individual creator basis, there will certainly be a devastating impact on a lot of smaller creators and smaller businesses that rely on the app. And Marissa and I have both been talking about the need for diversification and that's why we're seeing a lot of these smaller creators and smaller businesses really start to explore other platforms like YouTube Shorts and Instagram reels, which, which Marissa mentioned. Established creators like we talked about will probably be just fine because they're already active on multiple platforms, they already have multiple revenue streams. And so overall I think there's just going to be, you know, the impact is going to be different depending on what kind of creator you are. But where I think the biggest negative impact really will be is on the creation of new creators. I mean, TikTok really has been this breeding ground for creators for a very long time and there really is no replacement for the potential of discovery that happens on TikTok.
- [21:03]
Marcus
It does feel, it's kind of strange because it feels like even if TikTok went away, the kind of soul or essence of TikTok is kind of stays with us because it has influenced social media so much in kind of short form video format, whether it's a reels or shorts or however else you know, the TikTok like features have been incorporated into other platforms. Marissa, TikTok is still, still with us, still here and if it does get sold, it will, it will carry on. How is TikTok managing advertiser confidence amidst so much uncertainty at the moment?
- [21:38]
Marissa Jones
So I think TikTok is really trying to push advertiser to stay the course, kind of trying to instill confidence in them that at some point a deal will be made and no matter what happens, TikTok's not leaving the US. There's some reports that kind of in the background, TikTok is pushing advertisers to keep spending by reassuring them how profitable TikTok is, what TikTok can do for them, and has really reassured advertisers that the divest or ban law currently won't impact their ability to run ads on the platform as it currently is. But we are seeing that advertiser confidence might be fluctuating and dropping in some cases. I've covered TikTok CPMs dropping 80% year over year a few times now, so there is definitely a lesser confidence in the platform from advertisers. But that being said, we are still seeing that TikTok is kind of trying to shift the conversation away from that. There's reports that, that it's offering advertisers incentives, offering discounts on certain ad campaigns for advertisers, according to some ad buyers. So they could potentially keep pushing for this. I think while ad spend is still pretty good on the platform. I think with each time the ban is extended another 75 days, some confidence is declining in it. Chip, chip away.
- [23:06]
Marcus
Yeah, we're still Expecting ad revenue, TikTok ad revenue to go up, right? Yep, at least a little bit from this year to next year. And it's still adding users as well. TikTok will add another 15 million users over the next few years, reaching close to 40% of all Americans using TikTok. If it's still around by 2028. That's all we've got time for for today's episode. Thank you so, so much to my guests for hanging out with me today. Thank you.
- [23:32]
Jasmine Emberg
First to Jasmine, thanks for having me.
- [23:35]
Marcus
Absolutely. Thank you to Marissa.
- [23:36]
Marissa Jones
Thank you for having me.
- [23:38]
Marcus
Yes, indeed. Thanks to the whole editing crew, Victoria, John, Lance and Danny Stewart who runs the team and Sophie who does our social media thanks to everyone for listening to behind the Numbers, a new marketer video podcast made possible by Connected Media by United Airlines. Tune in to the Reimagining Retail show this coming Wednesday, where Sarah, Zach and Rachel will be talking about how have retailers react acted to the tariffs.