How TikTok is responding to advertisers' concerns about potential bans

Last week, TikTok CEO Shou Zi Chew testified before hostile lawmakers in the US Congress following an ultimatum from the Biden administration for TikTok parent company ByteDance to sell the app or potentially face a ban in the US. The request was issued due to concerns about how TikTok handles user data and shares it with its Chinese parent company.

The Biden administration and lawmakers raised the concerns because even though TikTok has repeatedly denied that US data flows to China, investigations have shown otherwise.

Buzzfeed reported that engineers in China regularly accessed US data. A former TikTok risk manager has also suggested that US data may still be exposed under TikTok's proposed plan to improve security.

TikTok CEO Chew Zi Shou in Congress

Common questions by lawmakers during Chew's testimony included - Does the CCP control TikTok decisions, directly or indirectly? How does TikTok get around CCP laws that require companies to provide user data access to the company plan to alleviate the harmful impacts of its platform on teen mental health?

It did not appear many lawmakers were interested in hearing Chew's response and, in some instances, rarely allowed him to respond to their questions fully or denied him the chance to respond.

To be fair to the lawmakers, Chew also avoided answering their questions directly and repeating many of the same lines from his opening testimony when responding to questions.

Hours before Chew's testimony, TikTok's Shant Oknayan, the newly appointed head of global business solutions in Asia Pacific, told Campaign Asia-Pacific the situation Chew and the leadership team are managing is 'disappointing' because it seems to lack deliberation and evidence and appears to be based on political posturing.

Shant Oknayan

"We are willing to meet with anyone to clarify our position and explain our steps to address any concerns," said Oknayan.

"Our efforts to ensure US data security, our collaboration with Oracle (for Project Texas), and the oversight and review by the US government are examples of avant-garde setups we have implemented. We are happy to discuss them with anyone."

Should the US decide to ban TikTok, advertisers' active campaigns on the platform will take the brunt of the impact, as well as advertisers who have gone all-in on TikTok as their primary social driver.

Oknayan admitted brands are curious about the situation and its relevance to consumers as they see how marketing is shifting. Creativity is being reintroduced, which adds value to their ROI.

He said TikTok is no longer a platform that brands test to see if it works but a fundamental part of their marketing strategy.

According to Sensor Tower, the increase in revenue when spending on TikTok has seen advertisers pay more on the platform. TikTok witnessed the highest growth in US ad spending in the third quarter of 2022 as brands opened their wallets. For example, Disney's ad spending on TikTok increased by just under $3 million in the first quarter of 2022 to $17.9 million.

"I have been talking to our brand partners about how they can continue to grow their business with us. We are also providing value to our users, and TikTok has created livelihoods for many creators and SMBs that rely on us. There are protests in Washington today from people saying banning TikTok disrupts their lives," said Oknayan.

"However, there are five million active small and medium businesses on TikTok in the US alone, and many have seen phenomenal growth. We have creators passionate about specific communities, such as financial literacy, science and technology, or DIY hacks, and they see TikTok as a platform to pursue their passions. We are not talking about influencers who are famous for being famous."

He continued: "The broader ecosystem's reaction is refreshing, as they see the actual ROI and how TikTok is reinventing marketing. Users see the relevance of our platform and keep coming back to spend time with us. SMBs see real business growth, and creators view TikTok as their livelihood."

Oknayan claimed TikTok has not seen reluctance from advertisers regarding the potential ban by the US or if Bytedance will divest from TikTok. Instead, he argued brands are more concerned about the business they must run and how TikTok is helping them to achieve their business results.

"Millions of advertisers are working with us and will continue to work with us as we get through this situation. So let's cross the bridge of doomsday if we ever get there instead of speculating about it," said Oknayan.

"We have had exponential growth and a responsibility to ensure the broader ecosystem understands why. We are taking user safety and trust as our top priority, and the relevance of our platform humbles us. Long story short, we must evangelise and showcase what we've been doing instead of speculating."

TikTok Shop and commerce

Despite the uncertain future it faces, business on TikTok continues. Oknayan, who was previously overseeing East Europe, the Middle East & Africa and Central Asia, is excited about his expanded role to lead APAC.

The former Meta and Google exec pointed to how TikTok chose to launch TikTok Shop globally in Southeast Asia in 2022 and is developing best practices in the region. While that could be the case, live shopping has caught on slowly in the US, which could have been why TikTok chose SEA.

"The consumer demographic is young, digitally savvy, mobile-first, willing to try new things, and brands eager to do the same. One of my personal goals is to see many of these innovations come out of this region, and TikTok Shop is an excellent example," explained Oknayan.

"I want my teams and partners in this region to be proud of their work and evangelise it confidently to our global leadership. My overarching mission is to ensure that we are not just receiving but driving innovation in this part of the world. I'm confident we'll see much material progress towards that goal."

