A leaked pitch deck reveals how TikTok is trying to woo brands
A gummy bear stands alone on a cardboard-box stage singing Adele. “Never mind, I’ll find … “ The camera holds a close up on the candy performer before it pans out to the audience, revealing a sea of gummy bears. The chorus rings out from the crowd: “ … someone like you.”
And that’s how TikTok is done (#haribo, #haribochallenge).
Advertisers could be forgiven if they are not quite sure what to make of TikTok, or even what’s going on there. Singing gummy bears? But the Chinese-based video app is trying its best to teach brands the fundamentals of the platform. A leaked pitch deck, obtained by Ad Age and included in full at the bottom of this post, shows that the company’s priority is simply to explain how the app works. “TikTok enables everyone to be a creator,” the pitch says, “and encourages users to share their passion and personal creative expression through their videos.” (So long as the expression isn’t political; the platform recently banned such advertising.)
The sales presentation, which was circulated to agencies, provides a rare comprehensive look into the rising social-media company, which has been guarded about publicly disclosing key details about its community, including its size. Until now, the only number that has been revealed about the size of TikTok’s user base is that the app has been downloaded more than a billion times. But that number doesn’t suggest how many people visit the app on a regular basis. The pitch deck does: There are 30 million-plus monthly active users in the U.S., it says. To put that into perspective, Snapchat has 83 million daily active users in North America, according to its second-quarter financial report.
What TikTok lacks in reach, it makes up for in its relevance with young viewers. According to the pitch deck, 69 percent of users are between the ages of 16 and 24 years old, making it enticing for brands searching for cultural relevance with that young audience. “If I was working for GE or Allstate or AT&T, I wouldn’t recommend advertising on the platform,” says Benjamin Stops, strategist at Rauxa, a full-service agency acquired by Publicis Groupe. “But if you’re Taco Bell, Burger King or Adidas, there’s an opportunity there.”
TikTok did not respond to a request for comment by press time.
Brands lining up
The pitch deck says TikTok now offers five ad products: the hashtag challenge, a brand takeover, in-feed video, branded lenses and a “top-view” video. The campaigns can cost hundreds of thousands of dollars a day, according to the pitch deck. A hashtag challenge, for instance, starts at $150,000 a day, the deck says.
The gummy bear meme was the first example in the ad presentation to demonstrate how branded videos can inspire users to participate. In this case, TikTok creators made copycat videos using the same Adele song and same comedic format. Other videos featured a rubber ducky and a goldfish performing the song.
“We don’t spark trends, we set them on fire,” TikTok says in the presentation.
While marketers don’t always intuitively understand the language of new online platforms—they have had a hard time grasping the popularity of Snapchat for years—they know they want to be a part of it. So brands are lining up to work with TikTok: Guess Jeans linked with it last year with the hashtag challenge “in my denim” that invited people to show off their jeans in videos. Walmart promoted a “savings shuffle” hashtag challenge with TikTok last month. The National Football League has a TikTok account, as does its star quarterback Tom Brady and many other players.
The pitch deck gives brands an idea of what kind of performance they can expect from campaigns on the app. Guess Jeans, for instance, generated 10.4 million views from 6,000 people making videos with its hashtag. Universal Pictures promoted a hashtag for the movie “A House with a Clock in Its Walls,” generating 20,000 videos with “millions of views,” the deck says. In that campaign, Universal worked with TikTok “influencers,” who are internet stars that can lend their followings to brands.
One advertising executive with a top entertainment studio, who spoke on condition of anonymity, says that TikTok is getting expensive for advertisers. “It would be better if it cost about half as much,” the ad exec says. “But TikTok looks like they want to make some money. They’ve built the user base and now want to make money from it.”
The sales pitch provides a detailed roadmap for how TikTok plans to do that, too. There are the five ad formats, including the latest one, the “top-view” video, which takes over the whole screen. It’s a “high-impact video ad unit,” the deck says. “The first that the users see.”
The deck also shows how TikTok plans to build up its ad technology so that advertisers can automate their campaigns with the ability to target and measure them. TikTok is just now developing what it calls in the deck “interest-based” targeting, which serves ads to audiences based on their behavioral characteristics. The pitch deck uses an example of identifying people based on preferences and personalities learned from their activity on the app.
TikTok is powered by technology developed by its Chinese parent company ByteDance, “all fed by key first-party behavioral cues on the platform,” the pitch deck says.
Most of TikTok’s users are, in fact, Chinese. The deck says 500 million of the 800 million monthly active users worldwide are in China. Of the 30 million-plus U.S. users, however, the company gives a sense of how often they use the app. Americans open the app eight times a day, spending 46 minutes a day there, the deck claims. There are 37 billion U.S. video views a month, the deck says.
Again, for perspective, Snapchat claims 10 billion video views a day, which adds up to around 300 billion a month.
Counting the risks
TikTok may be starting to catch on with brands, but there is still a lot of uncertainty around the platform. The app presents many of the same challenges of working with other social media networks. Advertisers are concerned about the accuracy of measuring videos and ensuring that followers are human, not bots.
“Just because something is starting to gain traction, doesn’t mean brands should leap at the chance to advertise on the platform,” says Rauxa’s Stops.
TikTok is positioning itself as a platform for creators, a place where advertisers can piggyback on the fanbase of popular users like they do on Instagram, YouTube and Snapchat, says Gil Eyal, CEO of HYPR, an influencer marketing platform. “One of the challenges brands will face is defining which metrics define success, because not many are available,” Eyal says.
Advertisers can see how many people use a hashtag and view their videos, but the question is how much is that worth in terms of sneakers and ticket sales?
Also, there are brand safety considerations when dealing with TikTok. Since it is a Chinese company, U.S. brands may have to think about how working with the app could reflect on them. Just look what happened to the National Basketball Association after its recent missteps with China.
An NBA executive tweeted support for the protesters in Hong Kong fighting the Chinese government, and now the league is getting blocked in China. Following the airing of a new episode that poked fun at Chinese censorship, adult animated series “South Park” also was recently banned in the Communist country.
TikTok is very much entangled in politics, no matter how much the app tries to avoid sensitive subjects. For instance, TikTok has been criticized for censoring videos about the Hong Kong protests, and there are concerns about how it will handle political subjects in the future.
After recent reports that it stifled certain political subjects, TikTok reiterated its policy banning political ads. That was part of a broader policy to keep the app focused on more lighthearted subjects, like lip-syncing gummy bears, and away from hot-button issues.
Brands seem to be OK with that position, for now. “It’s not something we’ve been concerned about,” says one ad executive who works closely with TikTok but spoke on condition of anonymity. “But maybe it is something we need to watch. It should be on our radar more.”
“This is a Chinese company collecting a great deal of information on young people around the world,” says another ad agency executive, who also spoke on condition of anonymity. “It’s something senior-level marketers are aware of and wary of.”
TikTok is making moves to become a bigger player on Madison Avenue by building out its ad team, which is based in Los Angeles. And a recent job posting on LinkedIn shows that TikTok wants help shaping the brand for American audiences; the company is in the market for a brand strategist. “We are looking for an innovative brand strategy manager to build and define TikTok’s new image,” the job listing says.
The company also recently hired U.S.-based agencies Omnicom Group’s PHD and independent shop RPA to handle the majority of its media and creative accounts, respectively.