American tech giants are battling it out in an unprecedented acquisition race to win control of the China-based TikTok (owned by ByteDance). Will a US-based TikTok become a game-changer in the advertising world? Let us find out.
TikTok is no stranger to controversies, but this time the very existence of TikTok in the U.S. is under threat. President Trump has signed an executive order of a 90-day deadline to China’s ByteDance to fully divest its U.S. assets of TikTok, citing concerns over the threat to national security and American citizen’s data privacy.
So, how will advertisers benefit from TikTok acquisition?
TikTok Acquisition: What Is in It for Advertisers?Â
Although, it is a time-framed deal driven by geopolitics, it might be unprecedented and resented by many. However, an acquisition offers survival for TikTok, a promising deal for the ultimate buyer, and a multitude of benefits for the advertisers. We list a few of them:
1. Brand safety
TikTok has been marred by a string of controversies throughout the year â€“ objectionable content, controversial TikTok challenges, data and privacy concerns, and national security concerns. Despite, the potential advertising benefits, advertisers shy away from TikTok to avoid damage to the brand image and reputation.
â€œBrand safety is paramount, that is to say, that advertisers will want to reach their target audience on platforms that don’t damage their image and reputation,â€ says Michele MarzanOpens a new window , chief strategy officer, MainAdOpens a new window .
Thus, a US-based TikTok would dispel many fears and build more trust among all the stakeholders.
2. Data and algorithms
All the tech giants in the race want to leverage data that TikTok has access to and its smart algorithms that help the video content reach target audiences.
Amy RumplerOpens a new window , VP of paid social, CentroOpens a new window , predicts, â€œIf the Microsoft buy goes down, the software giant could use user data to tweak features and content on their other properties to appeal to a broader audience. For instance, think of the possibilities that would come from TikTok being made available in Xbox as an app integration. Developers could target players with videos of people playing new releases and from there could offer the option for people to immediately click, download the game and then share clips with their own TikTok audience. Or, how easy it would be for people to make TikToks of themselves doing Fortnight dances and share those with friends they play Fortnite with via Xbox.â€
3. Bigger, better advertising potential
While Microsoft’s interest is a bid to expand its customer-facing platforms (LinkedIn), the participation of Oracle in the acquisition race comes as a bit of surprise. If you dig deeper, both Microsoft and Oracle have an impressive cloud infrastructure to support enormous data TikTok has amassed. Microsoft’s popularity was dipping, but now, the company has seen a resurgence because of the success of cloud computing and the growing popularity of Bing among the advertisers.
Oracle’s Data Cloud and data centers across North America hold massive data from credit agencies, analytics firms, and billions of other data points. Now, combine that with the TikTok user base and you have a perfect combination of data, infrastructure, and a platform to run your ads. Oracle’s interest in TikTok may not sound too weird now.
On the other hand, Twitter, too, could expand its scale to reach out to younger audiences along with their present set of mature audiences. And with the specialized industry knowledge and social media experience, there can be numerous advertising possibilities on Twitter-owned TikTok too.
4. Hyper personalization
Despite the pressure of the ban, it is business as usual for TikTok. AdGreetz, a video personalization platform recently partnered with TikTok.
â€œThe relationship extends TikTok’s platform capabilities significantly, enabling advertisers globally to more-effectively communicate with users by producing, deploying, and optimizing relevant, hyper-personalized content and messaging delivered in real-time. â€œThe world around us is changing daily and our societal needs are evolving constantly,â€said Lorry DestainvilleOpens a new window , marketing partnerships director, TikTokOpens a new window .
â€œIt is our responsibility at TikTok to meet those needs the best we can. As we introduced marketing capabilities via the platform, partnering with AdGreetz made perfect sense. Their personalization platform has proven to be one of the most effective tools for advertisers to communicate specific messaging tailored to individual users in a scalable manner,â€ AdGreetz announced Opens a new window in a press release.
With this partnership, advertisers can expect precise targeting and better advertising opportunities in the future.
To bolster business relevance, TikTok recently unveiled analytics tools for Pro accounts. Users will be able to see account performance summary, content performance, and follower’s engagement.
The timing of the announcement couldn’t have been better as the company looks for a potential buyer to divest its stake in the U.S. While TikTok has been around for three years now, only recently has its popularity spiked in the country. Launching new analytical capabilities only make the company more appealing to potential buyers and most importantly â€“ marketers and creators on the platformâ€¦With advanced analytical capabilities, TikTok is one step closer to becoming a social media platform of choice for brands and marketers. And while it remains to be seen how and if its acquisition takes place, TikTok has undeniably had a lasting impact on American popular culture.
