DTC Briefing: TikTok’s wild week caused chaos and uncertainty for startups

In the end, TikTok was only offline for about 18 hours. But brands have been preparing for its end for weeks and dedicating more resources to a variety of channels, like Instagram, YouTube and Amazon. For many brands, an executive order saving TikTok for the next 75 days isn’t enough reassurance to get them to stop these diversification efforts.

In the meantime, media buyers and advertising agencies advise their clients to monitor CPMs and web traffic closely this week to better understand how people are shifting their habits as TikTok’s fate remains uncertain.

Nadya Okamoto, the founder of period care brand August, went through a rollercoaster of emotions this past week. “It’s just so disappointing,” she told Modern Retail on Friday, just after the Supreme Court ruling was announced. She had just finished editing a video for YouTube — one of the channels that August has been pouring more resources into as a TikTok ban became more likely. 

She said her goodbyes on TikTok, reflecting to her followers about the more than 5,000 videos she had posted in the past several years. When August launched in 2021, many of its early customers discovered the brand through TikTok and through Okamoto’s personal videos specifically; Okamoto posted one video a month after the brand that racked up roughly 4.4 million views.

When Okamoto spoke with Modern Retail again on Monday, she said that while she was glad the app was back, “I definitely feel hesitant and less trusting of its stability.” She was still trying to figure out if and when she should get her brand back on TikTok Shop Live; she hosted many livestreams showcasing her products before the app went dark this weekend. The only thing that was certain about, she said, was that she would move forward with her efforts to diversify her content creation. She’s fortunate to already have more than 380,000 followers on Instagram and 654,000 subscribers on YouTube.

Still, “this experience has been a wake-up call about how unpredictable things can be, and I want to make sure my business is secure no matter what,” she said.

The executive order only provides a crumb of temporary comfort to brands. It only gives TikTok an additional 75 days to find a U.S.-approved buyer. After that, the app could go offline once again. In the meantime, even though TikTok is back online, Apple and Google still don’t make it available for download in their respective app stores, which limits its growth potential.

Another big unknown right now is how all of this will impact where U.S. social media users will spend their time. The uncertainty surrounding TikTok may lead some users to leave the app altogether. Some may opt to spend less time on social media entirely. Some may temporarily flock to another Chinese-owned app like Red Note — and, indeed, some already have — but that may not prove to be a lasting change in behavior. Crucially, the apps that people flock to in lieu of TikTok may not be ones that they are inclined to shop from.

For brands, the big question is: Where do they spend advertising dollars that might previously have gone to TikTok? And will they continue spending on TikTok in the near term?

Brands have spent a lot of time over the past several months future-proofing their businesses against a potential TikTok ban and want to make sure those efforts don’t go to waste. Tim Snyder, CEO of Jordan’s Skinny Mixes, a brand that sells sugar-free syrups and drink mixes, said that his company has been working closely with its network of influencers to prepare for a potential ban. For any influencer who was set to promote the brand on TikTok, “we have done everything for them, from giving them checklists on how to prepare for the switch to working with them directly on any of our shared assets so that they can use those in new platforms.”

As a TikTok ban became increasingly likely, Katya Constantine, founder of Digishopgirl Media, said her agency “took a really critical view of what TikTok does really well” and tried to figure out what other platforms could replicate parts of that. The company has been dabbling with Amazon’s Creator Connections, for example, as a way to partner with influencers, as well as YouTube’s affiliate integration.

“Caution is warranted in this period of uncertainty,” said Ryan Bopp, senior vice president of digital strategy at media strategy consultancy Eden Collective. When planning a TikTok campaign or collaborating with TikTok-centric influencers, “brands should prepare for the possibility of another shutdown and ensure assets can be repurposed across other channels.” 

In the lead-up to the TikTok ban, Eden Collective advised brands to clean up their websites — making sure they weren’t promoting any links that led to TikTok. When figuring out where else to direct advertising spend, Eden Collective counseled clients to think about what other placements might offer a similar experience as TikTok, specifically YouTube Shorts and Instagram Reels. But, where they direct their advertising dollars might also vary depending on who their target customer is, and what apps they are most likely to frequent.

“There’s going to be some level of loss in terms of [advertising] efficiency,” as brands try to figure out where people will go, if not TikTok, according to Eden Collective Chief Operating Officer Chris Novak. Brands could, hypothetically speaking, just dump the $10,000 they intended to spend on TikTok this week immediately into Instagram. But that might not be the wisest move if that’s not where the majority of a brand’s audience is going. And, if a bunch of brands make similar moves, that could result in CPM spikes.

Constantine said that when the Supreme Court held its hearing on January 10, she observed a 20% spike in Meta CPMs among her clients. In her estimation, there will likely be some short-term CPM spikes on other advertising channels in the coming weeks, depending on just how quickly advertisers pour their dollars into other channels. 

When it comes to ad budgets, “I think that we would keep media spends as they are” in the near term, Constantine said. TikTok makes up about 15%-18% of advertising budgets among Constantine’s clients. She will keep an eye on CPMs this week, and “we are advising clients to be ready for some fluctuations in performance.” But she said, “We need to have consistency in the channels that we manage.” That is – Constantine doesn’t want to make too many changes too quickly, and is trusting that the investments her agency made leading up to the ban will help clients navigate through the chaos.

In the meantime, brands are in a holding pattern. After this past week’s whiplash, many marketers are hesitant to make predictions about TikTok’s future. Instead, they advise others to keep a close eye on their advertising metrics.

“It’s really a lot of monitoring at this point,” Bopp said.

What I’m reading

• The Information looks at the “deep freeze” happening in the consumer space right now, as investors sour on consumer and some promising upstarts like Harry’s, Fanatics and Liquid Death have yet to go public.
• Helen of Troy, the parent company of Hydro Flask, Oxo Brands and others, says it is increasing inventory levels in anticipation of potential tariffs. 
• AdWeek has a deep dive into how TikTok changed advertising. 

What we’ve covered

• Brands are among the “TikTok refugees” flocking to RedNote but don’t expect the curiosity to last long. 
• Babylist, Bobbie and hundreds of other brands have been scrambling to figure out how to work together and help people who lost their homes in the Los Angeles wildfires.
• Some startups are starting to see an influx of traffic from ChatGPT and Google Gemini and are trying to figure out how to capitalize on it.