The uncertainty surrounding TikTok’s future in the U.S. has left advertisers split on their next move. Some are choosing to double down on the platform, while others are pulling out, causing ad prices to decline sharply. Cost-per-thousand impressions (CPMs) on TikTok plummeted by 80% from January 2024 to January 2025, according to adtech firm AdRoll.
While factors like competition and market trends play a role, the looming threat of a U.S. ban has significantly contributed to advertisers’ hesitation. Even though the ban was delayed by President Trump, the initial fear was enough to make many brands scale back or exit the platform entirely.
TikTok Ad Costs Drop as Brands Remain Cautious Amid Uncertainty
With fewer advertisers competing for placements, TikTok’s auction-based system has caused ad prices to drop significantly, making it a buyer’s market for those who remain. Several media agencies have reported varying degrees of CPM declines. At Jellyfish, TikTok ad costs have fallen by 30% to 35%, while Wpromote noted a 24.6% year-on-year decline.
Tinuiti observed an even steeper drop of 40%. However, TikTok’s global head of product strategy, Adolfo Fernandez, pushed back against the idea that brands have abandoned the platform, insisting that most advertisers have resumed their activity.
TikTok Ad Prices Plummet as Brands Adjust Strategies Amid Uncertain FutureThe drop in CPMs isn’t uniform across all industries. Wpromote recorded the most significant decline (66%) among consumer packaged goods (CPG) advertisers, while retail brands saw a 42% decrease. This variation suggests that advertisers in some sectors remain more cautious than others.
The uncertainty has led agencies like Hanson Dodge to advise clients to pause spending on TikTok before the January deadline. Many of those clients have yet to return, resulting in an overall decrease in spending compared to the previous year. Some advertisers remain hesitant to invest in the platform until its future is more certain.
Advertisers Weigh Risks and Opportunities Amid TikTok’s Uncertain Future and Lower Costs
Despite the challenges, some advertisers are taking advantage of the low ad costs on TikTok. Agencies like PMG and Jellyfish report that many of their clients have maintained or restored their advertising activity, capitalizing on the reduced competition. Tinuiti also noted that nearly all its clients who initially cut back have now resumed their spending, citing strong performance and high returns.
For brands willing to take the risk, TikTok remains an attractive platform, with many advertisers seeing significant benefits from lower CPMs and less crowded ad space.
While some brands are staying on TikTok, others are reallocating their budgets to alternative platforms. Meta’s Reels, YouTube Shorts, Snap Commercials, and Reddit Category Takeovers have emerged as popular alternatives. Agencies like Wpromote and Hanson Dodge have been shifting client spending towards these platforms, seeking similar audiences and engagement opportunities.
With TikTok’s fate still uncertain and an April 5 deadline looming for a potential sale or shutdown, its competitors are actively absorbing the displaced ad dollars, ensuring that brands have viable alternatives for their social media advertising strategies.
