Last week, ByteDance announced that its flagship product, TikTok, is used by more than 1BN people per month. At its current scale, TikTok is likely used by more people on a monthly basis than Snap and Twitter combined (Twitter doesn’t disclose MAU but reported 206MM DAU for Q2 2021), and it lags only Instagram, YouTube, and Facebook in terms of size. TikTok is a social behemoth, and it is growing at a dizzying pace, with MAU up 45% from a little more than one year ago.
One fairly astonishing aspect of the size of TikTok’s user base is that the 1BN MAU metric excludes India and likely excludes China. TikTok was banned from India in June 2020 by the country’s Ministry of Information Technology; at the time of the ban, the app boasted roughly 167MM users in the country. In December 2020, ByteDance reported 1.9BN MAU across its portfolio of apps, including a domestic version of TikTok in China called Douyin. In August 2020, in a lawsuit filed against the Trump administration over the potential ban of the product in the US, the company reported 689MM MAU for TikTok alone as of July of that year. The 1BN MAU metric seems consistent with TikTok’s user base exclusive of China (meaning, exclusive of Douyin), especially since ByteDance’s announcement of that number indicates that the United States, Europe, Brazil, and Southeast Asia are the largest markets for the app.
Despite its remarkable size and rate of growth, TikTok remains relatively underexploited as an advertising channel for mobile marketers. TikTok introduced its creator marketplace, which allows advertisers to recruit TikTok users directly to promote their products, in 2019, and it made an API for the marketplace available in August of this year. The TikTok creator marketplace is arguably the most innovative feature to be introduced to a digital ad platform since the advent of lookalike and custom audiences: it provides advertisers with a direct avenue to reaching influencers and content creators in pursuit of organic, context-consistent promotional material. The creator marketplace disintermediates the influencer and creator recruitment process, which is mostly facilitated by agencies, and it exposes advertisers to users with smaller but potentially more engaged audiences than they might otherwise happen upon.
But TikTok only launched its self-service advertising manager tool globally last summer, and the platform, generally speaking, is more aggressive in optimizing delivery around the top-of-funnel metrics associated with ad creative (this very thorough analysis of TikTok as an advertising platform captures this dynamic with: “TikTok is more often a function of cost arbitrage than value capture”). This can have a chilling effect on introductory tests of the platform, where teams allocate some moderate amount of budget to a new channel as an exploration of its potential. If a team simply borrows winning creative from other platforms for the purpose of experimenting with TikTok advertising, disappointing results are likely to come quickly and with force given the nuance of TikTok’s aggressive optimization scheme. When this is the case, the platform might be dismissed as not a fit for the product being advertised.
Anecdotally, I hear some variant of this very commonly: “We tried advertising on TikTok, but the results were poor or we couldn’t scale spend, and so we abandoned the channel.”
TikTok is simply too big and too important to shoehorn into an existing advertising tools stack that has been optimized for another channel (read: Facebook and Instagram). The user experience on TikTok is unique: it’s fast-paced, the aesthetic is gonzo, and it’s driven by behaviors that are mostly inscrutable from the outside (eg. the branded hashtag challenge, which is a native ad format on TikTok). The creative production strategy, the measurement system, and the targeting parameters that perform well for an advertiser on certain channels almost certainly need to be adapted or scrapped altogether when advertising on TikTok.
But that investment — into experimentation and into dedicated tools and infrastructure — becomes an imperative for advertisers at TikTok’s scale of 1BN MAU. TikTok is too large to ignore: neglecting the channel through insufficient investment can put an advertiser at a strategic disadvantage. In It’s impossible to saturate a marketing channel, I argue that advertisers often blame channel saturation for a fundamental lack of appeal on the part of a product — a channel is difficult to saturate, but a small total addressable market is not. This logic applies in reverse to the dismissive attitude I see advertisers adopt toward TikTok: if an advertiser cannot scale spend on TikTok with its 1BN monthly users outside of China and India, then the failure is the advertiser’s alone.