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Marcus Johnson (00:00):

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(00:27):

Hey gang. It's Monday, April 21st. Jasmine, Marisa, and listeners, welcome to Behind the Numbers, an eMarketer video podcast made possible by Kinective Media by United Airlines. I'm Marcus. Today we'll be discussing TikTok. Join me for that conversation. We have two people this week, and we start with our vice president and principal analyst covering social media based out in Cali. It's Jasmine Enberg.

Jasmine Enberg (00:51):

Hey Marcus. Hey everyone.

Marcus Johnson (00:53):

Hello there. And we also have with us 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 Marisa Jones.

Marisa Jones (01:02):

Hi, everyone. Excited to be here for my first time.

Marcus Johnson (01:05):

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.

Jasmine Enberg (01:27):

Wow.

Marcus Johnson (01:28):

So you are 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 than 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.

Jasmine Enberg (01:48):

Does this mean that people who are afraid of sharks, including myself, should now be more afraid of coconuts?

Marcus Johnson (01:54):

You should, yeah. And just in case you're wondering where most coconuts coming from, Indonesia, the Philippines, and India, responsible for most of coconut production, so steer clear.

Jasmine Enberg (02:04):

Good to know.

Marcus Johnson (02:05):

No, no, you're welcome. Another reason to hate coconut flavored things.

Jasmine Enberg (02:09):

Do you not like coconut flavored things?

Marcus Johnson (02:12):

I knew you were going to say that. For some reason, I just knew it. No, they're horrible.

Jasmine Enberg (02:18):

I love coconut flavored things, but I don't like coconut milk.

Marcus Johnson (02:22):

Still?

Jasmine Enberg (02:22):

Yeah, still.

Marcus Johnson (02:22):

Okay.

Jasmine Enberg (02:23):

I mean, and the more coconuts I eat, the fewer there are that can fall.

Marisa Jones (02:27):

I don't like coconut flavored things.

Marcus Johnson (02:29):

Saving people one coconut at a time. Sorry, Marisa.

Marisa Jones (02:31):

You're good. I don't like coconut flavored things mostly, but I do like pina coladas.

Marcus Johnson (02:36):

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 4th, the president gave the short form video app another lifeline by granting it a 75-day extension, saying, "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 uses data could be accessed by the Chinese government since TikTok's parent is based in China.

(03:26):

Marisa, why did the Trump administration extend TikTok's sell by date again?

Marisa Jones (03:32):

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. 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-

Marcus Johnson (04:27):

And that's percentage points, right? It went from 50% to close to about 32% from spring 2023 to the summer of 2024.

Marisa Jones (04:35):

Yep.

Marcus Johnson (04:37):

That's from pure research. Please.

Marisa Jones (04:38):

No, yeah. So it's already going down a lot, so keeping TikTok around is a way to feed into what the more popular opinion is surrounding the app, which is that it shouldn't be banned. 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.

Marcus Johnson (04:39):

Yeah.

Jasmine Enberg (05:04):

Yeah. I mean, I think Marisa 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.

(05:31):

So just 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 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.

(06:01):

And then later Trump said that they had actually been making really good progress towards the 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 seeing this deal punted down the line, and we could actually end up in a scenario where TikTok remains in limbo for much longer than any of us could have anticipated or really wanted.

Marcus Johnson (06:30):

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 associate law professor at the University of Minnesota, Alan rozenshtein, was saying that Trump's actions violate that, so it's going a bit against that.

(06:57):

The tariffs absolutely put a halt to this, as Jasmine mentioned. Also, there 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.

Jasmine Enberg (07:16):

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.

Marcus Johnson (07:32):

Exactly.

Jasmine Enberg (07:32):

So like we saw right after the shutdown, app stores, for example, didn't put that app back in for download until 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.

Marcus Johnson (08:00):

Yeah. I want to circle back to something, Marisa, that you were talking about, which was how people feel about the ban. As you mentioned, the 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 oppose, so it's very close. When you're talking about the younger users, a lot of whom use TikTok, how the TikTok users feel, 61% of TikTok users opposed the ban in August of last year versus 10% who supported one. For non-users, it's flipped, 42% supporting, 15% opposing.

(08:51):

A peer 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 in the top three reasons overall.

(09:18):

So that's how people feel. But Jasmine, turning our attention to creators, there's an Atlantic article writing that, "This drama is getting tiresome. It's just an app, 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, "It's a lot of fanfare and suspense over an app that, well, just isn't all that important." Does she have a point and do TikTok creators care about a ban anymore?

