TikTok ranks as most valuable platform for DTC brands, study finds

TikTok is ranked as the most valuable platform for direct-to-consumer advertisers, surpassing Facebook, according to a new report from Triple Whale. Ad spending by DTC brands on TikTok has surged 231% over the past year, hitting $30 million in the second quarter of 2022, the highest growth among major online platforms including Facebook, Snapchat and Google, e-commerce analytics software company Triple Whale found. Google Ads also saw strong growth in the second quarter, ranking as the second-highest DTC channel by spend in its report. Triple Whale analyzed $530 million in ad spending across 5,000 e-commerce stores. It found that brands generating $1 million to $5 million in annual revenue are buoying TikTok platform usage and driving up aggregate spending, rather than larger brands. Alexa Kilroy, head of brand at Triple Whale, points to several key reasons: affordability, investment into new strategy, competition and audience. See all of Ad Age's 2023 Agency A-List winners here “Because the advertising function of TikTok is relatively new, costs are notably more affordable than those of Facebook,” Kilroy said. Plus, adopting a new ad platform may be deemed as risky for established brands, Kilroy suggested. “They’re taking more of an ‘if it isn’t broken, don’t try to fix it’ approach, leveraging the platforms they’ve already had success on to continue scaling,” Kilroy said. “Smaller brands, less standardized in their operations, have the flexibility to use a portion of their marketing budget in order to source high-performing TikTok style content for their ad campaigns, especially due to the cost of efficiency of running ads on the platform itself.” Across all platforms, the biggest spending DTC category continues to be clothing, at $153.5 million in the second quarter, followed by health and beauty at $141.9 million, according to the survey. Home and garden brands spent $58.3 million on advertising during the quarter, followed by food and beverage marketers at $55.6 million and jewelry and watch sellers at $48.7 million. When it comes to Facebook, the categories that get the most bang for their buck are baby products, books and collectibles—they pay a CPM, or cost to reach 1,000, of $10, while health and beauty and digital products saw CPMs of $14, according to the report. ~ ~ ~CORRECTION: A previous version of this story misspelled Alexa Kilroy's first name. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here

TikTok ranks as most valuable platform for DTC brands, study finds

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