TikTok—the social video app famous for launching global trends—has only been in the advertising game since 2019, but it’s already pulling in record-breaking ad revenue year over year.
Among the social media giants, TikTok’s ad revenue is in the top five, overtaking Twitter and Snapchat. And it continues to grow. TikTok ad revenue is expected to reach $13.79 billion per year by 2026.
Featured on one of the most popular apps among young users, TikTok ads are attractive to companies and advertisers alike looking to reach the platform’s growing base.
TikTok ad revenue in context
TikTok is the fastest growing media brand globally, with a 215% brand value growth rate as of 2022. By number of users, TikTok lands in sixth place, but takes top spot in engagement rate, proving it’s a social media app that can run with the big players.
With increased competition in the ecommerce landscape, marketers are looking for new ways to reach audiences and new channels to sell products. Social commerce is a growing phenomenon, with more brands selling directly to consumers via the apps they’re already using. TikTok is already a key player with consumers, who rank the platform third—behind Meta powerhouses Instagram and Facebook—for best social commerce experience.
In total, social platforms are collectively expected to generate $262 billion in ad revenue by 2028. TikTok continues to take a bigger slice of that pie. In 2022, TikTok ad revenues topped $9.9 billion, an increase of 155% over the previous year.
As one of the most popular social media apps, it’s no wonder TikTok’s ad revenue is seeing massive growth. Brands looking to make genuine connections with potential customers should consider a TikTok marketing strategy including a mix of organic content and paid ads.
What you need to know about advertising on TikTok
Advertising on TikTok comes with its own unique benefits and challenges. Brands shouldn’t apply the same marketing tactics that work on other platforms, as these could fall flat with the TikTok audience. Here’s what to know before you start advertising.
TikTok is the place to advertise to gen Z
TikTok boasts more than one billion users over 18 years of age as of 2023, but it’s the platform’s particular demographics that are attractive to many brands and advertisers. Of that number, 38.5% are between the ages of 18 and 24, falling into the coveted Gen Z audience of tastemakers and trendsetters. That’s millions of potential customers for your business.
TikTok users don’t mind ads
TikTok users largely don’t mind ads—they even like them. According to research, two out of three TikTok users described ads on the platform in positive terms like “fun and engaging,” “trendsetting,” and “inspiring.” This is likely because TikTok ads don’t feel like ads. Marketers understand that the platform prizes authenticity and human-centered content. Ads that work best are those indistinguishable from users content in the feed.
Consumers are flocking to TikTok for product discovery
The rate at which TikTok’s ad revenue is growing is unsurprising, considering the platform’s hold on consumer trends. Product discovery is huge on the platform, with younger buyers looking for new brands and products on TikTok before turning to search engines. Two-thirds of shoppers polled in one survey said they purchased something they saw on TikTok—even if they weren’t actively shopping.
TikTok makes this easy for brands, tying its TikTok for business features to its ad platform and ecommerce tools. Switching to a business account gives brands full access to a suite of marketing and ecommerce options. Users can buy directly from their favorite brands with TikTok’s native shopping features or shoppable ads powered by Shopify.
TikTok Pulse makes advertising even more meaningful to users
In 2022, TikTok launched TikTok Pulse, an advertising feature that allows brands to pair ads with the most engaging content on the For You page. According to TikTok’s own data, TikTok users are 2.6 times more likely to interact with Pulse ads compared to other ads on the app. These early TikTok statistics on Pulse’s performance can only have a positive impact on the company’s ad revenue.
There’s a reason brands are spending on TikTok
TikTok’s rapidly growing ad revenue is a signal that the social media platform is doing the right thing to attract brands’ ad dollars. In fact, 43% of marketers reported plans to increase use of TikTok for social media marketing in the future. To do so effectively, brands should understand the platform and audience before investing in ads and using TikTok for ecommerce.
The most viral content on TikTok isn’t the most polished. Challenges, funny content, authentic human-centric videos, and trending sounds all have viral potential on the short form video app. Advertising is no exception. Find your voice, tell a compelling brand story, and create the kind of content your target audience expects.
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The article originates from: https://www.shopify.com/blog/tiktok-ad-spending