TikTok is offering big brands tens of thousands of dollars in free media in an effort to get hesitant advertisers to try the service, according to people familiar with TikTok’s advertising negotiations.
The credits are not new and not part of an incentive program, a TikTok spokesperson said. Advertisers said TikTok’s aggressive pitch comes as the platform is looking to attract even more brands as the entire digital landscape navigates uncertain times amid a fraught economy and as Tik-Tok fights to poach brands from rivals such as Meta’s Instagram and Facebook.
At the same time, TikTok has been making changes to its ad products, telling advertisers that branded hashtag challenges will “evolve.”
Social media apps often give some free media to brands to test new ad products and campaigns, but TikTok’s giveaway is large by most standards, advertisers said. “They’re going after brands that are not fully invested on TikTok yet, or they’re agnostic on the platform,” said one marketing executive, who spoke on condition of anonymity. “These are for large advertisers. These ad credits are pretty significant.” This person said the ad credits for TikTok could top six figures; other advertising execs said they are typically around $50,000.
A TikTok spokesperson said the platform offers credits based on individual clients’ campaigns, where a certain amount of spend unlocks auction ad credits for programmatic ads when brands bid on inventory.
Ad Age also received a copy of a recent email sent by TikTok ad sales reps to marketers, which showed that the company is “evolving” how hashtag challenges work. Hashtag challenges are when a brand promotes a trend, propelling attention to a campaign, and are some of TikTok’s most prominent and expensive ad products. The price of challenges starts at $150,000 for six days.
TikTok has a complex ad platform, with a variety of products like video ad takeovers that take up the whole screen and options for brands to partner with creators. TikTok is seen as an effective marketing platform, but it’s also difficult for brands to decipher its unfamiliar culture. TikTok teenagers have a unique style of video consumption, one that does not lend itself to easy commercial interruptions. TikTok has tried to teach brands that style of video, and to build ad products that are better suited for the trends, memes, dancing, music and editing tricks that come innately to TikTok users. TikTok also is trying to impress upon brands that it can be a safe atmosphere, even if some user-created videos are risqué or involve sensitive subjects.
TikTok is owned by Chinese-based ByteDance and is expected to hit $6 billion in ad revenue in the U.S. this year, according to eMarketer, up from $2 billion last year. At the same time, TikTok is casting a larger presence in the ad world, participating in major industry events such as the digital NewFronts in May. It is also sending its ads team to Cannes this month, marking its first official presence at the ad festival.
In recent months, TikTok has made substantial changes to the ad platform. TikTok made a string of announcements about new partnerships with marketing technology companies, including social analytics firms like Sprout Social and Sprinklr, and measurement firm IRI.
“There is a lot they’re cooking up, and a lot they’re evolving,” said one executive from a new TikTok marketing partner. “TikTok is being very iterative on its ad products.”
One of the biggest changes to TikTok came last month, when the app announced it would change its “Discovery” tab to a “Friends” tab. Discovery was where users scrolled through trending videos. The “Friends” feed is for videos from people with closer relationships. The product adjustment wound up affecting branded hashtag challenges, which used to appear on Discovery, among lists of other trends, and within banners promoting the trends. TikTok told marketers that the “branded hashtag challenge will evolve,” according to the email obtained by Ad Age, but did not provide specifics on what will come next.
Many marketers said that the hashtag challenges were not an effective way to spread messages because they were often hijacked by users, who use the hashtags on videos that have nothing to do with the challenge. Brands including Chobani, Samsung, Chipotle and American Eagle have run hashtag challenges. TikTok did not say how it would improve the challenge ads, but brands already are trying to work with creators to drive trends more organically. In May, TikTok released a new ad product called “Branded Missions,” which is described as a way for “advertisers to crowdsource authentic content from creators on TikTok, turn top-performing videos into ads, and improve brand affinity with media impressions.”
“The bar is kind of high on TikTok for brands to do something that people actually care about,” said Noah Mallin, chief strategy officer at IMGN Media, a media and tech company, which works on TikTok content production with brands. “It’s better to have direct integrations and have creators set up the challenges; there is more potential to be successful than a straightup branded hashtag.”