By Sheila Dang
(Reuters) - TikTok is preparing advertisers for a possible ban of its app in the United States, ad buyers said, offering refunds for ad campaigns that are unable to run.
The short-form video app's advertising business is still nascent. TikTok's anticipated $1 billion in 2020 revenue is a small fraction of its Chinese owner ByteDance's overall sales. But TikTok has become a popular place for brands that aim to reach the app's young tastemakers, who flock to it for lip-syncing, dancing and comedy sketch videos.
TikTok said it will continue to honor planned ad campaigns, refund any that it can't fulfill and would also work with major influencers to migrate to other platforms in the event of a ban, said Rob Pearsall, senior vice president of biddable media at ad agency Havas Media, referencing a memo the agency received from TikTok Friday morning.
President Donald Trump signed an executive order on Thursday that would ban U.S. transactions with TikTok and WeChat, the Chinese-owned messaging app, beginning Sept. 15.
"We’re committed to being a trusted partner to brands, agencies and marketers as we build TikTok for the long term. TikTok will be here for many years to come," Blake Chandlee, TikTok's vice president for global business solutions, said in a statement.
Some advertisers are forming contingency plans and considering other apps to move their marketing budgets.
Photo-messaging app Snapchat (N:SNAP) is one option for advertisers that need to reach TikTok's younger audience, said Meghan Rao, account director at ad agency HYFN, a unit of Nexstar Digital, which counts New Balance and Macy's (NYSE:M) as clients.
Contingency planning for one client that planned to advertise on TikTok is expected to begin on Monday, Rao said. She declined to name the brand.
One popular form of advertising on TikTok is a hashtag challenge, where users post videos about a brand's product. Since sponsoring a hashtag takes advance planning, Havas and its clients are likely to put a pause on those ads, given the looming Sept. 15 deadline, Pearsall said.
Brands have also started asking whether they should be on TikTok rivals such as Triller and Byte, which has seen downloads jump in recent days, said an ad agency director who declined to be named.