Several factors could be at play — weak demand, stiffer competition — but it’s hard to ignore the elephant in the room: the U.S. ban that was supposed to take effect in early January. Though ultimately delayed by President Trump, the mere threat of a ban was enough to rattle marketers, forcing some to scale back and others to walk away entirely.

Either way, the hesitation has translated into cheaper ads for those still in the game. With fewer advertisers bidding for placements, TikTok’s auction-based system drives prices down, making it a buyer’s market for those still looking to advertise on the platform.

At media agency Jellyfish, evp of paid social Shamsul Chowdhury told Digiday that TikTok CPMs have fallen 30% to 35%, to as low as $4. Deanna Mulkeen, head of media investment at agency Wpromote, said it had recorded an average year-on-year fall of 24.6%. Meanwhile, at media shop Tinuiti, senior social innovation director Jack Johnston said the agency had recorded a 40% average year-on-year decline in CPMs, as of last Friday (March 14).

Adolfo Fernandez, global head of product strategy and operations, commerce, at TikTok, declined to comment on the AdRoll report, but told Digiday that brands have not abandoned the platform. “From my vantage point, I can tell you that’s not the case. [The] support has been coming. We have almost 100% of the brands previously on TikTok in the U.S. back online,” Fernandez said.

That may be true from where he’s sitting, but the ad declines can’t be ignored.

The fall in CPMs is mostly likely due to falling demand, according to PMG director of paid social Danielle Schultz. “The assumption is that competition is just lower,” she said.

There’s some variation in CPMs, owing to different levels of demand across client categories. Between March last year and March this year, WPromote detected the largest fall (66%) among its CPG clients, while retail advertisers saw a drop of 42%.

“TikTok’s future remains a question mark for some clients, with concerns about a potential ban causing hesitancy to test new ideas,” Mulkeen said in an email.

Indie full-service agency Hanson Dodge recommended that clients pause their spending on the short-form video service prior to the January ban deadline. Typically, the platform had accounted for 15% to 20% of its clients’ paid social spend. The clients that took that recommendation haven’t yet revisited the platform, according to executive media director Jeremy Whitt.

“Overall we’re seeing less spend with TikTok than last year,” he said in an email.

Low prices present an opportunity

While the uncertainty over TikTok’s final destiny is clearly enough to keep some advertisers at arm’s length, some are determined to take advantage of low prices. The app’s usage levels, after all, appear to have returned to normal following its brief disruption of service and exile from smartphone app stores.

At PMG, Schultz said her clients had maintained the cadence of their activity on TikTok, while benefitting from lower CPMs. “If the advertiser is comfortable being on TikTok, we are comfortable being on TikTok,” she said. “Contingency plans are in the works, but as of right now, investment levels are pretty unchanged.”

Chowdhury said that five out of the six Jellyfish clients spending on TikTok prior to the January ban deadline had restored their investments. “We’re pretty bullish on it,” he said, adding that the absence of other advertisers had “made it a lot cheaper to be in market.”

Similarly, Johnston said that following a mild 5% to 10% cut in spending in the weeks on either side of the January ban deadline, “nearly 100% of Tinuiti’s clients had restored their spending levels on the app. “It’s performing super well right now, and advertisers are seeing great return,” he said. “Why not continue to lean in there?”

Where else is spend heading?

TikTok’s immediate crisis was deferred back in January, when the platform was given until April 5 to sell or close up shop in the U.S.

Since then there’s been very little clarity on how its future will be resolved. Vice President JD Vance indicated this week that TikTok’s status is likely to be resolved one way or the other, rather than a further extension being granted, according to Reuters. Vance has played a central role in what may be the concluding act of the TikTok ownership drama.

But the brands pulling back from TikTok aren’t banking the savings — they’re reinvesting them elsewhere.

According to Wpromote’s vp of paid social Darren D’Altorio, his agency’s clients are diverting that cash into Meta’s Reels, YouTube Shorts, Snap Commercials and Reddit Category Takeovers.

They’re not direct analogs, but he said the agency is “exploring where we can redirect client dollars to take advantage of similar audiences, communities and creative ad products across the social ecosystem.”

Whitt said Hanson Dodge’s clients have also redeployed budgets across Snap, YouTube and Reels. “The strategies on those other platforms were similar, and most clients didn’t hesitate to shift dollars towards high-performing ‘comparable’ areas,” he noted.

Clearly, TikTok’s rivals aren’t waiting for the chips to fall — they’re making sure those ad dollars land in their pockets instead.

https://digiday.com/?p=572311