Even as marketers continue to scrape dollars back wherever they can, whether that be from TV or Facebook, they can’t stop pouring money into TikTok. Why, exactly? TikTok continues to dominate people’s attention and that will always be a big draw for advertisers no matter what the economical conditions.
“Between the first three quarters of 2022 and the final one, we saw ad spending on TikTok rise 20%,” said Ben Allison, head of media operations at VaynerMedia. “It’s still early this year to say for sure, but anecdotally we see this trend of investment in TikTok continue to increase with quarterly comps expected to grow at least for the duration of this year.”
“TikTok makes up about 25% of the social ad budgets,” said Brendan Gahan, chief innovation officer at digital marketing agency Mekanism. “Since 2020 it’s grown pretty steadily. Each year it’s grown around 50% year over year.” Considering that 2019 marked the first ever branded hashtag on TikTok for this agency, that’s some huge growth.
Rob Jewell, chief growth officer at Power marketing agency Power Digital, a tech-enabled growth marketing firm, which works for clients such as Procter & Gamble, Uniqlo and Casper, also makes a hugely interesting observation. “While TikTok accounts for less than 10% of total spend for our marketing firm, it has more than doubled year over year […] We anticipate a similar growth trajectory in 2023 as the channel keeps attracting more advertisers eager to scale their TikTok efforts.”
What seems to be working for many brand advertisers these days is to run TikTok ads in conjunction with influencer marketing. So they use paid ads to essentially boost content they think could, or is, getting traction among users. Estee Lauder said as much last year, as did Pepsi the year before that.
Granted, TikTok isn’t (yet) as big an investment for these advertisers as Facebook or Instagram. But where advertising on those platforms is slowing (and in some cases in actual decline), the complete opposite is happening on TikTok. This is because more often than not the money that would’ve gone to those platforms is now going to TikTok. And it’s not hard to see why. Marketers get a sound on, full screen video ad opportunity when they advertise on the app, which effectiveness research shows is most impactful. That’s a world away from advertising on Facebook, Instagram and even Twitter where that sort of efficacy is hard to come by with video ad formats that aren’t as intrinsic to the wider feeds. Put another way: TikTok’s growth is coming at the expense of its more established counterparts.
To clarify, the amount of ad dollars spent on TikTok is nowhere near what’s getting dropped on Facebook and Instagram. Last year, the short-form video app raked in around $10 billion in revenue. Facebook did nearly triple that ($27.7 billion) in its last quarter. Then there are those worries that TikTok has become a new habitat for manipulated videos and photos. To say nothing of the fact that as a pure advertising channel, TikTok doesn’t have the efficiencies performance advertisers crave. Part of it has to do with the maturity of their algorithm and the ability to identify the right customer within the audience to help serve the ads.
From a growth perspective, this app is not to be ignored. Only 18 months ago was it considered by many marketers as more of a niche channel where young people went to watch quirky dancing videos. Now, not only is the app more mainstream with more than 850 million users worldwide — 40% of whom aren’t on Facebook — people are going there to do a lot more than watch random videos. Yes, they still do that, but they’re also shopping, watching the news and even using TikTok as a search engine. TikTok is not an app to be slept on.
