TikTok Takes Off and Advertisers Want In

More Market Share

TikTok is catching the eye of advertisers and siphoning off revenue from entrenched players like Google (GOOGL) and Meta Platform’s (FB) Facebook. The social media platform, owned by Chinese company ByteDance, has captured a bigger slice of the online ad pie. This comes on the heels of Apple’s (AAPL) new privacy controls. As the tech giants’ view into consumer preferences was dialed back, their value to advertisers declined. This prompted some companies to implement a more diversified marketing strategy.

The revised approach diverted some ad revenue to TikTok, which came with the added draw of its youthful user base — an otherwise hard to reach audience. For the social media newbie, this has translated to wild success. It will snag an estimated $12 billion in ad revenue this year.

Over One Billion Users

Although TikTok is just five years old, it already has over one billion users on its app, which hosts short-from user videos. Its primary audience includes Gen Z and millennials. It also attracts influencers which have gained more attention from advertisers looking for new ways to reach their target market. That’s especially true following Apple’s privacy crackdown.

Market observers contend that TikTok has set its sights on the small and mid-sized companies that have supported Meta’s bottom line. To this end, it recently partnered with ecommerce companies like Shopify (SHOP) to support businesses’ ads on the platform.

Potential Potholes

Industry observers note some issues could hinder the Chinese company’s ultimate success. One concern is rising costs, which historically have been about half of what Instagram or YouTube charge. Some marketing features offered by the app have already seen substantial price increases. It also doesn’t provide the same level of detailed information on potential customers that Facebook and Google offer.

The biggest potential pothole may come from the demographic least likely to log in — people over 34. Parents with kids engaging on TikTok could pull the plug on the platform, which has algorithms that allegedly may harmfully expose children to inappropriate videos. TikTok must be wary of watchful parents as well as several ongoing investigations being conducted in the US.

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