@tiktokshop_sg

Oknayan is keen to stress, when describing TikTok Shop, that the word 'enhanced' would be more appropriate than 'disrupt' to describe TikTok's move into ecommerce, despite Facebook and Instagram ending their live shopping feature after the launch of TikTok Shop.

He said changes in consumer behaviour are driving this shift as people are no longer just looking for transactional convenience but also want experiential and emotional connections with brands. Oknayan said this shift from transactional to experiential is called 'shoppertainment', where people want to be entertained first and then buy products due to a brand's value.

For instance, on TikTok, he says almost 50% of consumers discover new products because of engaging content on the platform, and nearly 50% buy something, pointing to the concept of 'TikTok made me buy it'.

Oknayan claimed Maybelline in Indonesia leveraged TikTok's video shopping ads on TikTok Shop and saw a 3.8 times return on ad spend.

"What does this mean for brands? Ultimately, brands must shift their behaviour and lean into the consumer side. We advise brands to engage more authentically with their consumer base. Consumers want to be educated and entertained by a brand or product story," said Oknayan.

"They want it to be video-first, quick, and snappy. They also want to make sure they're not being forced into a decision to buy now. Consumers want to see authenticity from the brands they work with and want recommendations about trends from their favourite brands."

The shift of ad dollars to TikTok

TikTok has become a sought-after advertising platform, with brands and agencies testing the waters and seeing promising results. Advertisers who typically use Facebook and Google find that TikTok charges a lower cost per thousand impressions (CPMs) and spend more on the platform.  

Lower CPMs have led to significant growth in US ad spending on TikTok, with Disney's ad spend on the platform increasing from just under $3 million in the first quarter of 2022 to $17.9 million.

Oknayan pointed to how Google created the Knowledge Graph, making the world's information valuable and accessible, and Facebook created digital word of mouth with the social network. He said we are in the age of content, where the algorithm is smart enough to determine what content is relevant to users.

He said TikTok has the same reach as big platforms, with over a billion users globally, but argues its vital differentiation is its relevance.

"Users and creators of TikTok will check email, messages, and social media, but they will also watch content that is relevant to them. When reach and relevance combine, exciting results are yielded for brands that lean into it. On average, people globally spend over 80 minutes daily on the platform, which shows how relevant it is," said Oknayan.

"For brands, this means that the funnel has collapsed. It is no longer just about brand or performance advertising; the funnel is now circular. It goes from engaging, educational content to transactional, performance content. We call this brand performance, and we believe our advertisers are leaning into it because their consumers want to see it. In addition, some great brand results support that this approach drives impact, especially in tough economic times."

Koiniwa, Bank of Incubation

For example, Oknayan said a Japanese gaming app called Koiniwa created by Bank of Incubation decided to do an episode of storytelling about why people should download their app. As a result, they saw a 74% decrease in cost per install, a 1.3 times improvement in ROI compared to other channels, and a 120% increase in long-term value.

"The narrative of a collapsed funnel, combining brand and performance and entertainment with content, is a fun marketing exercise and drives meaningful results. That's what consumers want to see, so they keep returning to TikTok," Oknayan added.

The challenge ahead for TikTok

Aside from the mammoth challenge it faces in Washington, the rise of generative AI is top of mind for Chew, Oknayan and the rest of TikTok's leadership.

With generative AI going through intense tension around use, ownership, and royalties as brands and creators use these tools, the likes of Adobe have launched Firefly to address these issues by using a combination of assets, technology, and training data from Adobe and other sources.

TikTok has also launched a creator pay program, acknowledging concerns about low payouts from the platform's Creator Fund.

"How do we keep staying relevant? How do we keep helping brands achieve their business objectives in our company? ROI for our advertisers is our priority; we have programs, platforms, and products to help," explained Oknayan.

CPF's campaign

For example, in a campaign by Singapore's Central Provident Fund Board, the government pension fund used TikTok to host a 45-minute livestream featuring ng prominent creators who posed questions to CPF experts with questions submitted by users about CPF or planning for their life goals.

One key feature of the campaign was the Countdown Sticker, an interactive add-on product providing the time countdown function in In-Feed Ads, embedded in each creators' content. The countdown sticker, which leverages a scrolling timer, allowed CPFB to promote the livestream session. In addition, traffic Ads with Countdown Stickers also amplified the creators' content and drove users to click through to submit their queries in advance on the H5 page.

Oknayan says TikTok wants to keep leaning into creativity at scale. So the platform has introduced initiatives like TikTok Playground, TikTok Creative Exchange and TikTok Creator Marketplace to help brands build more creative that is more TikTok native.

TikTok is also looking to leverage generative AI content to build content and create and scale with tools like CapCut.

"As we are an entertainment and increasingly an edutainment platform, we have launched a whole feed around STEM content and have a dedicated feed for science and technology content because we know we have a responsibility to keep it relevant to what our users want, not only in terms of entertainment but also education," says Oknayan.