TikTok wants more ad dollars, and has a new plan to get them

TikTok has an advertising problem. On Tuesday, the company launched a new plan to deal with it.

For years, home videos that function more or less like advertisements have received hundreds of millions of views on the app – and in many of those cases, TikTok hasn’t made a dime.

In June, singer Walker Hayes posted a video of himself dancing with his daughter to “Fancy Like,” his country pop song that highlights the restaurant chain Applebee’s name. The clip inspired copy videos and led to an Applebee TV campaign featuring the song.

Last year, Nathan Apodaca, a TikTok user who posts as 420doggface208, went viral with a clip showing him skateboarding while drinking Ocean Spray Cran-Raspberry juice with “Dreams” strains. by Fleetwood Mac. This video has racked up over 80 million views, and Ocean Spray showed its gratitude by sending Mr. Apodaca a cranberry red van filled with jugs of Ocean Spray.

TikTok Executives announced new initiatives intended to persuade businesses and advertising agencies to buy space on the app at its first-ever TikTok World event on Tuesday, a virtual presentation aimed at the marketing industry. The company said it was introducing an automated system to act as a sort of matchmaker, bringing together advertisers and content creators, giving TikTok a better opportunity to catch up with other social media companies that generated more ad revenue. important.

TikTok officially opened up to paid ads over a year ago, but many companies have remained wary of it. TikTok is the least trusted leading social media platform, behind Instagram, YouTube, Google and Facebook, although trust is growing, according to research by research firm Kantar of more than 900 marketers.

There are concerns about TikTok pushing young viewers to dangerous content, as well as a lingering distrust of the company’s privacy record. While the app sparked healthy follies involving sorority fashion, it also sparked vandalism binges and eating fads with negative side effects.

Half of the big brands, including Nestle and Audi, have no presence on TikTok, according to a recent review of 300 companies by research group WARC. Some companies cite a hangover from TikTok’s fight with the Trump administration in late 2020 over security and censorship issues involving its owner, Chinese company ByteDance. Others say they fear the Chinese government will start cracking down on the app, just as it recently placed limits on video games.

At Tuesday’s event, executives and content creators at TikTok discussed how the company plans to make its growing advertising platform safer, smoother and more extensive. In response to one of the advertising industry’s biggest fears – ads appearing alongside unsavory content – TikTok will begin scanning videos, audio clips and text for risk, executives said. , using technology and content moderators.

TikTok will also introduce features that businesses can use to control who they target with ads and how often those users see the ads. The new tools will also give ad managers a better idea of ​​how many people are likely to see their ads, allowing them to better gauge how far their budgets will go on TikTok, said Jiayi Cao, who heads TikTok’s product strategy.

“It’s old technology in a new medium, and it will be interesting for traditional agencies around the world to embrace it,” he said.

TikTok has been popular in the United States for less than five years, but it has spawned a cultural economy that includes coalitions of influencers, dedicated platform-only marketing agencies and, the company said this week, over a billion monthly users around the world.

Without the app, the musician Lil Nas X probably wouldn’t be a Grammy winner climbing the steps of the Met Gala in gold armor. leggings would not fly off the shelves, and trend watchers would have no trouble decoding what the “cheugy” aesthetic really means.

“Much of this virality comes from sharing users with other users,” said Jeremy Yang, assistant professor at Harvard Business School who wanted TikTok while he was a doctoral student at the Massachusetts Institute of Technology. “You’re more likely to share an influencer post with a friend than an ad posted by a business. “

Some companies are still looking to appear on TikTok, said Jordan Fox, head of advertising agency Laundry Service.

“While the tools are much better now than they were 12 months ago, they’re still evolving, and so are reports and data, probably,” he said. “This is no reason not to be present on this platform, but it is a reason to reflect on the budget allocation on this platform compared to others.”

When Blake Chandlee, president of TikTok’s Global Business Solutions, joined the company in 2019 after more than a decade at Facebook, the app only had a few dozen advertisers. Halfway through the pandemic, TikTok has become a serious competitor to television and other platforms, he said. Now he has hundreds of thousands of advertisers, he said.

Advertising is responsible for TikTok’s “lion’s share” of revenue, Chandlee said, adding that the company is also testing subscriptions and tips. And yet, TikTok generates less than $ 1.3 billion in annual ad sales in the United States, compared to $ 2.2 billion for Twitter, $ 2.6 billion for LinkedIn and $ 48 billion for Facebook and Instagram, according to the research firm eMarketer.

This year, the share of people exposed to ads on TikTok nearly doubled to 37% from 19% last year, according to Kantar, who surveyed more than 14,500 people in 23 regions.

The platform was considered to have the most entertaining ads, but more and more people complained about encountering too many of them on the app. As it tries to attract more paid ads, the company seems aware of the danger of breaking the flow of social media.

“We don’t want to interrupt the experiment,” Mr. Chandlee said. “We want people to look at an ad and say ‘It was amazing’, not ‘I watched this because it was in my feed.'”

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