The use of the app TikTok has exploded recently. Facebook’s rapid user growth in just four years is comparable to what it took MySpace approximately seven years to achieve. Brands can’t survive without incorporating TikTok marketing techniques. TikTok has the same challenge that Facebook and other social media apps did when they first launched: how to convert their user base into paying customers through advertising. The Internet wouldn’t exist without adverts, after all.

TikTok has lower prices than its competitors

The low cost is the main perk. TikTok is growing in popularity at a much quicker rate than it is adding advertising, making it an excellent value for marketers. How does it compare to the likes of Meta (Facebook, Instagram, etc.)?When compared to other platforms, TikTok’s cost per thousand impressions (CPM) costs are significantly lower. Spending 2.5 times as much will get you to the same number of people on Meta.

Users on TikTok have higher retention rates and lower migration rates

Advertisers care not only about how many people see their ads but also how many of those people interact with them (by clicking, sharing, or commenting). According to the data, TikTok advertising had an 835% greater engagement rate than Meta. This is probably due to the fact that adverts on the platform are so natural that users are less likely to recognize them as such.

TikTok has a much better potential for generating comments and shares, but the data shows that Meta users are nearly three times more likely to click on an ad. What gives, then?

TikTok’s ad format may have anything to do with it. Ads on TikTok play full screen like any other video, making them hard to spot at first. In addition, in 2022, TikTok’s slogan for marketers was “Don’t make ads, make TikToks.”

One possible explanation is that the TikTok algorithm is so effective at delivering content that users want that they simply can’t stand to uninstall the program. You really can lose an hour on TikTok.

The economic implications of TikTok

It’s easier for TikTok’s algorithm to keep users engaged than Meta’s does, but cheaper for advertisers to reach and interact with an audience on TikTok.

The primary goal of any advertising campaign on either platform is, of course, to increase revenue. How effective is TikTok in this region?

Here’s where the difficulty begins for marketers. TikTok advertising provide a 26% lower return on ad spend (ROAS) than Meta advertisements, although this is still a very respectable 11x.

TikTok’s cost per sale is seven times that of Meta because customers are less likely to abandon the service, as we’ve already discussed (see table 2).

However, we already know that viewers are impacted by the advertisements they see (but don’t click) on TikTok, so that doesn’t give us the whole picture.

Recent studies have shown that over half of all TikTok users had made a purchase based on recommendations made by friends or businesses they followed on the app. As an illustration of its impact, consider the hashtag #TikTokMadeMeBuyIt. More than 6 billion people have seen this hashtag, which demonstrates the enormous quantity of goods that users have been persuaded to purchase.

Methods For Evaluating TikTok’s Financial Effects

Wolfgang Digital has been experimenting with different methods to determine how much of an effect TikTok has on revenue. What we have discovered is as follows:

TikTok can increase brand searches in a quantifiable way. They found that beginning activity on TikTok was connected with a 10% rise in brand searches. TikTok may be credited with boosting these sales, but the credit will actually go to Google search.

Two, TikTok has an effect on retail establishments. Clients were asked to choose between two similar niche products that were only advertised on TikTok. There was an increase in sales of 25% to 35% at the retail level.

There are obviously other immeasurable influences, but there is rising faith in TikTok’s capacity to affect sales. The problem is that it’s difficult to gauge the true effect of digital marketing using conventional metrics alone.

Leave a Reply

Your email address will not be published. Required fields are marked *