TikTok rides out wider advertising slowdown

FILE PHOTO: TikTok head office in United States

TikTok is expected to ride out the advertising slowdown, as the Chinese-owned social media titan becomes an outlier to the wider industry slowdown.

According to a new report published by GroupM, the media buying agency owned by WPP, TikTok doubled its advertising revenue in 2022.

“This has likely been another driver of the advertising deceleration or “pullback” noted at Meta and Snap over and above macroeconomic factors given that we see less deceleration across other digital platforms where TikTok would be a less obvious alternative (such as Microsoft),” the report said.

However, the report reckons that although marketers may choose to view the platform as a good way to reach younger audiences who are becoming increasingly difficult to target via linear TV, there was a caveat that longer term strategies would “come with increased risk of the platform being banned in additional markets”.

Despite boasting over a billion users, TikTok remains banned in India, and continues to receive scrutiny from the UK, US and European Union, especially over data access from China.

GroupM revised its 2023 forecast for total ad spending growth down 0.5 per cent to 5.9 per cent.

Tech analyst at PP Foresight Paolo Pescatore echoed this sentiment, and told City A.M.: “As its [TikTok’s] dominance grows this will only draw further attention among regulators and competition authorities.”

He said that this market prevalence was unlikely to vanish anytime soon, with marketeers following eyeballs, which continue to have an increasing focus on shorter form content via TikTok. 

Nonetheless, the GroupM estimate come after reports that TikTok cut its global revenue targets for 2022 by at least 20 per cent in September after it struggled to keep up momentum in the face of tightening advertising spend and wider macroeconomic instability.

Head of investment at interactive investor Victoria Scholar previously told City A.M. that although Facebook has been at odds with TikTok to nab the attention of Gen Z, the latter’s “overconfidence has led to a spending problem that has got out of control”.