Lessons from an (almost) ban.
EDITION 10: INVEST ON PURPOSE
Unless you’ve really avoided the news, this past weekend you probably heard about TikTok getting banned. It was gone for a matter of hours and had people panicking, from those who casually consume funny videos to those whose businesses rely on the platform. For today’s purposes, though, I want to focus on the market impact of what’s going on here.
Did you know…
In just four years, TikTok's U.S. advertising revenue grew from virtually nothing to being estimated at $10 billion in 2024, capturing advertising dollars from tech giants like Meta and Google. TikTok represents about 10% of Google's annual ad revenue and 15% of Meta's and generates more ad revenue than X (Twitter) and Snapchat combined.
This rapid growth demonstrates both the platform's effectiveness and the potential vulnerability of established players. But, if TikTok is banned, it is estimated that 80% or 90% of TikTok’s ad revenue would go back to Meta and Google.
To make sure we’re all on the same page, let’s quickly define what ad revenue means. Ad revenue is the income you can earn from advertisements being seen on your websites and platforms. When the visitors to your website, or viewers of your content click on, or experience the advertisement, you often receive payment for that.
So you might be thinking, as an investor, why should I care about ad revenue? Let’s dig in.
Imagine this…
You're sitting in a marketing meeting at a major U.S. corporation in March 2024. Your team has just allocated $50 million to TikTok advertising for the year, betting big on reaching younger consumers. Then the news breaks about the potential ban. Like thousands of other companies, you're witnessing a seismic shift in the digital advertising landscape – and the market's reaction is immediate and dramatic.
You spend the next several months playing a waiting game and making contingency plans to revise your entire digital marketing strategy. The ripple effects start showing up in the stock market.
Welcome to the Power of Too Few…
The TikTok situation exposes a critical vulnerability: extreme market concentration. While Meta's stock jumped 3.7% and Snap rose 8.3% as the ban deadline approached, this seemingly positive reaction masks deeper risks. Just three companies control three-quarters of all digital ad spending, creating an oligopoly where costs keep rising, algorithm changes can destroy business models overnight, and a single regulation can disrupt entire industries.
This concentration creates a paradox: while the stock market rewards the major platforms with higher valuations, it simultaneously signals increased systemic risk. When TikTok emerged, it briefly disrupted this oligopoly, capturing billions in US ad revenue and forcing innovation from incumbents. Its potential ban threatened to further consolidate power among the remaining giants.
How to apply this…
The TikTok ban offers a powerful lesson: over-concentration isn't just a problem for advertisers—it's a risk for your investment portfolio too. It highlights the need for diversification in your investments. This is where BeeCene comes in. By investing in women-owned businesses, BeeCene offers a way to diversify beyond the giants to build a more resilient, inclusive economy that benefits everyone.
Here's how to think about this strategically:
Diversify across sectors: While it's tempting to buy shares in Meta or Google as they would benefit from TikTok's ban, consider this: by solely investing in public market tech giants, you're reinforcing the same concentration risk that made TikTok so disruptive. Instead, consider diversifying through:
Early-stage innovative private companies
Independent creator economy platforms
Investment platforms like BeeCene, which make investing in non-tech private businesses more accessible
Play the long game: Private market investments can provide stability and steady growth. They offer:
A way to reduce volatility compared to public markets
Opportunities to support more equitable, diverse economic growth
Investment vehicles like private credit, which offer steady returns without the long lock-up periods typical of private equity or VC funds
In summary…
While the TikTok ban threatens to further concentrate digital advertising power among a few tech giants, it also highlights the opportunity for innovative solutions that democratize investing and business growth. Just as market concentration poses risks in digital advertising, it mirrors broader economic challenges. Platforms like BeeCene demonstrate how investors can participate in building a more resilient economy while earning steady returns.
By investing in diverse opportunities, we can help create a more stable and equitable financial future. Want to be part of this shift? Be sure to follow BeeCene on Instagram and LinkedIn for updates and be among the first to access our upcoming platform.
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This newsletter is for informational purposes only and should not be considered financial advice.
Sources
https://finance.yahoo.com/news/snap-meta-stocks-jump-tiktok-170232363.html
https://www.indeed.com/career-advice/career-development/what-is-ad-revenue
