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TikTok's Land Grab - Should Advertisers be Flocking to Gen Z's Favourite Platform?


TikTok has introduced a new suite of new tools aimed at encouraging brands to make greater use of its platform as an advertising and marketing channel. At first glance, the establishment of an open and transparent creator marketplace provides an opportunity for brands to draw on the talents of a large and increasingly professional community of influencers and ambassadors. But this is a very different environment from the familiar shores of Instagram and YouTube. So should brands be approaching the TikTok challenge with a certain degree of caution?

In September of this year, TikTok for Business announced the launch of a new marketplace designed specifically to help businesses of all sizes to collaborate more effectively with creators.Dubbed - perhaps not surprisingly - the TikTok Creator Marketplace - the tool offers a means to not only find creators but also assess them in terms of their track record on the platform. Potential advertisers can filter video makers in terms of the type of content they produce, the audience they reach, location and average views. Importantly,creators can be contacted and hired through the marketplace or via a group of selected MarketPlace Partners, such Captiv8, Influential and Whalar.

Anna Buglakova, Chief Product Officer of video editing app maker Vochi has already used the marketplace and is impressed by the transparency it offers. ,,We work with creators a lot," she says. ,,The market gives us access to the whole base and you can see all the metrics. I wish we had the same kind of access on Instagram.''

In addition to the marketplace itself, TikTok has introduced a "spark" facility that effectively turns organic content into ads that can be boosted to reach a wider audience. In order to maintain transparency, a brand toggle allows creators to label content as sponsored.

All this is probably good news for creators, who can look forward to being contacted more regularly by businesses who have checked them out via the marketplace. But for advertisers and marketers, there are some fundamental questions to ask. Globally, the platform has about 1 billion active users per month and while that is impressive it is still some way behind Facebook and YouTube, which each have more than 2 billion. And while TikTok advertising budgets are rising, spending is thought to be much lower than on the other major social media platforms.

So brands have choices to make. Focus on the tried and trusted platforms or experiment with TikTok.There are some compelling reasons for using the platform. For one thing, it has a committed audience. TikTok's own statistics suggest that users spend more than 50 minutes a day viewing content. It's also an active audience, with 83 per cent of users having posted a video.

Hashtag Challenges
Higher than average upload opens the door to a marketing strategy that has already proved highly successful - namely the "hashtag" challenge." For instance, earlier this year, FTSE-100-listed UK Accountancy Software company Sage invited its customers to post videos advertising their own businesses under the hashtag Bossit21. The idea was that small business owners would show how their companies were thriving, despite the Covid Pandemic. As part of the campaign Sage also took over the TikTok home page for a day. The result was a win/win. Over one million videos were posted, attracting more than 5 billion views. Because Sage publicised the campaign and took over the TikTok home page to raise its profile, businesses had a chance to reach a sizeable audience with their own videos. Meanwhile Sage deepened its engagement with its own customers.

But were the videos reaching the right audience? ,,Sixty one per cent of new businesses are created by people aged 18-34," Sage's VP of Marketing Kirsty Waller told me. ,,Demographically speaking, Tik Tok holds the promise of genuine peer-to-peer engagement.''

Harvey Morton, founder of social media consultancy Harvey Morton Digital agrees the demographics make sense. ,,The platform's user base is mainly teenagers and young adults so that makes it great for businesses who are targeting young people," he says.

The Intermittency Problem
But there may be a problem. The TikTok audience is not necessarily receptive to branded or sponsored content and nor can the previous performance of creators provide much of a guide to their ability to attract viewers on any given day. You could call it the intermittency problem. An Instagram influencer with a large following can usually be relied upon to generate a consistent number of views. On TikTok, a creator might get a million views today and a tenth of that figure tomorrow.

Certainly, that's been the experience of Ben Pawson, founder of Cadence Talent, a UK agency that connects creators to brands. As he sees it, organic content tends to do better than its branded counterpart. That's partly because users have a tendency to swipe past obvious ads but also because of the platform's bias towards all things organic. ,,We did something with the games company Fortnite and only got 20,000 views," he recalls.

That's something that has been addressed in part by the Spark feature introduced by TikTok. ,,You can boost the views," says Pawson. ,,That's something that a lot of advertisers don't know about at the moment. The boost is very specific. You might choose half a million for the Philippines for £50 or the same number in the UK for £500."

A Level Playing Field
Harvey Morton, argues that the TikTok algorithm can actually be helpful in that creates a kind of level playing field in which all content has a chance to find an audience.,,Tik Tok gives every video a fair chance to show on the view page. It shows it to a small audience first and even if you have zero followers on Tik Tok, if your video performs well with that small group, it'll continue to push it out to more people. If that works, it'll just keep growing further and further so the really good thing about the platform is everyone has an equal chance of doing well," he says.

But the numbers will only grow if the content is right for the audience. Kirsty Waller stresses the importance of creating content that is appropriate for the targeted subset of TikTok's user base. In the case of Sage's Hashtag Challenge, that meant encouraging participants to create content that would engage potential customers. ,,We asked them to tell their business stories," she says.

Morton agrees. ,,Stories are more likely to go viral than dances, particularly stories that people can find really useful. One thing that's really beginning to take off on Tik Tok lately is careers advice and job guidance," he says. In other words,content that is useful or inspiring does better than videos that pander to a preconception of what the audience wants to see. Morton adds that videos should engage from the start. Attention spans are short.

Buglakova has also encountered the problem of users turning off from branded content. Vochi's goal is to sell video editing software created in Ukraine into markets such as the US and influencers can play a huge role in raising awareness. But one-off endorsements don't necessarily work. Instead, Vochi asks creators to create a series of TikTok's over a number of weeks to establish a real connection with the brand.

Equally important, the brand, the influencer and his or her audience should all be pretty much in sync with others. There is little point in hiring a fashionista to endorse enterprise software.

Counting the Cost
In theory at least, TikTok can deliver on a range of metrics including conversions, but there's general agreement that, as things stand, it works best as an engagement and/or awareness-raising tool.,,By and large brands are looking for views," says Pawson. The key metric is CPM and as Buglakova points out, an influencer doesn't necessarily have to have millions of followers or average views to deliver a satisfactory outcome in terms of cost per thousand.

And according to Pawson, TikTokers are much cheaper to hire than their counterparts on Instagram or Youtube. He cites the example of JD Sport. ,,They paid only £6,000 for someone who has five million followers."

In that respect, TikTok is a cost-effective option- Pawson estimates that CPM is four times more expensive on Instagram -and as such, it is a space where advertisers can experiment with a dynamic creator community. Rates start at around $10 per CPM for in-feed ads and content but brands will pay a lot more to place a hashtag challenge in the discovery section of the platform or for a brand takeover. A recent Bloomberg report put the cost of a home page takeover at $1.4 million in the US.

TikTok success depends on matching brand ambitions with appropriate content. The key to achieving that may be the creation of launch of a relatively transparent creator marketplace. 

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