Steep Learning Curve for Marketers Considering TikTok

By Matthew Schwartz

ANA

In order to gain control online you must lose control. It’s long been a signpost for brand marketers navigating the social media terrain. Nevertheless, most brands managers continue to deploy command-and-control strategies when it comes to leveraging their social marketing efforts. You can hardly blame them, what with the brain police online ready to pounce on any marketing message or piece of creative they deem offensive. But in order to monetize TikTok, the video-sharing social network that is all the rage, marketers may have to bite the bullet.

“Now more than ever this is the medium where you need to lose control,” says Greg Paull, co-founder and principal at independent consultancy R3, whose clients include American Express, SONY, and Unilever, among other major companies. “You can put out the templates. You can put out the content. But you need to leave it to the consumers to do the creativity for you.”

Paull estimates that up to 80 percent of brand marketers have yet to invest in TikTok, but expects that percentage to fall this year. “There’s still a lack of awareness and knowledge base, in terms of what TikTok is doing and some of the case studies they’ve produced,” he says, adding that it would behoove CMOs to download the app on their smartphone posthaste. “When you start to see some of the case studies (such as Chipotle’s #GuacDance challenge) you’ll start to see the business opportunity.”

Unheard of just a few years ago, TikTok, which is owned by Beijing-based ByteDance, has catapulted to the top of the social media stack since its 2017 launch. The video platform now has more than one billion monthly active users across its apps while topping worldwide downloads of social platform since 2018.

In an effort to capitalize on its growing popularity, TikTok plans to increase its efforts to promote its brand, according to the Wall Street Journal. In addition to an ad it ran twice during Fox Corp.’s live stream of this year’s Super Bowl, TikTok will follow up with marketing tied to the “March Madness” NCAA basketball tournament and the Tokyo Olympics this summer.

The video-sharing site continues to go gangbusters (at least for now). In 2019 TikTok grew 375 percent year-over-year in terms of time spent on the platform, according to App Annie’s State of Mobile report. Time spent, of course, is one of the more legitimate metrics that CMOs peg to their media spending, as opposed to likes and followers.

Explosive growth notwithstanding, marketers have to be comfortable with TikTok’s infinitely quirky content — animals put in awfully compromising positions and people playing bizarre pranks on one another, for instance — if they want to succeed in the space. I spoke with Paull about TikTok’s growing potential for brand marketers and what’s in store for the video-sharing site.

Q. What are some of the best practices for engaging the TikTok audience?

Some people are calling TikTok the future of advertising, and there are number of different ways that marketers can engage. The most interesting facet is that there are production teams at TikTok set up to help [marketers] optimize their investments. Unlike other media, where you are using a third-party agency, here you can work directly with the app itself and the team to develop a lot of the work. I think there’s an opportunity for far more engaging brand work and based on TikTok’s own history and knowledge bank they can develop hashtag challenges and other videos that are going to be very effective. In 2019, U.S. consumers spent 85 million hours looking at TikTok videos, which was up 15 million hours from 2018 — and that’s more time than people spent watching HBO, using Twitch or watching Amazon Prime. There’s really an incredible role for TikTok to be an entertainment vehicle for the right type of audience and marketers need to be a part of it… Any [site] where you’re going to be relying a lot on user-generated content you’re going to have to accept the fact that you’re in a co-creation mindset with consumers and are no longer just broadcasting to them.

Q. In order to engage successfully on TiKTok, do marketers need to flip their mindset, in terms of taking “fun” more seriously?

The issue is broadcasting versus creativity. Unless you’ve got a certain amount of creativity engagement you’re going to be just noise, but that’s a challenge for any medium now, I think it’s just particularly so on TikTok because you’ve got a very young demographic that’s very time poor. But you need to be open and flexible to consumers; if you look at what Kind Bar has been doing in terms of co-creation, that’s a great example of creativity at scale.

Q. The app, which is China-owned, is under investigation by the Committee on Foreign Investment in the United States (CFIUS) for how it manages user data. Last year, TikTok was fined millions by the FCC for violating the Children’s Online Privacy Protection Act. More recently, the company has come under fire for censorship. Taken all those challenges, where does the CMO strike a proper balance?

I completely understand all those points and it’s something to be cognizant of as a CMO. But you can turn it the other way and say, for most global CMOs, China already probably represents 10 percent or 20 percent of their revenue and they accept the importance of a strong China relationship. Now that this type of material has gone to the U.S. it’s the same issue it would be advertising inside of China. [Marketers] need to be vigilant and be aware that nothing may be secure. Our friends at Facebook and Google have had similar problems over the years, not the least with Russia and other places, so it’s something to be aware of with any online media. This is a medium that’s only going to increase in the coming years. It’s already well funded, in terms of growth, in China. We don’t see this as a flash in the pan medium; we see this as something with stability and growth potential. TikTok has got a $70 billion market capitalization and will probably list (as an IPO) within the next 12 months.

Q. Does TikTok change the talent equation for CMOs, who may have to hire people who are well-versed in entertainment and production values, rather than traditional marketers?

There’s a couple things CMOs need to look at, in terms of their talent mix. One is [hiring] someone to lead influencer strategy — of course, TikTok is a part of that, but it would also include Instagram and other media, as well — and that’s not a job function that’s been within the marketing team until recently. Two is hiring people of a certain age and capability to create entertaining content, whether it’s done internally or through agencies. Take a look at the Washington Post TikTok site; it’s unbelievably creative on a daily basis and [the brand] is trying to raise its profile with gen Z, which is not something you think of from something like the Washington Post. There’s room for creativity for any marketer. Every six months we’re seeing new levels of creativity. Late last year Adidas created a new Zipper Challenge, with a zipper that was particularly clasped; they had 300,000 uploads of different people taking the Zipper Challenge and collectively had 2.9 billion views, so that’s half the world’s population. That’s just one example of a hashtag challenge that became very successful, probably more successful in terms of views than the original Ice Bucket Challenge (ICB). (Adidas is a former client of R3.)

Q. How does the rise of TikTok affect the brand’s overall marketing strategy, in terms of budget, creative, distribution, and measurement?

I think it’s going to change the types of talent you need in the marketing department as well as the types of output that your brand is going to be giving. Both of those things are going to become more important moving forward. We’re encouraging people to test and learn. The cost of using influencers on TikTok is still significantly lower than it is on Instagram, YouTube, or Facebook. Now is the right time to try it out. You don’t need more than 2 or 3 percent of your marketing budget and we believe [marketers] will find a valid business case for future investment. Adidas reported a 26 percent growth in sales in the last year and attributed a lot to their engagement to things like TikTok. In the end, it has to have a business outcome; this is not just about entertainment value, but driving business. In 2020, TikTok will build e-commerce into the site in a far more collaborative way so, again, you’ll be able to start seeing some real business results as an outcome. I think you’ll see both B2C companies come in a big way once they can start measuring sales and you’re going to see the more traditional marketers, opening e-commerce channels they didn’t have before, on TikTok.