It’s hard to escape a conversation about advertising in 2023 without somebody mentioning the short-form video sharing platform that is TikTok.
With around one billion users around the world and an estimated 2.5 million users in Ireland, the 10-year-old business has been slowly muscling its way into the social media advertising schedules, nibbling away at the advertising budgets that almost exclusively winged their way into the coffers of established giants like Facebook, Instagram and YouTube.
The company, part of the Chinese-owned ByteDance, is notoriously secretive and does not disclose any financial information but some industry analysts, like Insider Intelligence, estimate that it is on course to clock up $18bn (€16.36bn) in advertising revenues this year, rising to $23.6bn in 2023. If it can continue this momentum, advertising revenues for 2024 are likely to be three times those of Twitter and Snapchat combined.
But further context is necessary. Facebook pulled in about $27.8bn in advertising during the last quarter of 2022 while Google’s YouTube pulled in $7bn in Q3 of 2022. Between them, they still account for about 70pc of all social media advertising budgets globally, a position of strength that they will not cede willingly.
Despite this, TikTok’s growth does pose a clear competitive threat to the established hegemony. During a 2022 earnings call, Facebook’s founder Mark Zuckerberg mentioned TikTok no fewer than eight times during his presentation, a telling sign that he was concerned about his rival’s explosive growth.
On top of this many industry analysts and the media agencies that so often control advertising budgets have all upped their TikTok advertising spend forecasts by as much as 15pc-20pc this year. This is not additional spend but rather it’s coming from the likes of Facebook and Google.
While TikTok may not be for all brands, especially those that are unable to harness and understand its creative formats, there’s no shortage of Irish brands that have moved beyond dipping their toes in the water. These include the likes of An Post, Enterprise Ireland, Aer Lingus, Ryanair, Gas Networks Ireland, Bord Bia, Cairn Homes, Dublin Bus, Flahavan’s, Audi Ireland, Valeo Foods, FBD Insurance, Virgin Media and SSE Airtricity. Meanwhile, Government departments such as the Department of An Taoiseach, the Department of Health and the Department of Foreign Affairs have also spent money on it.
Beyond advertising, TikTok would also appear to be muscling in on the digital search market, one which Google has maintained its vice-like grip on for years. In the same way consumers are turning to the likes of Amazon to research and buy products and Instagram to keep up with certain trends, TikTok has also put down a marker in this space as a discovery tool, a move that could also lead to the introduction of live shopping. In China, for example, TikTok’s sister company Douyin has already built a thriving e-commerce business on the back of its social media offering by allowing users to buy products and services they see in the videos they watch. For some brands, particularly those operating in the direct-to-consumer space, this could be a game-changer.
Even though TikTok likes to be known as an entertainment company – as opposed to a social media one – it will still face many of the challenges its rivals have. Far from the dancing nurses, the singing priests and the home-cooking heroes that made it popular during the lockdowns of 2020 and 2021, TikTok will always have to grapple with the seedier and sometimes sinister side of the social media ecosystem. This is well-worn terrain for scammers, deepfakers, far right extremists and porn peddlers, most of which are adept at staying two steps ahead of the compliance and safety teams in what seems like a never-ending game of whac-a-mole.
For the vast majority of users, much of this will go unnoticed or be seen for what it is. For advertisers, meanwhile, it will be all about reaching and engaging with new audiences in a different way. So far, TikTok would appear to be delivering.