From viral dances and lip-sync videos to trending challenges and makeup hacks, TikTok has reimagined the limits of user-generated content. Fast, fun and engaging, the wildly popular video app serves up bite-sized content to more than 1 billion monthly active users. With such tremendous usership, TikTok has astronomical potential for advertisers. Now, the social media giant has slashed ad prices and made the platform even more enticing to brands.
It’s all part of a bid to drive growth and siphon business away from rivals like Meta, Twitter and YouTube. With consumer spending down, inflation on the rise and marketing budgets being tightened, the move couldn’t have come at a better time.
The strategy is clearly working, with advertisers confirming low advertising costs, high engagement levels and excellent ROI have spurred TikTok advertising spends. Want to know more?
Read on as we take a deep dive into the advent of TikTok, what makes the platform such a powerful advertising tool, and why there’s never been a better time to ramp up your TikTok ad spend.
A brief history of TikTok
TikTok first lit up screens in 2016 when it was launched by Chinese entrepreneur Zhang Yiming. While it had a good national following and enjoyed quite a bit of success with British teens, it was ultimately the COVID-19 pandemic that sparked dramatic growth. Suddenly, tween dance videos and cheeky pranks weren’t the only themes dominating TikTok feeds.
Around the world, people lapped up videos of NHS workers performing choreographed dances, healthcare workers playing the piano during shift breaks and doctors debunking COVID myths. Celebrities used TikTok to offer a glimpse of their lockdown routines and everyday users started to share everything from quarantine survival tips to easy at-home recipes and clever gardening hacks.
“Diversity in content, and the kinds of creators that were creating content on the platform went from pretty simple offerings to diversity around cooking and DIY and education,” explains Blake Chandlee, VP of Global Business Solutions at TikTok.
“And we had these amazing creators just tell inspiring stories all year long and that just continued, which then led to the adoption of the platform for a variety of audiences,” adds Chandlee in a podcast published by Variety.
Crunching the numbers: TikTok vs other socials
TikTok is now owned by Chinese tech giant ByteDance and first introduced ads to the platform in 2019. Despite incredible growth over the past few years, the company has made a landmark move to slash advertising costs.
A recent report released by New York-based media agency VaynerMedia in the Financial Times reveals the extent of TikTok’s discounts. In 2022 the cost of gaining 1000 impressions via TikTok video ads was almost 50% less than obtaining the same number on Instagram Reels. Meanwhile, advertising on TikTok was around 30% cheaper than Twitter and 60% less than Snapchat.
A changing of the guard
Advertisers have been extremely responsive to the lower costs, with VaynerMedia reporting a boom in TikTok spends in the last quarter of 2022. And yes, this cash is coming directly from budgets that would otherwise be allocated to competitors like Instagram and Facebook. Advertising spends aren’t necessarily on the rise. Cash is simply being redirected to other platforms.
“On the whole we continue to see the movement of dollars from traditional channels into online channels so the pie for TikTok to dip into is getting bigger, although this migration of spend is slowing,” says Ben Allison, head of media operations at VaynerMedia. “When it comes to TikTok specifically, though, the increase in budgets there is coming from direct competitors. It’s money that’s becoming available, like Twitter for example, that TikTok has been able to pull into its ads business.”
The power of TikTok advertising
Socials aren’t just about staying in touch with friends, organising events or connecting with co-workers. They’re powerful advertising tools with huge potential for brands to build recognition, engage with consumers and ultimately, increase profits.
In 2021 an estimated 4.26 billion people used social media. By 2027 this figure is expected to increase to around 6 billion. The reach of social media is incredible. Plain and simple, brands that fail to leverage the power of social media advertising are missing out.
So, what makes TikTok stand out? The short-form video format is designed to engage consumers, a goal that’s at the heart of most advertising campaigns. Unlike rivals such as Facebook and Instagram, the video ad format is built into the DNA of TikTok. This means advertisers can instantly capture the attention of viewers with full screen, sound on videos that seamlessly integrate into feeds.
Acquiring new users with TikTok
TikTok is especially powerful when it comes to acquiring new users. In the Financial Times article cited earlier, experts reveal the standard engagement rate for TikTok ads can be as high as 6%. This is lightyears higher than the standard engagement rate for Instagram ad content, which sits at around 0.6%. With such high engagement stats, it makes sense for advertisers to channel more cash into TikTok ads.
“There is a big opportunity for brands to create incredible advertising on TikTok, whatever the budget,” says Kris Boger, General Manager of Global Business Solutions at TikTok.
The multigenerational appeal of TikTok
The multigenerational appeal of TikTok is another major driver. Unlike other social platforms that can be alienating to some users, Chandlee says TikTok is designed to “inspire creativity and spark joy” among users of all ages and interests. The recent remake of a classic Cheerio’s ad from the 1990s is just one example of the multigenerational power of TikTok.
Basically, if your target audience is aged between 13 and 60, TikTok is a powerful advertising tool. And with ad costs now lower than ever, there’s never been a better time to jump onboard.
Looking to up your TikTok game in 2023?
As one of the top social media and influencer marketing agencies in the UK, Hoopla is here to help. Get in touch with the Hoopla Marketing team to discuss how to take advantage of huge TikTok ad spend cuts or learn more in our guide to social media advertising.