As TikTok fights for survival in the U.S., it continues to turn to a central lobbying point: economic impact on SMBs. The company points to millions of SMBs that use it as a critical marketing tool to reach local customers. Opponents argue that this may be true to a degree, but SMBs have many other comparable options.
Either way, resting its lobbying efforts on this thesis is smart for TikTok, as supporting U.S. small businesses is one of the last few remaining non-partisan issues that both sides of the aisle can get behind (that, and disdain for big tech). It’s even enlisted SMBs to march and picket on this message.
Now the latest shot has been fired from TikTok. To validate its pro-SMB economic narrative, it has produced a study that aims to quantify its positive economic impact on the sector. Entitled TikTok Economic Impact Report 2024, it argues that the social app supports $24.2 billion in economic activity for SMBs.
Direct & Downstream
To qualify that figure a bit further, it takes a broad look (read: larger number,) including SMB revenue generated, as well as other economic ripple effects such as the employment that’s supported by these businesses (quantified through salaries paid), and other related factors in the SMB economic sphere.
For example, the promotional benefits for SMBs on TikTok have allegedly fueled their economic success and, in turn, supported 224,000 U.S. jobs. 98,000 of those jobs are the direct hires of the SMBs that market themselves on TikTok, while the rest exist downstream, per the ripple effect noted above.
Zeroing in on the revenue generated for SMBs as a result of their ability to promote themselves on TikTok, that figure is reportedly $14.7 billion. TikTok also says that 7 million U.S. businesses promote themselves on the platform. Doing the quick math, that’s $2,100 in additional economic impact per business.
Presumably that $2,100 (though it’s our math and not a figure explicated in the report) is the incremental annual revenue that SMBs have been able to generate – in return-on-ad-spend (ROAS) terms – as a direct result of their TikTok-based marketing. If that’s what they’re saying, it doesn’t seem unreasonable.
Common Tradecraft
For further context on the findings, TikTok’s study was completed by Oxford Economics, which is content marketing 101 to boost credibility through a third party. But the report’s production was indeed paid for… so apply the appropriate salt tonnage. That said, the results do seem reasonable as noted.
Back to the geo-political dealings, a bill that could Ban TikTok in the U.S. has passed in the House of Representatives. President Biden has telegraphed that he will sign it if it makes it to his desk, leaving TikTok’s fate in the Senate. This puts TikTok closer to death than in any of its past political oscillations.
The broader question is what this could do for the U.S. ad economy, especially within social media spending. TikTok’s market entrance was impactful in terms of introducing more supply at a time when demand has retracted. The latter involves the same ad budget declines that are seen in any downturn.
So one result of a TikTok ban would be to benefit Meta, Snap, and a few others. Whether deliberately or not, social competitors will be ready for this day given the feature copying that has become accepted tradecraft in social media. In other words, be ready to see more Instagram Reels and YouTube Shorts.