Jasmine Enberg (09:48):

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. And most of them have been dealing with this now for up to a year when we first started talking about this specific ban, and many of them have 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.

(10:30):

And on top of that, I think a lot of people are more concerned about larger issues with the economy. 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.

Marcus Johnson (10:58):

Yeah, yeah. That's probably what they're saying, isn't it? Even if you care about this 60% that points priorities one through 10, if this is 11, you care about 90 through 65%. 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 list.

Marisa Jones (11:19):

Yeah. And Jasmine, you mentioned this ban. This ban 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 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 TikTok does eventually get banned because a ban has been talked about for so long. For five years now, we've been talking about, "Is TikTok going to be banned? Let's ban TikTok." From two different presidents, we've been hearing it.

(11:58):

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.

Jasmine Enberg (12:20):

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. 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.

Marcus Johnson (13:05):

Yeah. There was a quote from one I think maybe sums up a lot of the sentiment quite well, Terrell Wade, comedian, actor and content creator with one 45 million TikTok followers saying, "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," 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."

(13:46):

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?

Jasmine Enberg (14:03):

There's a lot, Marcus. There are so many potential interested buyers.

Marcus Johnson (14:11):

Let's start with who's not interested? Just me.

Jasmine Enberg (14:12):

Just you?

Marcus Johnson (14:13):

Don't have the money.

Jasmine Enberg (14:17):

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 and a cryptocurrency company.

(14:47):

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. I mean, Amazon wanting to buy TikTok means that it certainly takes TikTok seriously as an e-commerce platform.

(15:14):

And then of course, there's 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 we have some details about that. Apparently 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.

Marcus Johnson (15:56):

Exactly. Yes. So they're talking about new investors would get 50% of TikTok's US 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 China, 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.

(16:41):

Marisa, what I found really interesting about this list of companies is how different they all are. I mean, 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, MrBeast wants in on this as well. What did you make of this plethora of potential buyers of TikTok?

Marisa Jones (17:08):

Yeah, and I was actually going to mention MrBeast 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.

Marcus Johnson (17:39):

Yeah. There was a really good quote from The Economist, which kind of touches on the other point we were talking about with regards to leasing the algorithm, The Economist saying that if ByteDance keeps control of the recommendation algorithm, it could theoretically still influence Americans' news diet, noting that, "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 hock 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 [inaudible 00:18:45].

Marisa Jones (18:46):

That's a great way to describe it, Marcus.

Marcus Johnson (18:48):

Yeah, I thought... yeah, exactly.

Jasmine Enberg (18:50):

Sums it up perfectly.

Marcus Johnson (18:54):

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?

Jasmine Enberg (19:06):

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.

(19:37):

Just for some context, that's actually slightly more than we predict that YouTube will generate in net ad revenues in the US, so you can just see how important creators and influencers have become to marketing strategies. But of that $10 billion, TikTok alone accounts for just under one fifth. So there's still plenty of influencer marketing activity happening with or without TikTok.

(20:01):

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 Marisa 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 Marisa 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.

(20:36):

And so overall, I think there's just going to be, 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.

Marcus Johnson (21:03):

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 stays with us because it has influenced social media so much in the short form video format, whether it's Reels or Shorts or however else the TikTok-like features have incorporated into other platforms.

(21:24):

Marisa, TikTok is still with us, still here, and if it does get sold, it will carry on. How is TikTok managing advertiser confidence amidst so much uncertainty at the moment?

Marisa Jones (21:37):

So I think TikTok is really trying to push advertisers 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 divestment or ban law currently won't impact their ability to run ads on the platform as it currently is.

(22:14):

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 trying to shift the conversation away from that. There's reports 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.

Marcus Johnson (23:04):

Shifting away, yeah. We're still expecting ad revenue, TikTok ad revenue to go up, right?

Marisa Jones (23:10):

Yep.

Marcus Johnson (23:11):

At least this 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.

(23:27):

That's all we've got time for today's episode. Thank you so, so much to my guests for hanging out with me today. Thank you first to Jasmine.

Jasmine Enberg (23:33):

Thanks for having me.

Marcus Johnson (23:34):

Absolutely. Thank you to Marisa.

Marisa Jones (23:36):

Thank you for having me.

Marcus Johnson (23:38):

Yes, indeed. Thanks to the whole editing crew, Victoria, John Lanson, Daniel Stewart who runs the team, and Sophie who does our social media. Thanks to everyone listening to Behind the Numbers, a eMarketer video podcast made possible by Kinective 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 reacted to the tariffs.