Why Tech Giants are Keen on the TikTok AcquisitionÂ Â
1. Contention for data
TikTok has access to mammoth data of millions of users. While U.S. ownership will eliminate the fear of misuse by China, it will also leverage the new owners to better understand and market to the TikTok user base.
2. Short videos are the present and the future
TikTok has seen an exponential rise in the number of downloads and active users globally. Which is proof that the Gen Z and the millennials love videos. Short videos drive better engagement for today’s users with a short attention span. More engagement means more brand awareness and more probability of going viral. Other video platforms still have not established their supremacy in the short video domain, making TikTok the most preferred platform for users, content creators, as well as the advertisers.
3. Authentic and relatable content
TikTok is a platform that embraces amateurs as well as professional content creators. TikTok’s audience is not looking for airbrushed shots or perfect lip syncs. Content creators can become overnight stars if they deliver entertaining and relatable content. This makes TikTok a hub of micro and nano influencers who have a niche, loyal user base. Plus, TikTok offers a great platform for user-generated content campaigns.
4. TikTok algorithms
TikTok’s algorithms are perceptive and give brands and content creators equal opportunities to be discovered and seen by their target audiences. According to TikToOpens a new window Opens a new window ” aria-label=”undefined (opens in a new tab)” rel=”noreferrer noopener”>k, â€œThe system recommends content by ranking videos based on a combination of factors, starting from interests you express as a new user and adjusting for things you indicate you’re not interested in, too.â€
Â TikTok algorithms weigh user engagement, video information (hashtags, captions, sounds), device, and account settings (language preferences, country, device type, etc.) to deliver content in a users’ feeds. Thus, an equal opportunity to be â€˜seen’ improves brand awareness which is a boon for marketers and advertisers.
5. TikTok ads
TikTok Ads have not reached their full potential yet, and marketers and advertisers are still experimenting with them. Thus, TikTok offers fresh and organic opportunities for brands to reach their target audiences.
Amid this uncertainty TikTok announced Opens a new window its biggest ad campaign â€“ â€œIt Starts on TikTokâ€. TikTok ads will run in the U.S. on linear TV (including ESPN, TNT, ABC, NBC), digital media (Spotify and Hulu), TikTok social channels, digital out-of-home, and radio (iHeartMedia). The campaign will expand globally in September.
TikTok offers tremendous potential for brands, marketers, and advertisers to reach out to a wide and engaged user base. While the end-user is hooked to the platform, a U.S. based TikTok offers better advertising opportunities.
What If There is No Deal?Â Â Â Â Â Â
â€œIt’s unlikely that the app will get shut down before the election considering the disruption and friction it would cause for the platform’s 100 million U.S. users. However, in the unlikely event that the app does get shut down, users will likely move to a different platform like Instagram, Snapchat, or YouTube.
â€œThis year, much of TikTok’s user growth has come from the more mature generations. Like the market conditions Snapchat faced in its earlier days, TikTok understands that to maintain a stronghold on its audience, it must be able to attract users across generations â€“ not just the younger ones. This month, Facebook is set to launch its TikTok competitive feature called Reels, given a majority of TikTok’s more mature users are already on Instagram and Facebook, this new feature will likely draw their attention â€“ if it holds up,â€ says Rumpler.
Closing ThoughtsÂ Â Â Â
As the social media landscape hangs in uncertainty, a lot is going to change for TikTok and even for the rival platforms like Instagram’s Reels. As Marzan puts it, â€œThese platforms will hardly lose their allure for Gen Z and younger generations, but undeniably something is going to change, not only in terms of privacy regulations but also in terms of budget allocationsâ€¦We should not forget that social media platforms are not the only way to reach customers on their mobile devices. In-app targeting is on the rise, and I see a blue ocean of opportunities for brands in the open web, for what concerns measurable results in performance and conversion-based campaigns.â€
It is yet to be seen who can make the best deal amidst the highly political social media realm. A good deal will open numerous opportunities for advertisers, but a no-deal too will push the rival platforms to innovate and woo the TikTok user base and influencers. Discovering the right platforms and figuring out the right budget allocation for each of them may take time for long term success. But we are rooting for a US-based TikTok!