The TikTok effect: short video digital ad spend rising

TikTok’s staggering growth trajectory is showing no sign of abating, and is driving an increase in short video creation, consumption and ad spend across Asia-Pacific, according to a Forrester report.

The two-year-old video app, which allows users to create and share 15-second videos across their social platforms, has become a global sensation.

Available in 150 markets and in 75 languages, the platform has more than 700 million monthly active users globally. It has been downloaded 80 million times in the US, and the most-followed TikTok account, that of the German twins Lisa and Lena, has 31.5 million followers.

While TikTok is not the first short video app to gain popularity (Vine was successful in North America, and Kuaishou was popular in China), it is the first to reach such towering global success.

It is proving to be stiff competition to more established social media platforms for users and video ad dollars. In just a year, TikTok has attracted 200 million users in India, compared to Facebook's 300 million existing users it built over nearly 13 years.

Meanwhile TikTok recorded 663 million new downloads in 2018, compared to 444 million new downloads for Instagram.

It has been among the top downloaded apps in all key Asia Pacific countries in the past year.

Short video ad spend

The platform is also driving an increase in short video ad spend across China and Asia-Pacific.

Forrester estimates that short video ad spending for the key Asia-Pacific markets of Australia, China, India, Japan, and South Korea will be $4.7 billion in 2019, accounting for 5% of overall digital ad spend.

This short video ad revenue will not be totally incremental but will cannibalise advertising on social media platforms like Instagram, Forrester predicts.

Overall online video ad spending across Asia-Pacific will increase from $21.3 billion in 2018 to $53.7 billion in 2023, growing at a compound annual growth rate of 20.3%, the firm added.

China will account for 99% of the short video ad spending in 2019, and 75% of the total online video ad spending in 2023.

Short video ad spending will reach $6.5 billion in China by 2020, from $2.1 billion in 2018, growing at a compound annual growth rate (CAGR) of 25.5% in that period.

China

The lion’s share of TikTok's success still comes from China, which is home to more than 500 million short video users across a variety of short video players, Forrester said.

TikTok saw its number of daily active users in China increase from 30 million to 250 million in one year.

Kuaishou, which launched in 2011 as a photo sharing app, is the oldest platform and is backed by Tencent. Meanwhile key tech giants like Tencent, Alibaba, and Baidu have launched their own short video apps, Weishi, Lu Ke, and Nani, respectively.

Future

The rapidly-changing nature of social media renders the future of apps like TikTok uncertain. One only needs to look at Twitter’s decision to shutter Vine in 2016 after it struggled to monetise the service as evidence.

But Forrester thinks that given consumers’ shrinking attention span and the growing amount of media content they are bombarded with, the short video format will continue to grow for the next few years.

Early brand adopters are seeing strong success on TikTok.

SBI Life, an insurance company in India, did a campaign for its app YONO to woo youngsters in small towns and garnered more than 7 million views in a week, while in Japan Softbank launched a successful ‘Brand Takeovers’ ad on TikTok.

TikTok has launched new advertising formats including brand takeovers that allow full-screen vertical display, in-feed native video, and hashtag challenge ads, to provide a more immersive and interactive platform to marketers. 

Xiaofeng Wang, senior analyst, Forrester, said: “TikTok is fast becoming the most popular app in China and across the world. The short video format with rich audio and image filtering features and machine learning based content recommendations attract young consumers. It has also become a relevant digital platform for marketers. Brands like Louis Vuitton and Michael Kors launched marketing campaigns on TikTok in China. Uniqlo has partnered TikTok to launch the first global marketing campaign in June, including the US, France and Japan.”