When it Comes to Commerce, TikTok is Poised to Compete with Facebook

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TikTok launched globally in September 2017, a year after its debut in China. In that time, it has amassed 100 Million monthly active users and surpassed Facebook as the most time-consuming social media app of 2020, with users spending an average of 21.5 hours on TikTok per month (App Annie 2020). 

There’s a reason Americans are flocking to TikTok, watching an entire futbol game’s worth of videos every day. Actually, there are 5 reasons:

  • Its algorithm optimizes to encourage creation 
  • Its algorithm encourages discovery
  • Its features lower the barrier to creating (duets & stich)
  • It encourages users to share TikToks off platform 
  • It allows users to crowdsource music & sounds

This amount of undivided, sound-on attention is obviously interesting to brands looking to build awareness among a new generation of buyers – especially those at the precipice of forming lifelong purchasing habits and brand loyalties. 

The ability to elicit emotion with an audio-on atmosphere, tap into happier mindsets & encourage user generated content makes TikTok a recognizable tool to drive upper and middle funnel campaigns. 

But don’t sleep on TikTok’s ability to drive sales. 

If Douyin, its Chinese equivalent, is any example, TikTok’s bound to become a mainstay of sales-driven campaigns and is poised to compete with Facebook in 1-2 years’ time. 

Revenue from Douyin’s livestreaming commerce formats doubled from April to July of 2020, from around $10M to nearly $20MM (chanmama, 36Kr). Though TikTok has US-based ownership, Bytedance is sure to share what’s driven its social commerce success in China, our north star for commerce in general. 

Okay, so what makes TikTok commerce more promising/different from other platforms?

Its distinct Audience – TikTok obviously has its own unique formats and mindset, but it also has a distinct audience that isn’t replicated on other platforms. Recent data from TikTok purports that 40% of people on TikTok don’t have a Facebook account and 63% aren’t on Twitter. Not only are the users on TikTok more engaged and, therefore, more likely to remember an ad, they’re also not reachable on some of the other tried & true commerce-driven platforms. 

A new class of creators brings authenticity & entertainment to commerce- Where Instagram has influencers, TikTok has creators. Because they can’t rely on followership to ensure success, TikTok creators have even tighter relationships with their followers than those of influencers past. TikTokers are forced to bring their A game to every single video they share. And the A in A game stands for Authenticity. 

Take this ad for Converse by Steezy Kane.

The second part of this ad is what you’d see on Instagram. The entirety is what you see on TikTok. And that’s the personality and transparency I want to buy. But you don’t have to take my word for it,

More than 48% of Gen Z and Millennials are more likely to buy a product a Creator recommends, when this influencer is a person they can relate to.1

TikTok Puts the Product in Participation – Because TikTok is at the epicenter of culture, brands have a greater opportunity to achieve both product-focused campaigns and campaigns that foster brand advocacy. TikTok creates a FOMO effect for its users via challenges, prioritizes sharing content that inspires creation & democratizes influence making it easier for anyone/anything to be discovered. These things combined, compel users to participate in trends more often, even when these trends surround a product…actually, especially when they surround a product.

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The most noteworthy example is Doggface’s Morning Vibe trend set to ‘Dreams’. From countless members of the community, to Mick Fleetwood and even the Ocean Spray CEO joining in, the world joined in and sold out the product. Earlier examples include Chipotle’s #GuacDance challenge from 2019, the ever-popular Target Couples Challenge and more recent include the feta cheese supply chain issues caused by this baked feta pasta recipe.

Heightened Discovery & Impulse Purchase – Because of its non-follower-based graph, users are much more likely to passively discover content and brands without actively seeking them out. This behavior trains users’ receptivity to brand messaging and purchase. In fact, TikTok has inspired more impulse buying than any other platform. 

Take @hannahshschelenker’s organic post raving about Aerie’s Crossover leggings for example. She posts an organic video wearing the leggings, a TikToker than duets the video quite literally searching for the product online and buying the leggings immediately. The product immediately sold out and drove 700,000 searches on Aerie’s website, and a 200,000% increase in Google searches. 

Today, commerce on TikTok is still nascent

While platforms like Facebook, Instagram, and Snapchat all have introduced ways to generate causal attribution between a particular campaign and sales, TikTok isn’t quite there yet. Many marketers still rely on third-party measurement providers to assess the impact of their advertising – including their investments on TikTok. 

TikTok added product links to help advertisers with attribution late last year and it’s clear from the #TikTokMadeMeBuyIt trend (1.3B video views) and other campaign case studies that commerce is alive and well on the platform, but it’s still new and that means there’s still not as much data to support it. 

TikTok’s strategy is to catch up with its competitors AND differentiate its strategy 

Because of its parent company, Bytedance, TikTok has the opportunity learn about what drives commerce from the most social commerce active place in the world: China. In the next year we will see TikTok catch up to its social commerce peers like Facebook/Instagram and Pinterest, creating the building blocks it needs to compete dollar for dollar. Here’s how:

Catching up to its #SCommerce Peers

Facebook’s main competitive advantages are its attribution models, DPA, Product catalogues and product tags. TikTok is in active alphas on their version of these right now. 

Including:

Showcase Tiles allow advertisers to highlight 3 products or categories and multiple destination pages from a single video.

  • Promo Tiles appear on in-feed videos that can be used to draw attention to special promotions, offers, or sale events.   
  • Collection Ads Tiles are fed from your catalog and link to an instant loading product listing page (PLP)  hosted by TikTok. The PLP hosts a collection of top products from the catalog.
  • DPA (Dynamic Product Ads) enable advertisers to use existing video templates to translate their product catalogs into compelling TikTok videos at scale or upload product specific videos in their feed. 

A differentiated strategy that seeks to create experiential ads with younger audiences at the center

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A Focus on creator monetization

TikTok’s already made a concerted effort to ensure creators aren’t monetized by brands without seeing a piece of the action. For commerce specifically, TikTok’s already formalized its relationship with Creators via Creator Marketplace and it’s working on a tool that allows its most popular users to share links to products & automatically earn commission on any sales. Most popular users, not just influencers – a far cry from Instagram’s mandate that creators must have 100k followers in order to add links to Stories. TikTok’s focus on supporting creators ensures that creators stay active on the platform because they’re able to make money more consistently and securely than on others.  

Livestreaming Expertise 

As recently piloted with Walmart via its “Spring Shop Along”, “Livestreamed” shopping is a big part of TikTok’s future. It essentially creates a mobile version of TV shopping channels where users can buy goods with a few taps after seeing them showcased by TikTok stars. 

TikTok Show Windows

The TikTok Show Window is TikTok’s foray into helping brands create a shoppable page within their Business Accounts. Creators can collaborate with brands to help promote those same products on their profile page and in their TikTok videos. Their initial launch will only be available via Shopify, but by next year they’ll build additional integrations for other 3rd party platforms and individual brands to plug in.

With these three areas of focus, there is nothing stopping TikTok from taking on the biggest players in the social commerce space.

Source:

  1. US Holiday Shopping research with Walnut, 2020. EU Holiday Shopping Research, 2020. Compared to YouTube, Facebook, Instagram, and Snapchat users.

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