Marketing Briefing: ‘Trifecta of industry buzz’: Marketers remain bullish on TikTok despite rising costs

As some marketers are looking to lean into TikTok more and taking note of a second out-of-the-blue viral moment for a brand, Bloomberg reports that TikTok is upping its ad prices, charging $1.4 million for a homepage takeover in third quarter, $1.8 million in fourth quarter and $2 million for that ad space during the holiday months. Ad buyers say it’s not surprising that TikTok is upping the cost of its premium ad units as the platform has grown in popularity and shown it can have an impact on culture. Per Digiday research, nearly half (43%) of agencies and brands now post on TikTok at least occasionally. That data is based on a sample of 117 brand and agency professionals.

“It’s unsurprising the rates are going up, and I’m sure for brands (big and small) who were early to engage with the platform there’s some sticker shock taking place with news of these changes,” said Ruth Bernstein, CEO of creative shop Yard NYC. “However, it doesn’t change the reality that for big brands, with the right content, collaborations with creators and a sticky idea, the buy is worth it, for one simple truth. TikTok drives more and more of culture at large.” 

Even with the the increase in ad prices — TikTok’s rate cards for their high impact units went up by as much as between 30-50% compared to third quarter last year, per Emmy Clarke, director of social media at Good Apple —marketers targeting Gen Z are “overwhelmingly bullish” on the platform, according to Brendan Gahan, partner and chief social officer at Mekanism. 

“TikTok is a hot commodity,” he said, adding that while TikTok is still a smaller piece of the social pie than Facebook, year-over-year investment in TikTok overall has increased between 3-5X for clients. “The increase in pricing is not going to impact investment in the space. If anything I can picture it creating a greater sense of urgency. The platform itself has the trifecta of industry buzz, it delivers amazing results, and pop culture influence.” 

Given the rise in costs, some clients are looking at other options than the premium ad placements, according to Erika Mahon, group director, audience activation at dentsu Media. 

“The rising costs from TikTok’s reserved products have been a large topic of conversation both internally and with our clients over the past few quarters,” said Mahon. “While this structure is pricing out some clients, we’re seeing a few things: A few clients that are willing to pay these increasing prices because TikTok is a crucial part of their social strategy, increased interaction with creators for authenticity in the promotion of their products and more clients turning to testing within TikTok’s auction offering (and often using content sourced from creators).” 

Overall, even as TikTok increases ad prices for premium ad units, ad buyers say they expect advertiser interest to continue to rise in the platform because of its ability to tap into culture. Brands need to be prepared to respond should they hit a viral moment like Ocean Spray or Adult Swim and understand the platform. Ad buyers say that TikTok ad reps have been working with brands to teach them how to use TikTok and that the platform’s sales team has been pushing brands to “build TikToks, not ads.”  

“TikTok is only going to continue to grow and advertisers will continue to pay a premium for it because it’s working,” said Alyssa DeSangro, associate media director, The Many.

“The amount of influence that the platform brings is something we’ve never seen before. They are effectively tapping into not only Gen Z, but all generations,” added DeSangro. “TikTok has successfully created and nurtured an environment where Gen Z feels empowered to create authentically and influence those around them. The space is highly conversational and feedback-oriented, creating a community for users to feel seen, heard and supported.”

3 Questions with Noodles & Company CMO Stacey Pool

As vaccine rollout continues to ramp up, people are out and about again. What does that mean for marketers in the food and beverage industry?

While the food and beverage industry has undoubtedly had to pivot, we’ve found that people are more comfortable than ever using digital technologies to engage in food ordering. Even as the country begins to open up again, people are going to remain interested in combining digital elements into in-person experiences when it comes to dining. As a result, we’re going to continue innovating our capabilities to make the ordering process, whether in-person or online, as friendly and personalized as possible, two mantras inherent to our brand.

Over the last year, we have learned things can change quickly in terms of customer needs. How did you manage that?

First and foremost, we must never stop listening to customers. As marketers, our job is to understand guest behaviors and evolve to fit their needs. We carefully monitor all channels where our guests engage to understand what is working and what is not. Whether it’s hearing that our guests are craving stuffed pasta or that we need to improve a process, there is nothing more important than what our guests are telling us, and then investing in the data and analytics to continually understand and meet their needs.

What is Noodles & Company’s plan to keep a nimble marketing strategy in place for the future?
We have to exercise agility. This means having the right team and partners in place. Especially throughout the pandemic, much of our success has been rooted in our ability to test ideas and get them into market quickly, and then to learn from the feedback we receive and iterate as needed. — Kimeko McCoy

By the Numbers

A number of brands have started to test the vaccine-incentivized waters, rolling out free and discounted products to vaccinated Americans. For example, Krispy Kreme will hand out free donuts for those with proof they’ve been vaccinated. Meanwhile, Sam Adams is giving out free beer. But according to recent research from global intelligence company Morning Consult, most Americans haven’t even heard much about these kinds of brand offers. 

Still, the report found there’s little downside to offering incentives. Find the breakdown below:

• 73% of consumers who’ve received a COVID-19 vaccine said they’re likely to take advantage of rewards from local retailers in particular.
• 58% of Americans said rewarding people for receiving the vaccine is a good way to boost vaccination rates, but 44% said companies shouldn’t offer rewards exclusively to those who have been vaccinated. — Kimeko McCoy

Quote of the Week

“A lot of people forget that as Black and brown women, doing this type of work, we are also living and walking through it. There is no line of delineation. I’m still a Black woman. I still feel a lot of things that are happening in the world and it allows me to make sure that I understand my rooting in this role. And I have a great opportunity to be able to impact things from the space of who I am.”

— Tahlisha Williams, chief inclusion, equity and diversity officer for Wunderman Thompson’s North American division, speak to Kimeko McCoy for her story on diversity, equity and inclusion leaders.

What We’ve Covered

• Carolyn Everson Facebook’s former global ads chief left the company last week, so we spoke with agency execs and marketers to get a sense of the impact on the industry’s relationship with the company.
• Senior News Editor Seb Joseph covered marketers worries about Apple’s hardline stance on tracking.
• Platforms, data and privacy reporter Kate Kaye dug into the privacy watchers’ fears surrounding Google’s FLoC.