How A TikTok Ban Would Impact Increasing Demand For UGC Advertising

With over 150 million users in the U.S. alone, TikTok continues to be the fastest-growing app in the world. Content creators across the globe use the platform to share their passions and perspectives, promote products, and encourage users to invest (or not invest) time and money in specific brands. This user-generated content (UGC) is often more powerful in driving conversions than traditional advertising or influencer marketing strategies because TikTok creators are real people sharing their genuine thoughts with the world—and as a result, they impact 79% of consumers’ purchasing decisions. 

While only 18% of marketers employ UGC advertising in their strategies, this number is on the rise. And for good reason, as consumers are 2.4 times more likely to say that UGC marketing is more authentic than brand-created content and advertising. Additionally, TikTok’s in-app features and editing capabilities make it a safe and cost-effective space for experimentation with video advertising. All in all, the increased demand for UGC marketing is a win-win for all parties involved. 

But what happens if TikTok gets banned by governments across the globe? If you’ve been watching the news, you know that multiple countries have expressed their concerns that the app may endanger sensitive user data. With TikTok at the helm of the UGC marketing revolution, it is crucial to consider the potential negative impacts a TikTok ban could have on the U.S. advertising market. 

Competing Over Ad Platforms 

As UGC advertising continues to rise in demand, a TikTok ban could cause an oversaturation of advertising content on other digital marketing platforms, such as Facebook, Twitter, Instagram, YouTube, and their respective advertising tools. 

Minimizing the number of ad platforms marketers can use increases competition and decreases how they can reach their target audience. For example, only 32% of teenagers between 13 and 17 use Facebook. As a result, marketers trying to reach this demographic will likely have more difficulty meeting them where they are without TikTok––a platform known for resonating with the Gen Z and millennial age brackets. 

Bambassadors, a UGC and creator marketing solution and TikTok Creative Marketing partner, explains the cost of this over-saturation: 

“Platform diversity matters. If brands have to restrict their advertising to platforms that don’t serve their core audience, they’ll see a drop in revenue, and their audience will miss out on learning about the products that can solve their problems,” said Oded Farkash, CEO of Bambassadors. 

Rising Costs and a Lack of Experimentation

If TikTok is banned, marketers will compete for lower inventory, advertising rates will inevitably increase, making it difficult for marketers of small businesses to increase engagement, generate leads, and compete with larger organizations for conversions. This includes CPMs, or “cost per one thousand impressions or views of an advertisement.”

Take a look at these whopping increases between 2020 and 2021: 

• Google and YouTube’s CPM increased by 108%
• The average Facebook ad CPM was $11 in 2021 
• Facebook’s ad cost had an 89% increase

One of the reasons why UGC content is successful is due to its cost-effectiveness in production. Taking away one of the largest platforms for this content to exist will force marketers to pay more money for fewer results. 

Banning the platform will also discourage video experimentation, which is a key factor in why creator-produced advertisements benefit brands in all industries. TikTok’s in-app editing features and filters allow content creators to keep their content relatable and accessible to various audiences. 

On the marketing side, UGC TikTok ads allow brands to think from the consumer’s perspective and outside the box without worrying about a high cost-per-click if a creative risk fails. And these ads help consumers as well. In today’s marketplace, authenticity generates sales, and UGC advertising contradicts the traditional—sometimes disingenuous—commercial styles of the past. People want to see advertising that comes from real people—not celebrities or the brands themselves. 

UGC advertising works. It helps brands and buyers—and losing it would hurt marketers, businesses, and the customers they serve. 

We don’t know if the U.S. will ban the platform. But as the discussions around TikTok unfold, we hope governments worldwide will consider how banning platforms will affect their local businesses and economies.

Image sourced from Shutterstock

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. This content contains sponsored advertising content and is for informational purposes only and not intended to be investing advice.