In an attempt to boost revenue, the Chinese App TikTok is undercutting its social media rival platforms by offering cheap ads amid a slowdown in digital ad spend.
According to The Financial Times, an increasing amount of advertising spend is moving from platforms such as Twitter and Meta to TikTok due to the Chinese site’s lower costs and higher levels of user engagement.
It is owned by China’s ByteDance and has shaken up the social media sector in recent years by rapidly growing to over 1 billion users globally.
It has a global user base of over one billion people.
According to data from the New York-based marketing business VaynerMedia, the cost of 1,000 impressions from digital ads on TikTok in 2022 is about half the price of Instagram Reels, a third less than Twitter, and 62% less than Snapchat advertising.
According to market intelligence firm Mathematics, advertising expenditure on TikTok increased by 66% from September to October last year, with the top 1,000 advertisers in the US raising their ad spend on the video-sharing site by $467 million from September to October.
“So many of our brand partners… were 100% Instagram,” Permele Doyle, founder, and president of creative agency Billion Dollar Boy stated. “Now, we’re seeing 80 or 100% TikTok by 2023.”
TikTok rivals Snap and Meta have both been affected by a global decline in online consumption, prompting them to substantially reduce their headcount.
According to Kris Boger, the company’s general manager of global business solutions, “there is a great possibility for businesses to develop incredible advertising on TikTok, whatever the budget.”
TikTok’s in-app ad pricing is also 62% lower than Snapchat’s and one-third lower than Twitter’s. According to Pathmatics data, in September and October 2022, the top 1,000 advertisers in the United States boosted their TikTok ad expenditure by 66% to USD$467 million (£384 million).
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https://www.ft.com/content/2e62de44-7877-4ec3-8eec-68dd7788b9dc
TikTok is offering cheaper advertising rates than rival social media platforms as the fast-growing video app moves to grab a larger share of the digital ads market amid a slowdown in online spending. Advertisers, industry bodies and brands have told the Financial Times an increasing amount of ad spend has moved from platforms such as Twitter and Meta, which owns Facebook and Instagram, over to TikTok owing to lower costs and better levels of engagement. TikTok, owned by China’s ByteDance, has shaken up the social media industry in recent years as it has rapidly grown to more than 1bn users worldwide. The short-form video app, which first launched ads in 2019, has also been undercutting rivals at a time when marketing budgets are narrowing. Figures shared by New York-based media agency VaynerMedia from 2022 show that the cost to obtain 1,000 impressions from video advertising on TikTok is almost half the price of Instagram Reels, a third cheaper than Twitter and 62 per cent cheaper than advertising on Snapchat. Advertising soared on TikTok in the fourth quarter of last year. The top 1,000 advertisers in the US increased their spending on the viral video platform by 66 per cent to $467mn from September to October of 2022, according to data from Pathmatics, a market intelligence company. “So many of our brand partners . . . used to be 100 per cent Instagram,” said Permele Doyle, founder and president of creative agency Billion Dollar Boy. “Now for 2023, we’re seeing 80 or 100 per cent TikTok.” TikTok quickly emerged as a place to engage new, younger consumers, causing rivals to launch their own short-form video offerings such as Instagram’s Reels and YouTube’s Shorts. However, the Chinese-owned group has drawn attention from global regulators over security concerns. Chief executive Shou Zi Chew will meet EU competition chief Margrethe Vestager on Tuesday, which is expected to include discussions on compliance with the bloc’s landmark new tech regulation.
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