TikTok Ad Spend Growth Slows Amid Ban Threat; Younger User Engagement Declines

July 10, 2024 at 6:07:18 AM

TL;DR TikTok's ad spend has grown year-over-year but slowed since the US ban threat in March. From January to May 2024, ad spend exceeded $1.5 billion, an 11% YoY increase. However, four of the top 10 advertisers reduced their spend in April. Despite this, advertisers still find value in TikTok. User growth, particularly among younger demographics, has stagnated, with a notable decline in users aged 18-24. Daily usage has also slightly decreased.

TikTok Ad Spend Growth Slows Amid Ban Threat; Younger User Engagement Declines

Ad spend on TikTok has been growing year-over-year but has slowed since the potential U.S. ban was announced in March 2024. From January to May 2024, ad spend exceeded $1.5 billion, an 11% increase from the same period in 2023. However, the growth rate cooled from 19% YoY in March to 11% in April and 6% in May according to Adweek.

Ad Spend Trends

Top Advertisers: Four of the top 10 advertisers reduced their spend in April, including Target (down 30%), DoorDash (25%), Bayer (20%), and Procter & Gamble (10%).
Category Increases: Nine out of 20 advertising categories saw increases in April, with consumer services up 115%, jobs and education up 20%, financial services up 17%, and both real estate and software up 16%.
Daily Spend: The average daily spend dropped by only 2% month-over-month in April.

Advertiser Strategies

Performance-Centric Shift: Brands are shifting focus from brand awareness to performance-driven ROI goals due to the potential ban.
CPMs and Engagement: TikTok's CPMs for upper-funnel metrics increased by 15% YTD. Tracer reported a 7% increase in CPMs from February to May and a 19% YoY increase. User engagement also grew, with a 27% increase in click-through rates in April compared to March.

User Demographics and Engagement

Stagnation and Decline: TikTok's user growth has stagnated, with a notable decline among younger users. The percentage of weekly users aged 18-24 fell from 35% in 2022 to 25% in 2024, while users aged 35-44 rose from 16% to 19%.
Average Age and Usage: The average age of a TikTok user in the U.S. is now over 30. Average daily use dropped by 1.2% in 2024, from 52 minutes to 51 minutes.

Despite the potential ban and shifts in advertiser strategies, TikTok continues to attract significant ad spend and user engagement. However, the platform is experiencing challenges in maintaining its growth, particularly among younger demographics.