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Photo: AFP
Photo: AFP

TikTok ban leaves brands, advertising agencies stranded

  • Tiktok's ad rates were more economical than mature platforms such as YouTube and Instagram
  • The video app has been bullish on India as it has witnessed a meteoric rise in user base, generating 611 million lifetime downloads so far

NEW DELHI : Advertisements worth millions of rupees have been stalled after the Indian government on Monday banned Chinese video-making app Tiktok.

Tiktok statement on Tuesday said that the company representatives will meet government officials to clear their stand. Advertising and marketing agencies have paused their brand campaigns as they await the fate of ByteDance-owned Tiktok in India.

Big brands such as Pepsi, Puma, Clean and Clear, Flipkart and Myntra, among others were running their campaigns on the app which has witnessed a 50% growth in ad revenue in the past one year. Most of the TikTok ad deals are bundled, which include home screen ad, hashtag promotion as well as influencer outreach.

Being a new platform Tiktok's ad rates, ranging between 5 lakh to 50 lakh, were more economical than mature platforms such as YouTube and Instagram. It also offered high engagement through user generated content (UGC) and deep reach especially in small towns and rural areas.

“It is a huge blow for small and boutique agencies for sure that have been getting campaign projects because of meteoric rise of Tiktok in India," said a senior executive from social media agency on the condition of anonymity. “I personally know an agency which was launching 50 lakh worth of campaign from a big brand which has been paused till further notice."

The video app has been bullish on India as it has witnessed a meteoric rise in user base, generating 611 million lifetime downloads so far, nearly a third of the app's overall global downloads of 2 billion. However, the recent Tiktok vs YouTube controversy with content creator Carryminati and then ongoing anti-China sentiment created a dent in the short form video app's download figures.

Harikrishnan Pillai, co-founder and CEO of digital agency TheSmallBigIdea said there will be a massive impact on ad spends from short to medium term because even brands would like to stay away from Tiktok even if it is allowed to operate. The ban will lead to brands rethinking their media strategy and Tiktok’s share will get redistributed on other platforms. Overall spends might go down as well, Pillai said.

“The immediate response by brands will be to opt for alternate platforms. Having said that it is difficult to get an absolute replacement for Tiktok, brands will have to opt for a combination of Facebook and Instagram along with ShareChat and Mitron which are slowly gaining popularity," he noted.

According to industry estimates, although TikTok's advertising revenue was on a continuous rise the likes of Google and Facebook still dominated country’s 17,000 crore digital ad market.

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