The news: TikTok is stepping away from offering free traffic to US merchants and shifting to a model where businesses must pay for TikTok ads for the same level of visibility.

The change presents unique challenges for small businesses that previously relied on TikTok as an affordable option to get products viewed by large audiences at a lower cost and follows a turbulent year for TikTok.

Zooming out: TikTok is betting that advertisers will continue relying on the platform for reaching engaged audiences across key demographics regardless of whether ads get more expensive—but some advertisers are already reconsidering their spend.

The shift away from TikTok is largely attributable to the ever-looming US TikTok ban. While a ban seems less and less likely as President Trump vows to extend TikTok’s sale deadline—currently June 19—for a third time, the ongoing uncertainty has caused some to rethink strategies and turn to more reliable platforms. That's evidenced by TikTok’s CPMs dropping as platforms like Pinterest surge.

Yes, but: Despite advertisers diversifying, TikTok maintains massive reach and a consistently growing US user base. The platform reaches key audiences like Gen Z that drive digital buyer growth more than platforms like Pinterest and Facebook. Even with higher prices resulting from this shift, the majority of US advertisers are unlikely to cut TikTok ad spending entirely unless forced to.

Our take: TikTok’s shift could affect some advertisers’ willingness to invest, especially small businesses—but TikTok’s ad revenues are likely to remain steady regardless, as the majority of advertisers still see the platform as a critical touchpoint with reach that only a select few others match.