E-commerce has skyrocketed during the pandemic, and TikTok wants in on the action.
The Chinese video app is making a bigger play for advertiser budgets with new ad formats designed to get people to shop on the platform, according to ad buyers and recent TikTok pitch decks shared with buyers. The move comes as online shopping surges in popularity and becomes an increasingly bigger priority for advertisers.
The new ad formats — which are in testing and expected to be rolled out in the first half of 2021 — let brands show their products, retarget people with products they've shown interest in, and highlight sales and promotions. The new formats include:
- Collection Ads, where brands can combine their product catalogs and branded videos to lead people to product landing pages.
- Dynamic Product Ads, which automatically retarget people with products according to their online behaviors.
- Promo Tiles, which allow advertisers to add customizable sales and promotions to their in-feed ads.
- Showcase Tiles, which let creators promote products in their videos with a link to them in tiles below for users to purchase.
A TikTok spokeswoman confirmed the platform was testing e-commerce ads without confirming the formats above or commenting on the decks. The move comes on the heels of TikTok running shoppable livestreaming tests with Walmart and a partnership it announced with e-commerce platform Shopify last year, which allows Shopify merchants to run TikTok marketing campaigns from the Shopify dashboard.
"TikTok is at a tipping point," Jon Severson, the vice president and director of paid social at Mediahub, said. "It's no longer just a novelty for brands to maybe try but is trying to become something that can drive incremental returns and business outcomes."
The app's usage has grown during the pandemic as people turned to its short-form videos for entertainment. While it mainly makes money through advertising, TikTok has been integrating shopping into the app to appeal to its millennial and Gen Z audience. Its competitors Snapchat and Instagram already have e-commerce ads.
Sandie Hawkins, the US general manager of global business solutions at TikTok, said the app was becoming a place where people discover new products through the hashtag #TikTokMadeMeBuyIt, and brands like Eos going viral and seeing increases in awareness and sales.
Overall, TikTok's US advertising business grew more than 500% in the past year, Hawkins said, without providing specifics. TikTok's US ad revenues were expected to hit $500 million in 2020, The Information reported.
TikTok is also going on a charm offensive with ad agencies, offering media credits to test out the new formats if they spend at least $5,000 over a two-week period, a media executive at a holding company said.
It's also broadening the base of advertisers it's pursuing and offering them perks like credit, newsletters, and alpha and beta testing, said Penney Soon, the senior director of social media at the Omnicom agency Hearts & Science.
TikTok has struck deals with the ad companies WPP and IPG Mediabrands that give them early access to new ad products and connect brands to creators on the platform, respectively.
In the pitch decks, TikTok presents itself as a place where "discovery drives purchase behavior." The slides tout its audience and how much time it spends on the platform, and details how brands have used it to grow awareness and sales.
Here's how TikTok is pitching itself to advertisers and retailers.
