Despite being less than half a decade old, TikTok touts hundreds of millions of users, making it one of the most popular social media networks in the world. Still, with its lower U.S.-adoption and new political troubles, marketers haven’t quite jumped at the idea of utilizing it for advertising just yet.
According to a report published by social media agency We are Social and social media management platform Hootesuite, Chinese-based TikTok has more than 800 million users, making it the seventh most popular social media platform in the world. However, most of those users—over 60%—reside in China, where the app is known as Douyin. Just under 70% of TikTok’s 800 million users fall in Generation Z, and 90% of the time spent on the app is from users based in China and India.
This many users—particularly those in the younger generations—makes TikTok valuable to retailers, says Mary Ann O’Brien, founder and CEO of OBI Creative, a strategic communication, research and advertising agency.
“I like TikTok not just because of who they are targeting, but because of the influence millennials [and Generation Z] have on their parents,” O’Brien says. “TikTok has a kind of double effect. [Younger generations] are engaging on that platform, but then they are influencing their parents and friends.”
But retailer adoption of TikTok still seems to be lukewarm. This could be because of its limited advertising options. Only recently has the platform began implementing new business tools for brands and retailers.
In June 2020, the social media company launched “TikTok for Business” with the intention of using the portal as a home for brand marketing. As of publication, TikTok only has one option for ecommerce and a few for interested marketers, and they’re not all straight forward. For instance, advertisers used to have to go through a TikTok advertising representative to place an ad, causing confusion for those unfamiliar with the platform and used to the self-service platforms available on Facebook, Twitter and Instagram.
Now, marketing professionals can create an ad through TikTok’s “create a campaign” feature, but they must first register a business account. And, according to a leaked TikTok pitch deck Adage published, advertising can get expensive, with in-feed videos costing $25,000 and six-day hashtag challenges $150,000. However, self-service advertising campaigns—which allow advertisers to set, program and manage their own advertising content instead of going through a representative—have a minimum budget of $500 per campaign, and $50 at the ad group level. This feature only became available in July 2020, though.
In addition to ad campaigns, hashtag challenges and in-feed video ads, retailers can also advertise on TikTok with: brand takeovers, branded lenses, working with influencers, and creating a custom package that includes sponsored content and more.
Only 5% of retailers surveyed currently advertise on the social media platform, ahead of only Snapchat at 4% of retailers, according to a May/June 2020 survey of 105 retailers by Digital Commerce 360.
Adding to the hesitation of advertisers engaging with TikTok is its new political entanglements. TikTok’s ties with China have resulted in scrutiny by the Trump administration.
In early August, President Donald Trump issued an executive order imposing limitations on Chinese social media apps, with an expressed interest in banning TikTok. According to the order, TikTok’s parent company, ByteDance Ltd., uses the social channel to collect the location, browsing and search data of its users—something the current U.S. administration deems a threat. A potential ban would begin 45-days after the Aug. 6 executive order, placing the ban in mid- to late-September.
But complications have arisen. The U.S. administration initially declared a U.S. company could purchase TikTok to avoid the ban. Soon after the executive order, ByteDance Ltd. began talks with Microsoft Corp., Walmart Inc. and Oracle Corp. to buy the platform, with Microsoft and Walmart teaming up to make a combined offer. But the Chinese government responded by placing restrictions on exporting artificial intelligence technology, including that of social media apps like TikTok.
If no deal is brokered, it’s unclear what a TikTok ban would mean for U.S. advertisers.
Newegg, a computer and technology retailer that also offers business and staffing services, is one retailer which currently has a TikTok account, but doesn’t use paid ads or influencers, says Marina Berber, director of staffing at Newegg.
“The process if very organic,” she says. “We simply come up with fun ideas and we post roughly once per week. We also share our TikTok profile and other videos via the Newegg Staffing website and other social media platforms.”
Instead of using the social media platform for business-to-consumer purposes, Berber says Newegg uses TikTok to target job seekers and employers who might want to use the staffing services Newegg offers. However, return on investment with the social media platform is difficult to quantify, she says, but Newegg’s efforts have been perceived as successful.
“We were surprised to hear about the potential TikTok ban,” Berber says. “Since we started using the platform in the June timeframe, we reached our first milestone of achieving 10,000+ views on one of our videos, and we’re steadily increasing our number of followers.”
A potential ban might hinder some of the audience Newegg is trying to reach, but its overall marketing strategy wouldn’t be severely affected, Berber says.
“A TikTok ban would certainly hamper our efforts to reach viewers in the U.S. via TikTok, but our broader marketing plan utilizes a diverse range of tools and platforms, insulating us from the detrimental effects of a possible TikTok ban,” she says.
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Consumer adoption and use of TikTok echoes these sentiments, as only a small percentage are using the app for shopping, according to a recent survey by Bazaarvoice of 4,500 North American consumers in mid-June.
Of those surveyed, only 12% said that they shopped on TikTok, compared with 54% on Facebook and 84% on Instagram. However, 33% of those that have recently tried a new social media platform started using TikTok followed by Twitter at only 6%. Furthermore, 24% of respondents said that they were using TikTok to escape/for entertainment during the lockdown, and 33% of consumers said that they have increased their usage of TikTok during the coronavirus pandemic.
Should a TikTok ban take effect mid- to late-September, retailers that spend ad dollars on the social media platform need not worry, says O’Brien. Something will take its place.