‘Still test and learn’: TikTok’s European business expansion
TikTok is coming out of stealth mode in the U.K. following its arrival here 14 months ago. In that time, TikTok has used the time to turn its WeWork office in Holborn, London, into its hub for Europe where commercial execs for countries including Spain, Italy and Germany are based as part of a team that covers 150 people, per LinkedIn. From the London office, director of revenue and partnerships Inam Mahmood oversees the European markets for TikTok. But most of the ad revenue comes from the U.K., which alongside the U.S. is where the social network has tested and sold most of its ads to date.
Despite the investments, TikTok’s pitch is as fledgling as those junior execs who tend to sell it to agencies, according to the media buyers. Like other social networks, ads on TikTok appear in the main feed as short, vertical videos. Where the social network has tried to differentiate itself is through its sponsored Hashtag Challenges, which can include branded takeovers of TikTok, influencer outreach and TikTok content creation. While these challenges can go to generate billions of views, advertisers are asking whether being an early adopter will be a big enough benefit or if they should sit tight until TikTok becomes established.
“TikTok is still a test and learn for our buyers and clients, and the only benchmarks they have are when they compare against reach and frequency buys on other social platforms,” said Paul Kasamias, managing partner at Starcom. “It’s hard to know what good looks like on TikTok now.”
TikTok’s value to advertisers
Clarifying what advertising on TikTok can do is a priority for the app as it looks to capitalize on the popularity that has pushed its downloads to more than 1 billion since its launch in 2017. The U.K. accounts for a fraction of those downloads, with monthly active users at around 4.7 million, according to the senior buyer, who has met with TikTok’s commercial team. For context, Facebook had 39.2 million monthly active users in the U.K. last month, per Statista. Current size aside, the U.K. is a key market for TikTok as evidenced by the launch of its first brand campaign last December and a more recent push last month.
“TikTok has too much demand, so its team in the U.K. are trying to find a way to scale quickly,” said Kasamias. “There’s a huge buzz around the app, but they don’t have enough manpower at the moment so have been quite focused about who they work with.”
It was a similar story with Snapchat as it took them a while to understand what the potential barriers to entry for advertisers and agencies might be, added the same exec.
A look at where the vacancies are at TikTok in the U.K. shows how keen it is to grow its commercial team. Thirteen of the 24 job posts currently on LinkedIn are connected to developing TikTok’s ad business in the U.K., from ad operations, agency sales to influencers and privacy.
Brand partnerships is another focus, according to the job posts, with three of the vacancies recruiting to strengthen the app’s ties to agency teams. Last month, TikTok stumped up the cash for its first IAB Upfronts session where execs were at pains to show how in step the app is with young, confident, irreverent social media users. TikTok’s Mahmood spoke about how the social network had become the world’s leading destination for mobile short-form video, while brand strategist Ryan Martin talked through the creative aspect of the app, which he said allows people to become their own Spielberg. Snapchat sang a similar tune in 2017 when it was trying to launch its own business across Europe with the U.K as the starting point.
“Clients are signing off budgets to run test campaigns on TikTok, but I can see how in the future the app could get pitched against Snapchat because of how similar their audiences are,” said Rhys Westwell, head of paid social at Zenith in the U.K. “It could be that the money that went on Snapchat now goes to TikTok.”
Many of the challenges Snapchat had in Europe in 2017 mirror those TikTok now faces: Regarded as an age-gating tool that’s still in beta and with limited measurement that struggles to link the site’s vanity metrics to business goals. Nevertheless, TikTok has tried to learn from its predecessor by taking a more aggressive stance to translating its ads business to Europe. Whereas Snapchat took a more phased approach, gradually introducing measurement, targeting and programmatic buying tools to advertisers, TikTok wants to provide all those services over a much shorter time frame.
A pixel tracking tool, similar to other social networks, has been promised to local ad buyers in the coming weeks, said one exec, while another has been told that partnerships with data firms are in the pipeline in order to introduce third-party measurement to the platform. The updates coincide with TikTok’s plan to quickly transition from a direct business, where its own team buys ads on behalf of agencies as a managed service, to a self-serve platform. Some of the unskippable ads that play on TikTok can already be bought on a self-serve basis in the U.K., said Kasamias.
Building an ads business
The well-trodden self-serve path taken by the likes of Snapchat, Facebook and Instagram lets TikTok reach a much broader set of advertisers. In fact, the dynamics of a self-serve platform are heavily reliant on TikTok gaining a critical mass of advertisers in order to drive up average ad prices. As it stands, cost-per-thousand impressions on the social network sit somewhere between Snapchat at £1.50 ($1.83) and Facebook at £3.50 ($4.27) agreed the execs.
“TikTok currently has a grace period,” said Westwell. “It’s come out of nowhere and has a lot of users, so advertisers are excited about it. They’re not necessarily looking at the business metrics or the eventual challenges that come when a platform like that gets bigger.”
Aside from brand safety, TikTok’s biggest concern is visibility among buyers. For example, some of the agencies contacted for this article did not know enough about the platform to share their views on the platform, even though the social network has been in the U.K. for over a year. It seems plans are underway to address this issue, however, with execs from the commercial team willing to offer incentives to advertisers that can help raise its profile in the industry. According to one exec who spoke on the condition of anonymity, TikTok will make creative for certain advertisers and will even give away free media to get them started on the platform. Even influencers are being wooed with the promise of boosted posts. The more popular influencers on TikTok, the more advertisers will pay to reach them.
“TikTok wants more influencers to come into their office so that it can work through ways to support them over a 12-month period,” said Ben Jeffrie, CEO of influencer marketing platform Influencer. “TikTok is also prepared to boost certain content out on its page to drive up follower counts for certain influencers.”
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