Advertising budgets are often the first to suffer from a struggling economy. With inflation estimated at 8.5% in Europe and 6.5% in the United States, the sector is currently at the bottom of the wave. Even the Internet and social networks, traditionally spared, are suffering from the cold snap. The two advertising empires in the sector showed signs of slowing down: – 1% in turnover in 2022 for Meta, and – 7.8% in the fourth quarter of 2022 for YouTube (Google). Everyone is sinking, except one: TikTok.
The young social network generated more than $11 billion in advertising revenue last year, a spectacular increase of 200% over one year. A jackpot that constitutes the majority of its revenue, with purchases and tips left by users, on which TikTok receives commissions. According to eMarketer analysts, the platform could make $18 billion from advertising alone in 2023, and another $5 billion the following year. “In France, in the second half of the past year, 30% of the growth of the advertising market on social networks is only on TikTok”, observes Emmanuel Amiot, partner at Oliver Wyman, firm author of the report of the Observatory of the SRI e-pub. Even if Google, Amazon, and Meta still represent two thirds of the market in France (and even more in the world), a new challenger is clearly in place.
The extreme popularity of TikTok is the beginning of an explanation for the phenomenon. The social network has already exceeded one billion users worldwide. More than 50% of them are under 30 years old. “It’s the ideal place to rejuvenate your brand image,” observes Jacques Dillies, communications manager at Adveris, which supports companies and institutions on TikTok. Advertisers are also enticed by the retention capacity of TikTok. On average, its users spend 95 minutes a day there in 2022. This is twice as long as on Facebook or its direct competitor Instagram. In the attention economy, we don’t do better. TikTok understood this well by expanding its troops at a rapid pace. “In France, for example, there were around ten salespeople in 2021. Today, they are ten times more numerous to offer their services”, indicates Guillaume Benech, co-founder of Odace, a consulting and content production agency. for social networks.
Return on investment
The tone of the platform is the other side of its attractiveness. “TikTok is betting on entertainment, it’s a place where we break codes, or create new ones”, sums up Jacques Dillies. Ideal for advertising in the most natural (some would say disguised) way possible. To avoid missteps, TikTok directly offers brands to leave “assignments“, modeled on advertising briefs, to content creators so that they can push their products themselves, with musical challenges for example. There is something for everyone. Deezer, Carte Noire and Burger King have already used this new way to advertise.
The armada of TikTok salespeople tumbles with weighty arguments. Its powerful recommendation algorithm pushes more ads than its competitors because videos scroll much faster. The vast majority are less than a minute. Targeting is also carried out very precisely thanks to an impressive amount of data collected by the network: “likes”, types of content watched, duration for each of them, subscriptions…
And like Free in telecoms at the turn of the 2000s, the challenger landed with knockdown prices. “Going through TikTok Ads Manager generally costs half as much as Meta, for example, for results that are already very precise regarding acquisitions, whether subscribers, awareness or direct purchases”, emphasizes Guillaume Benech. The #MoneyTok steamroller is running at full speed.