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TikTok Leaves Ad Money on the Table for Facebook


Jan. 1 2020, Updated 9:37 a.m. ET

Digital advertising space has become highly competitive. In particular, market leaders Facebook (FB) and Google (GOOGL) are under immense pressure. In the case of Facebook, rival TikTok is both poaching its talents and advertising clients, thereby posing an existential threat.

Even with intensifying competition in digital advertising market, there is a segment of the market where Facebook is having a field day: selling political ads. Many of Facebook’s major competitors decided to stop selling political ads or restrict their participation in that space. And with that, they leave money on the table for Facebook.

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TikTok and Twitter ban political ads, bucking Facebook’s stance

Hoping to stay away from controversies, TikTok and Twitter (TWTR) banned political ads on their platforms. TikTok explained that political ads do not fit with the standards of its platform. So, it decided to avoid them. Twitter stopped accepting political ads last month. In exiting political ads market, Twitter argues that political popularity should be earned, not bought.

Unlike TikTok and Twitter, Facebook sees no problem in selling political ads. However, Facebook has come under fire for running political ads with disputed facts.

Spotify joins political ads ban bandwagon

Also, Spotify (SPOT) joined the list of digital platforms that won’t compete with Facebook for political advertising dollars. The music streaming giant will not sell political ads in the US in 2020, AdAge reported Friday. Bernie Sanders, who wants to legalize marijuana, is one of the 2020 presidential candidates who has run ads on Spotify.

Google, like when Facebook came under fire over political ads, decided to restrict its participation in that business.

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$9.8 billion up for grabs for Facebook in 2020 politics

The decisions by TikTok, Twitter, and Spotify to avoid political ads and Google’s move to reduce its role in the space mean Facebook now faces limited competition in its pursuit of 2020 elections ad dollars.

With billionaires Mike Bloomberg and Tom Steyer in the 2020 presidential race, political ad spending is expected to hit record highs. According to Hollywood Reporter, 2020 political ad spending will hit $9.8 billion, an all-time high, across digital and traditional channels.

Facebook expects political ad sales to add about 0.5% of its revenue in 2020. Wall Street projects Facebook will make $85.8 billion in revenue in 2020. Thus, Facebook looks to be on course to make $430 million in political ad sales next year. Notably, Facebook provided its political ad sales estimates before Bloomberg joined the presidential race. Now, Bloomberg is outspending rival presidential candidates in political ad purchases.


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