Advertisers and agencies are waking up to the enormous marketing potential of TikTok just as the world's fastest growing social network was ranked as the most valuable platform for DTC brands. According to recent reports, the short-form video sharing app continues to outperform the Big 5 in terms of growth and RoI.
"TikTok is no longer the channel for teenage dance challenges as people tend to believe," says Vladimir Beštić, CEO and founder of Zaza Digital, a leading TikTok ad agency. "It has become the most powerful advertising channel because of its explosive user growth and high levels of consumer spending and engagement."
TikTok registered its billionth user last year, becoming the fastest growing social media network globally. The number of TikTok users is estimated to grow to 1.8 billion by the end of 2022.
TikTok is not just ideal for connecting to a younger audience. More than 55% of TikTok users are 25 years or older while 37.90% are 35 and older. This makes TikTok just perfect for advertising not just to Gen Z and Gen Y, but to a wider, high-spending and growing audience.
Coming to consumer spending, 37% of TikTok users have a household income of more than $100,000 and only 9.60% have less than $25,000.
The app raked up more than $3.7 billion in lifetime consumer spending until Q1, 2022. It is the highest grossing mobile app for the fourth straight quarter in a row as of Q3, 2022.
According to Statista, TikTok generated $4.0 billion in advertising revenue in 2021, a figure that is expected to double by 2024 and triple by 2026.
Besides being well paid, TikTok users are also highly engaged. Users spend an average of 45.8 minutes on the app per day. This puts TikTok ahead of all other social media networks including YouTube, Twitter, SnapChat, Instagram, and Facebook.
"The bottom line is that ecommerce DTC businesses cannot afford to ignore TikTok anymore," says Vladimir Beštić. "I'm not saying that Facebook, Instagram or YouTube don't work, but TikTok is much less crowded, which means you can create greater brand awareness and drive more revenues with lesser budgets."
D2C businesses are already warming up to TikTok advertising. Latest Insider analytics reported that D2C brands spent 231% more on TikTok advertising in the second quarter this year compared to the same period last year.
These numbers come after one of the most brutal quarters for other social media platforms like Snapchat who saw their share price decline by 25% in the face of three straight quarters of dwindling ad revenue. Meanwhile Meta cited "weak demand" and Twitter also suffered its worst performance yet.
So, why is the ad revenue decreasing on other social media networks and increasing on TikTok?
TikTok Ads are less expensive than other social media platforms, with a cost per thousand impressions (CPM) just above $6 versus $12.57 for Facebook ads.
Speaking on the mechanics of advertising on TikTok, Vladimir Beštić says TikTok is a different beast from Facebook and Instagram. The mantra on TikTok is not to make ads but "TikToks".
To be successful on TikTok, advertisers and agencies must work closely with TikTok creators to produce raw video content that they can then adapt into multiple ad variations. Agencies like Zaza Digital use a data-driven approach for creating engaging & high-performing video content for TikTok.
"We script, find the right creators to work with and do post-production to deliver highly engaging videos that compel your viewers to stop scrolling, visit your website and convert. We just published a list of profitable TikTok ad examples to inspire other brands wanting to get started on TikTok."