Marketers’ excitement over TikTok had been brewing for quite some time before the whole Ocean Spray thing happened, but since that viral sensation it seems like every brand with a promotional budget started thinking of the social network in a new light. There’s good cause for this buzz with the app revealing they now have 100 million monthly active users in the U.S. and 689 million globally. Additionally, the app has coveted influence and exposure with millennials and Gen Zers who make up over 40% of their user base. Despite the huge interest and desire to explore the platform further, brands were put in an awkward position by the political climate last summer not knowing whether the app would stick around in the U.S. or be forced to sell. Now that the situation has cooled off with the new administration, the social app is making moves that brands can’t afford to miss out on.
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While other social media companies have been focused on trying to replicate TikTok’s formats and creator appeal (some more successful than others), they have set their sights on other priorities - namely, eCommerce. With the pandemic, online shopping behavior shifts have clearly been accelerated and many businesses have been caught underprepared. ByteDance has seen the opportunity here and quietly made important strides toward setting TikTok up to become a long-term digital commerce engine for brands and businesses.
Since 2019, TikTok has been testing out allowing brands to provide sponsored product offerings. More recently, they’ve accelerated their offering to businesses by launching a partnership with Shopify which makes it easier for merchants to run advertising campaigns on the app and reach a larger audience. In the future, the partnership is said to make product browsing and direct shopping on TikTok a reality for businesses. Following this news, the app also announced plans to create more features to facilitate affiliate marketing and livestream shopping as well as focusing on improving their ad platform offering. All of these upgrades offer a view into how TikTok wants to be thought of by marketers: more than just a content and reach vehicle, but instead as a full funnel sales driver.
A couple other recent experiments show how TikTok is looking to widen the aperture on their approach. To better enable influencers to share kitchen and cooking content, TikTok is testing a recipe saving feature in partnership with Whisk. As many recipes are often produced or sponsored by brands looking to drive usage of their products, this could become an appealing sponsored content offering within the app. Another bet being made in Europe is TikTok’s recent smart TV app allowing users to watch content on the big screen. Ostensibly this is a play to attract a broader audience and encourage group viewing behaviors at home. This opens the door to TikTok potentially enabling production of longer-form or family-oriented content. I am sure we’ll continue to see the app explore new territories like these as it looks to build its position as a top of mind advertising channel.
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Importantly, this posture is resonating with brands and the app is finding itself in the enviable position of being a budget item mainstay for companies investing in social media marketing. A recent Digiday article had agency partners placing brands’ investment allocation toward TikTok at around 5% of social budgets, but noting that they could see it growing to 20% in the near future. eCommerce advancements and the potential for the app to become a greater sales contributor are seen as major factors for increased confidence in investment. For TikTok, the shift in perception from a ‘test and learn’ platform to a priority growth channel is well underway.
Where might TikTok go from here? To continue this trajectory they will need to focus on a few key areas to build their eCommerce business:
Expand The App’s Reach. Like any other app, continuing to build user scale will be crucial to attracting more money. Some of the initiatives mentioned above may help bring in a more diverse user base from a demographic standpoint, but TikTok will have to be careful not to make their core users (millennials and Gen Zers) feel like the app is no longer for them. Kids and Gen X audiences feel like the right demographics to explore first.
Make It Easy for Creators to Work With Brands. TikTok already has a great start on creator discovery tools for brands. As they introduce new eCommerce features, they should ensure it’s simple for creators to utilize them and educate potential brand collaborators on what’s possible to do within content partnerships they are considering.
Consider New Business Models. While the app itself and the massive amount of attention it garners will always be ByteDance’s main focus, it’s worthwhile to consider alternative ways the TikTok brand and audience can be leveraged. Particularly for retailers, creating TikTok exclusive products (with accompanying digital tools to facilitate drops and simple fulfillment) or IRL pop-up stores in partnership with the app could lead to new revenue opportunities. These options would be a natural extension of what brands like Crocs are already doing on the app.
The hard part of all this for TikTok won’t necessarily be execution, but rather maintaining the complexion of their app experience and audience. Facebook may have driven its value through the roof building up its user base and advertising business, but they certainly lost appeal to younger users along the way. TikTok will need to prove it can become a brand-friendly shopping destination while not sacrificing its quirky charm and place in culture.
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