TikTok joins the AI-driven advertising pack to compete with Meta for ad dollars

Officially launching today (Oct. 7), Smart+ automates everything from creative development to targeting and optimization, streamlining the entire ad-buying process on the app. 

In practice, marketers can let TikTok’s AI handle the heavy lifting — building and delivering ads to drive conversions, leads, or app downloads. However, they also have the option to take control at key stages, as Smart+ offers the flexibility to use its features selectively.

For instance, marketers can utilize the tool to create and optimize ads and then choose whether to manage the campaigns themselves or hand over control to the AI. This modular approach allows marketers to pick and choose which functionalities to leverage, setting it apart from competing solutions that often require full commitment to the entire suite.

This flexibility might ease concerns that tools like Smart+ require marketers to hand over too much control to inscrutable algorithms. 

However, it also highlights a more significant issue with tools like Smart+: while these “black box” models promise enhanced performance through advanced machine learning, they demand a hefty dose of trust from marketers, often lacking the insight and control they’re accustomed to. 

Still, many seem willing to trade a bit of oversight for quicker results and improved ad performance.

That’s exactly what TikTok is banking on with Smart+. The pitch is all about simplicity and speed — no more weeks of guesswork and endless A/B testing, according to Adolfo Fernandez, TikTok’s director, global head of product strategy and operations, commerce. 

With TikTok’s AI already trained on what drives successful ad campaigns on the platform, advertisers can expect quick wins with less hassle, he added. The same goes for creative; Smart+ is linked to TikTok’s other AI tool, Symphony, designed to help marketers generate and refine ad concepts. 

“Advertisers optimizing for value with Smart+ web campaigns achieve a 53% improvement in return on ad spend on average [compared to without it],” said Fernandez.

Ray-Ban is one example. Over the summer, the brand ran a beta Smart+ campaign that slashed cost per acquisition by 50% compared to previous campaigns without the tool. Conversion rates shot up 47%, driving a 42% bump in return on investment for the eyewear brand.

Results like this are meant to appeal to a specific type of marketer — the kind who’s avoided TikTok so far, unsure whether the platform can deliver faster results or who are unwilling to spend the time and money to find out. Smart+ is TikTok’s way of pulling them in. And if it works, it could reshape TikTok’s ad business, making smaller advertisers the foundation of its growth — just as Meta and Google have done.

“In my mind, with the advent of Smart+, the gap will close almost entirely with Meta,” Blake Chandlee, TikTok’s president of global business solutions, told Digiday. “That [Meta’s Advantage+] has really been the benchmark in the industry. Historically, we’ve been really strong in branding, to the point our branding products outperform anybody in the market. But our performance products [especially including Smart+], I think, can be on parity.”

However, closing that gap won’t be easy — TikTok’s ad business still has some catching up to do with Meta.

TikTok’s worldwide ad revenue is expected to reach $22.32 billion by the end of the year, and increase 27.3% to $28.42 billion by the end of 2025, according to eMarketer’s March 2024 forecast. By comparison, Meta’s worldwide ad revenue is expected to total $154.16 billion by the end of this year, increasing 23.2% to $173.92 billion by the end of 2025, per eMarketer.

“Automation is a key step for us as we enable advertisers to further invest in TikTok and achieve even greater return on investment,” David Kaufman, TikTok’s global head of monetization product and solutions, said during the TikTok.

Shop continues to be a critical cog in those plans — so much so that it’s rolled out its own AI tool to boost merchant sales. Called GMV (Gross Merchandise Value) Max, the AI tool automatically tests and picks the best-performing creative assets for sellers. It optimizes traffic, organic content, paid ads, and affiliate posts to reach shoppers across TikTok’s entire shoppable real estate — from the For You Page to the Shop tab and even search results. It can’t, however, optimize for return on sales, only overall ROI within TikTok. But TikTok execs don’t see that as a drawback — in fact, they think it’s a feature, not a bug.

“If you put that in perspective — moving from ROAS to overall ROI — is a major step forward in our vision of moving from being a media partner to becoming a true business partner for our customers,” said Fernandez.

Put another way: TikTok wants to emphasize broader business outcomes — like long-term growth and marketing efficiency across its ecosystem — over simply driving immediate sales through ads. And the early test results suggest it might be onto something: merchants using GMV Max saw an average 30% uplift in gross merchandise value, according to Fernandez.

Taken together, all signs point to a shift in TikTok’s pitch to marketers. The company wants to be seen as more than just an entertainment app where users kill time watching viral videos. It’s becoming a platform where people choose to spend their time — and with that shift in mindset, they’re increasingly searching, discovering and buying what they see.

To prove it, TikTok’s head of measurement product solutions and operations pointed to some compelling numbers. “Research shows that 79% of purchases driven by TikTok aren’t attributed to the platform, and conversions are undervalued by 73%,” said Ann Nguyen, TikTok’s head of measurement product solutions and operations.

According to the exec, this trend has been building for a while — existing measurement tools just couldn’t capture it. So, instead of waiting for third-party metrics to catch up, TikTok built its own.

When external data didn’t tell the story it wanted, TikTok created its own narrative — backed by its own tools, including conversion lift studies. These studies measure sales that wouldn’t have occurred without a TikTok ad and use a randomized controlled trial approach similar to what’s done in scientific research. TikTok execs are encouraging Smart+ advertisers to leverage these studies, although marketers will also have the option to utilize their own tools.

“They consistently show that TiKTok is a highly incremental platform that generates demand with results that far surpass last-click attribution,” said Nguyen. “Advertisers are, for instance, seeing on average a conversion lift of at least 25%.”

This isn’t a new tactic — Google and Meta have both leveraged similar strategies for years to build an “undervalued, underinvested” narrative. But TikTok is trying to stand out with its focus on privacy-enhancing technologies, like data clean rooms and trusted execution environments, to keep marketers’ data safe while proving its value.

And as TikTok repositions itself as a serious player in advertising, the pressure’s on to show that it can deliver where it matters most: the bottom line.