As the end of the year rapidly approaches, many advertisers are finding themselves with a little extra money in their media budgets that needs to be spent by the year’s end — or else it’s gone. It’s an odd, yet common, conundrum. They don’t want to lose the money, but they don’t want to waste it either.
The social video app’s growth this year has impressed many advertisers, though often not enough to commit media dollars. The rewards of being one of the first advertisers on the social video app du jour haven’t outweighed the risks of not being able to get a return from investing in it.
After all, advertisers haven’t exactly been flush with media dollars throughout the pandemic. And when they have had money, they’ve spent it with tried-and-tested media owners, not experimental ones like TikTok. The end-of-year spending hikes flips this dynamic, especially for those advertisers where this incentive is a side effect of the budget process. For the remaining months, as with most things right now, all bets are off.
“We’re seeing a lot of marketers rethink media strategies this year and many believe the remaining months are an opportune time to start on TikTok,” said Sam Gormley, founder of digital agency Osaka Labs.
Often, those requests have come from the CPG category where execs are scrambling to think and act more like their counterparts at DTC businesses, said Gormley. So there’s more pressure on those marketers to measure new channels against those they already rely on.
“We’re seeing limited inventory across video channels in Q4. For example, some OTT channels are practically sold out,” said Andre Artacho, managing director of media consultancy Two Nil. “[Advertisers are] pushing more spend into new promising channels —such as TikTok. The reason behind it is the use-it-or-lose-it ad spending that is usually expected in Q4, amplified by the spend retraction in Q2 and Q3 that is now reallocated to Q4 and, finally, the elections ad spend that is reducing inventory even more.”
But whenever money is spent hastily like this, there’s always the potential for irrational spending. There’s a reason some marketers refer to this quirk of the industry as “irrational budget dumping.” To avoid falling into that stance, advertisers are comparing the effectiveness of ads on TikTok to TV. As Gormley explained: “Marketers want to gauge the value of advertising on TikTok and to do that they’re comparing the ads they buy there to what they buy on TV.
This is not entirely out-of-left-field. TikTok is more of a video destination than a social network and advertisers are treating its ads accordingly and say they see TikTok as a way to reach those younger audiences who don’t watch as much TV.
“TikTok with its young and engaged users is in a great position to steal share from TV budgets,” said Lawrence Dodds, client director at agency Universal McCann. “We’ve had some clients across the agency look to move money from TV into TikTok, and yet it’s not massive amounts because TV is still a good driver of reach; shifts from TV to platforms like TikTok can be between 2% and 5% depending on the client.”
That’s not to say TikTok’s growth from Q4’s chronic spending surges will be at TV’s expense. Yes, the social video app is stealing some media dollars from TV, but so too are its, larger, more established online counterparts.
In fact, Google and Facebook’s dominance of online advertising would see them benefit most if GroupM’s prediction that the market will account for more than half of the $530 billion global advertising industry in 2020. So in all likelihood, TikTok’s share of TV media dollars won’t amount to much in comparison — at least not yet.
“This is a play on framing the [TikTok] platform as an extension of TV not necessarily a replacement for it so that advertisers can get the incremental reach that’s backed up by measurement studies,” said Paul Kasamias, managing partner of performance at media agency Starcom, where clients are asking the same questions.
More importantly for advertisers, though, is where TikTok’s audience overlaps with TV and vice versa.
“It’s not unusual for a TV campaign from a CPG advertiser to have a 70% reach,” said Duncan Southgate, global brand director at Kantar. “That means every person who sees a TikTok ad, around two-thirds of them have probably seen the TV version as well. It’s more about the potential synergies from audience overlaps, rather than incremental reach,”
With advertisers pausing and shifting media dollars as needed, TikTok’s growth this quarter is likely to come from other distressed channels like print and outdoor media, not just TV. That momentum, in turn, will carry on into next year. So much so that TikTok is set to be one of the winners in the online video market over the next 12 months.
More than half (52%) of senior marketers said they would increase their spending on the social video app in 2021, according to a Kantar study of 733 respondents.
“2020 has been a year of tremendous evolution for brands’ advertising strategies on TikTok,” said Stuart Flint, head of global business solutions for TikTok across Europe. “However, we see clearly that brands find success on our platform not because they have simply repurposed their TV commercials for mobile, had the glossiest ad or the biggest names in their campaign, but because of their ability to creatively engage and connect with users through feelings, actions and sounds.”
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‘Great position to steal share’: As use-it-or-lost-it ad spending picks up, TikTok emerges as an unlikely beneficiary - Digiday
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