TikTok and ATT

The FT this week reported that TikTok has reduced its worldwide revenue targets by at least $2BN, from between $12-14BN to $10BN. From the piece:

Targets were cut by 20 per cent in late September by TikTok chief executive Shou Zi Chew in a virtual “all-hands” meeting, according to four people familiar with the move. TikTok originally projected revenues between $12bn and $14.5bn this year, but actual revenue is now believed to be closer to $10bn, these people added.

TikTok is a convenient scapegoat for many of the current revenue headwinds confronting social media platforms, but it likely is experiencing those same headwinds. TikTok operates the same “hub-and-spoke” structure of digital advertising that both Meta and Snap utilize, which means Apple’s App Tracking Transparency (ATT) policy has created friction for it as well.

I’ve argued that the companies most impacted by ATT have downplayed its commercial impact because it represents a systemic, permanent drag on their businesses, instead blaming the vague apparition of “macro headwinds.” My sense is that TikTok is another bogeyman that is used in this way, especially as many companies rush to emulate its short-form video product. The fact that TikTok also faces revenue headwinds invalidates the narrative that TikTok is solely, or in the main, responsible for the misfortune of other social media platforms.

If TikTok was primarily responsible for the revenue adversity faced by other social media companies, its own revenue would account for that. Instead, the company is revising its revenue target down for the year, indicating that it has faced the same recent obstacles as its peers. And other large advertising companies that aren’t materially or at all impacted by ATT thrived over the past quarter, such as The Trade Desk, which saw 31% year-over-year growth, and Publicis, which raised its Q4 guidance. If TikTok isn’t siphoning revenue away from the social media platforms and is instead facing headwinds, and the areas of the advertising economy that are insulated from ATT are not struggling, then dismissing or minimizing ATT’s role in the inhospitable advertising environment is difficult.