The prices of the packages are suspiciously low, the ad executive said, adding that they wouldn't really make economic sense unless TikTok was subsidizing them. TikTok has told agencies it does not shoulder the costs of this particular program. What could be happening, is that nimbler, creator-focused agencies have just gotten efficient at streamlining TikTok production.
TikTok’s internal ad liaisons do sometimes talk directly with brands to “upsell” them on ad campaigns, said another executive at a digital ad agency, which specializes in e-commerce. “There have been a couple of examples of TikTok having conversations without our account teams and trying to upsell our clients on different things,” the executive said, also speaking on condition of anonymity.
TikTok declined to comment for this story.
The company has become one of the most powerful platforms in advertising and entertainment. TikTok, owned by Chinese-based ByteDance, has more than 1 billion users, with 102 million in the U.S. TikTok is set to hit $14.15 billion in ad revenue this year, up from $9.9 billion in 2022, according to Insider Intelligence. Media holding companies and their ad agencies are ramping up spend, and they closely guard their relationships with brands. Meanwhile, brands are being meticulous about saving money and accounting for every marketing dollar while the economy is in a period of distress.
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TikTok has multiple layers of services for large brands and small businesses, like how Meta developed its ad business. There are self-serve tools for smaller ad buyers to automate campaigns, and there is white glove treatment for top spenders. TikTok has a program for “managed service providers,” which pairs brands with select marketing partners that are proficient at using the TikTok Creator Marketplace. There also is a TikTok Creative Exchange, which is an even more automated way to tap creative services and creators. Taco Bell UK used the TikTok Creator Exchange to get “instant access” to talent on the site, according to a case study on the TikTok for Business site.
Brands such as PepsiCo, DiGiorno Pizza, King’s Hawaiian, Ray Ban, ASOS and others are visible on the “TikTok for Business” website. There are case studies from recent campaigns that demonstrate how the brands used various marketing partners to run campaigns.
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“Basically, TikTok is going directly to brands,” said another exec from a major ad agency. “They are encouraging brands to get on board because they have an improved self-serve ad manager.”
This agency executive sees another potential motive for TikTok’s urgency to get closer to brands: TikTok wants to insulate itself from the whims of major holding companies, which advise brands on where to spend money. “Frankly, I feel the bigger push is to drive agencies out,” the ad executive said.
TikTok is in the middle of a contentious fight with governments around the world, and its CEO Shou Zi Chew, is set to testify in front of the U.S. Congress next week. U.S. lawmakers are considering restricting access to TikTok on national security grounds. The agency executive noted that major agencies often advise brands about when to turn off spending on platforms if they become too controversial or infringe on safety. For instance, ad agencies were the first to caution brands about spending on Twitter last year, after Elon Musk bought the company. The advice led to a brand drain from Twitter that persists to this day. TikTok has reasons to ensure it has a direct line to brands in the event of any backlash against the company.