TikTok Becomes An Advertising Hot Spot As Social Media Rivals Struggle

TikTok, originally made famous for dance trends and lip-synced videos, has morphed into an advertising powerhouse. As a result, TikTok is becoming a global advertising competitor at a time when its rivals are experiencing declines.

Owned by the Chinese company ByteDance, TikTok has come under criticism by advertisers and governments for concerns over the spread of misinformation, prolific bot accounts, and how the company utilizes user information.

The Trump and Biden administrations have spoken against TikTok's parent company, with the Trump administration unsuccessfully attempting to ban the app in the U.S. in 2020 unless an American company partially owned it.

Despite lingering uncertainty surrounding the platform, TikTok continues to grow in users and revenue. Advertisers are taking serious notice, opting to assume the risk and utilize the site in order to reach the app's growing customer base.

The New York Times reported that data analytics company Sensory Tower estimated TikTok users spend over an hour and a half on the app daily. That is more than triple the amount of time spent on Twitter and double the time spent on Facebook.

The app is most popular among young people, who now use the site as a search engine and news tool over its competitors. TikTok uses its short video format and content creators to generate ad revenue, with ads looking no different than an average video except for the small "Promoted" label at the bottom of the screen.

In 2020, the app launched TikTok for Businesses, where it advised advertisers, "Don't make ads, make TikToks." In 2022, TikTok announced the creation of TikTok World, a global product summit for brands and creators to interact and collaborate. Many of the most popular TikTok ads include content creators talking with their audience about the product, making funny skits, and using internet memes to generate attention.

The New York Times reported research company Insider Intelligence estimates that TikTok will make over $10 billion in ad revenue in 2022, over half of what it made the previous year. Its competitors are expected to lose revenue this year with serious concerns about their futures.

Digital advertising has dropped over the past year due to global economic decline and anticipation of a recession. In addition, large social media companies, like Meta-owned Facebook, Instagram, WhatsApp, and Twitter, have laid off thousands of employees in recent weeks.

Meta CEO Mark Zuckerberg, who recently took accountability for the decisions that led to laying off 13% of Meta's staff last week, said in an earnings call in February that TikTok was a company rival.

TikTok for Business advertises that one in every two Gen Z TikTok users is likely to purchase something they see on the site, and 81 % of TikTok users have discovered new brands on the site.

TikTok has popularized the #TikTokMadeMeBuyIt hashtag, where people share popular products they learned of on the site. The hashtag has thousands of videos with millions of views.