How TikTok’s advertiser base is set to change

How TikTok’s advertiser base is set to change

By David Price, Managing Director, The Grove Media

TikTok has been the runaway success of the digital world. It’s reshaping the landscape and influencing how its competitors behave and go to market.

After just four years, TikTok passed the one billion user mark, it has been the world’s most downloaded app since early 2020, and its revenues are predicted to reach $12bn this year, rising to a massive $23bn in 2024.

The TikTok algorithm is arguably leading the way with its ability to curate content. TikTok can measure view time on a video, assess whether you reacted to it, saved or shared it, and many other factors, enables the platform to line up video after video for users. And it works. According to Statista, US TikTok users average 858 minutes per month on the app.

But as TikTok matures, speculation is shifting to whether the platform will go the way of Facebook in terms of advertiser profile. Today about 75% of Facebook’s ad revenue comes from SMEs. TikTok doesn’t release this data, but we can safely assume that its revenue from SMEs is nowhere near this.

But it’s clear TikTok is now gearing up in a big way to attract the SME market, with separate teams and initiatives to build this side of their business. TikTok has launched a small business resource centre that houses case studies, creative resources, ad templates etc. And earlier this year they released research in conjunction with Hello Alice – an organisation dedicated to promoting small businesses – into SMEs and their use of social media.

TikTok claims that of those SMEs that have used the platform, 78% plan on increasing investment. They’ve also launched a further initiative – ‘Follow Me to TikTok’. This is a virtual network of small business, TikTok professionals, content, and resources. Cleary another indication of their serious play for this lucrative sector, in terms of overall volume of spend.

So the big question is, will TikTok succeed in its bid to attract significant spend from SMEs. Given their runaway success to date, it’s hard to believe they won’t made significant inroads into the small business sector. And while a sizeable chunk of the SME is understandably hesitant – and in some cases clueless – about TikTok, things are clearly moving in the right direction.

 TikTok’s audience demographics are broadening out, making the platform more attractive to a much bigger pool of potential advertisers. A common – and fair – perception of TikTok is that it predominantly attracts younger users: the prime UK demographic is 18-24. However older demographics are now being attracted to the app – in the US, 22% of people aged 30 – 49 have used TikTok.

There’s also evidence from the US that TikTok is attracting more affluent audiences. Data from Pew research suggests that ‘more affluent households’ are 20% more likely to use the app. UK users stand at approximately 17.5m, so scale is significant, and e­ven if percentages of older audiences are smaller, they’re growing, and are still significant in numbers. Total user numbers are forecasted to be at over 20m by 2025 – this cannot be ignored by SMEs.

Nevertheless, there are several key factors that will help to drive both understanding of and investment in TikTok by SMEs. Firstly, there’s ease of access. One of the most common reasons cited by businesses who are not using the platform is that they find it too complicated. So TikTok will need to work on this and learn from the many over complicated platforms that have gone before them.

TikTok will need to maintain low cost of entry. Spark ads – the equivalent of Meta’s promoted posts – are designed for small businesses and advertisers with lower budgets looking to undertake promotional activity.

Publicising their small business resource centre and the tools available within it, will be key for TikTok to win over small business. These are some of the goodies on display: ‘Quick Optimisation’ which enables production of large batches of creative or easy video reformatting, ‘Smart Video’ blends video and image content into more slickly produced edits,  ‘Smart Video Soundtrack’ matches video with free copyrighted music and ‘Creator Marketplace’ allows businesses to connect with creators in their sector.

Following Google’s lead, TikTok needs to embrace SME outreach and have accessible marketing and tech support approach. Google are now proactively approaching smaller businesses with offers of support and advice on how to improve their presence and performance on their platforms. Simply encouraging small businesses to create a TikTok account is an important move in the right direction – a lot of UK businesses have not yet taken this step, and our experience is that there is a surprising amount of inertia in this sector.

And the revenue from SMEs is not just restricted to advertising, but extends into ecommerce. Last year, the platform launched TikTok Shop in the UK – a new shopping feature which enables businesses and creators to showcase and sell products directly on TikTok through in-feed videos, LIVEs and via a product showcase tab. According to the platform, 79% of UK users discovered new brands through TikTok, although there have been reports that live-stream shopping has not been a roaring success.

For SMEs looking to take advantage of TikTok, there are several key things they can do now. Set up a business account, start posting and begin to generate a follower base. This open up access to wider features like additional engagement solutions, real-time tracking and trends. Add a TikTok pixel to your website and set up event tracking for specific on-site events such as sales, leads etc. Add the TikTok logo to your website if you’ve not already, alongside your other social media clickable icons

Small business should then start to create TikTok suitable content to drive organic presence. Experiment – your posts will improve over time. Use the tools made available by TikTok and dive in the cases. And test your way into an advertising strategy – maybe start with Spark Ads and expand from there, according to budget.

This article appeared in The Media Leader, link below