January 19, 2023

There's a dichotomy. Whilst creators, consumers and advertisers have embraced TikTok there's also a nervous tension about the app as regulators tighten their grip on the Chinese-owned platform


There's a dichotomy. Whilst Instagram continues to command the highest share of influencer marketing dollar spend, TikTok is close to overtaking Facebook and is set to top YouTube next year. Foxwell Digital, estimates advertisers shunted across 20% - 30% of budgets from Meta to TikTok in the last 24 months.

Why is TikTok gaining so much ad-spend love? Partly because the video platform is offering significantly lower CPM compared with rivals according to figures shared with the Financial Times by VaynerMedia. If these figures are accurate TikTok ad CPM is 62% less than Snapchat. Almost 50% less than Instagram Reel. And, around 33% less than Twitter.

It’s cheaper, but also more effective, too. New research from data.ai shows TikTok's US average monthly revenue per user to be well above its top social competitors at $0.85 per user. 

Creators turn to TikTok for its content-first algorithm, its easy-to-use creative tools, the inclusivity of content and its relative ease to gain content views. 83% of TikTok users have posted a video at some point says Student Beans

TikTok benefits from a billion active users.  Nine in 10 users log onto TikTok multiple times every day.

TikTok's headwinds

So far, it’s all upside for the Chinese-owned app. And there’s the rub. ByteDance, TikTok’s owner, has spent the past three years trying to convince the Committee on Foreign Investment in the U.S. that, as a foreign company it presents no national security threat. 

The U.S. House of Representatives isn’t hanging about for the outcome of the CFIUS review, though. It’s already banned the download of TikTok on officially-managed devices. Dozens of US schools, universities have moved to ban the app. There’s talk of an outright nation-wide ban on the app, too. 

This uncertainty is starting to make some creators nervous. They may be building significant communities and earning strong revenues from TikTok but they are also wary of placing their livelihood solely with a platform generating so many legislative question marks. 

Advertisers also know that a creative platform without creator content is a wasteland. Vine taught them this lesson. This makes many brand owners nervous about going ‘all-in’ for spend on the platform. 

So, what’s TikTok to do? Schmooze the legislatures and spend more on pubic affairs is one route. TikTok spent $2.61m on lobbyists in 2020. $5.18m in 2021 and is forecast it’ll have spent more in 2022. 

It can also distance itself from China. This is where Project Texas comes in. An initiative started in June last year, and rumoured to be costing more than $1 billion, it will see the company rebuilt on Oracle servers in the U.S. 

Web3's opportunity

Will this be enough? I think so. I hope so. But volatility and uncertainty for some provides fertile soil for others.  Web2 issues of regulation, concentration of power, ownership and governance may be replaced by Web3's promise of new social networks, providing new ways for creators to monetise their presence where the users of the services gain control over the services they populate and part own. This may present a golden opportunity for the good folk driving Web3 to remind creators, brands and communities of the benefits in building on the Blockchain. That might help them ease themselves out of their Crypto Winter. But more on that another time ... .

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A version of this article first appeared on January 18 as a column for the Influencer Marketing Digest - the weekly newsletter I am commissioned to write for Fourth Floor. You can sign up to receive the newsletter here.

Scott Guthrie is a professional adviser within the influencer marketing industry. He is an event speaker, university guest lecturer, media commentator on influencer marketing and active blogger. He works with brands, agencies and platforms to achieve meaningful results from influencer marketing. That tells you something about him but it's not giving you a lot of detail, is it? So, read more here.

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