Tik Tok Tests ‘Shop Now’ Button For Influencer Videos
TikTok, mostly considered as an entertainment platform is improving its advertising offerings and nascent Creator Marketplace that matches advertisers with vetted publishers and influencers. DigiDay reported that TikTok is testing a new ad format namely the ‘Shop Now’ button. This would link brands to the leading influencers allowing the creators to display the Call-To-Action button in their videos. The ad revenue will be divided between TikTok and influencers.
The revenue split ratio is not decided yet but DigiDay reported that the company is discussing 20/80 splits in Tik Tok’s favor. This model allows TikTok to tap into revenue that was previously shared between advertisers and influencers.
Can you shop on TikTok?
The Shop Now option influences the user to shop the product right away is one way of having both – performance and direct response ad products. The creator CTA feature is still in the early testing stage and is available to only select advertisers and agencies.
As quoted by DigiDay, a TikTok spokeswoman,
“We are constantly experimenting with ideas and features to improve the app experience for our users. TikTok is a platform for creative expression and a big part of that is showing and sharing the things you love with others. We’re in the early stages of testing a way users can add links to products to their videos and will share more updates when we have them.”
Earlier this month we witnessed Levi’s was among the first brands to partner with Tik Tok’s influencers and trial the Shop Now’ program. It partnered with the influencers to promote its “Future Finish” customizable denim technology on the platform.
Levi’s reported the product views doubled on the ‘Future Finish’ page that featured in the campaign. All advertisers can access to ‘Shop Now’ button to help drive traffic to their websites but is different from the CTA Beta test said TikTok spokesperson to DigiDay.
Is TikTok following the YouTube way?
TikTok has increased its focus on Creators and for this, it had launched Creators Marketplace late last year. The Creators marketplace helps advertisers to filter out the platform’s top creators.
It appears that TikTok is moving towards YouTube Creator shared revenue model than the Instagram model. Amy Luca, chief executive at influencer marketing company TheAmplify said,
One of the things that Instagram struggles with is retrofitting some of their programs to pull out money from the gray market ecosystem that is being earned by influencers and paid by brands on their platform.”
Growing users of the social video app
TikTok has been growing rapidly over the past year and has been on a tear since the lockdown. Data company Apptopia estimates TikTok was the second top free app on iOs and Google Play stores in the U.S. on April 28. It is also estimated to have 328 monthly active users and was downloaded 100 million times worldwide between Mar 20 through April 28.
Jude Rajanathan, a global director at media agency Zenith stated that TikTok will work on improving its CTA buttons to push for more performances and direct-response ads.
Snap’s Q1 2020 Report: Users and Revenue Increases, Ad Spend Declines
Snap Inc. the parent company of the popular social media platform Snapchat reported in its Q1 2020 earnings – strong gains in both users and revenues but a dip in advertiser spend despite the growing concerns about the coronavirus pandemic.
No Coronavirus Negative Impact on Earnings-Yet
The stock was up nearly 20 percent after the company reported a 44 percent (Y-o-Y) increase in its first-quarter revenue to $462 million. That was a far better performance than expected. The ad spend growth grew 58% in January and February, and fell to roughly 25% in March (when the pandemic grew rapidly), the gains from the first two months helping to end the quarter positively.
CFO Derek Andersen said during Snap’s earnings call,
“The economic environment has become challenging for many of our advertising partners.”
The company didn’t provide guidance for Q2 citing uncertainty related to the worldwide economic crisis but in an unusual step, provided revenue growth figures for the first week of April. The advertiser mix on Snapchat contributed to the Q1 performance and continues to help in Q2. Snapchat has a few small business advertisers unlike Facebook and Instagram, however many large advertisers are ready to commit on a regular basis.
Snapchat CEO Evan Spiegel said in a statement,
“We are grateful for the opportunity to serve our community and partners during this difficult time.” He added, “Snapchat is helping people stay close to their friends and family while they are separated physically, and I am proud of our team for overcoming the many challenges of working from home during this time while we continue to grow our business and support those who are impacted by COVID-19.”
Strong User Growth and increase in Engagement
Snapchat’s daily active user (DAV) base reached 229 million in the first quarter across all regions and on Android and iOS.This represents a 20 percent increase from last year.
Image Credit: Snapchat Earnings Slides
There is some concern over the divergence of Snapchat’s users’ growth. Snapchat added 2 million more users in North America- the most lucrative market but the majority of the growth was from the ‘Rest of the World’ category. Snapchat has witnessed significant growth in the Indian market since it revamped its Android app, a key contributor to the ‘Rest of the World’ category.
However, the key area of opportunity that Snap would prefer to boost growth in the US as it will get more 3.5x more revenue per user.
Image Credit: Snapchat Sides
Besides, the time spent on Snapchat has increased due to coronavirus. CEO Evan Spiegel reported that the average time spent in the last week of March vs. the last week of January was up more than 20%. On the other hand, markets like the U.K, France saw more than a 30% increase.
Mobile app tracker App Annie’s findings point out 54% growth in average time spent per user on Snapchat in South Korea from March1-14,2020, compared with Q4 2019. Italy marked a 36% increase and Japan was up 23%.
Image Credit: eMarketer
Additionally, this pandemic increased communication with friends and family on Snapchat, up more than 30% in the last week of march compared to the last week of January whereas in some other geographies there was an increase of more than 50%.
Games, TV, Chat, Calling are other highlighting points of group engagement.
Snapchatters watching Snap’s premium content hub ‘ Discover’ grew 35% Y-o-Y in Q1 2020 which represents the total time spent watching shows more than doubling this quarter. The company also mentioned hiring Hulu senior vice president of advertising sales Peter Naylor.
Chief business officer Jeremi Gorman said,
“As TV budgets migrate to digital, they move to places that carry the same advantages of linear, and we’ve been investing in those things for years. Peter is just the most recent investment in the strategy.”
Snap has also launched App Stories -brings its popular stories feature to the app. It also launched five new Snap games globally. With the use of videoconferencing and live streaming to connect with friends and family, Snap has seen more than 30 times increase in the daily download of Snap camera, a desktop app that allows people to add lenses to whichever video service they use. Besides, it added more than 120 partner app integration with its Snap Kit, and the numbers of Snapchatters using on a monthly basis is up 75% from the Q4 of 2019.
Direct-Response advertising budgets make up half of the revenues.
Snap continues to double down on direct response advertisers especially in games, home entertainment, CPG, and eCommerce. Direct response advertising now accounts for more than half of Snap’s revenue.
Speigel noted,
“In the short-term, we’re shifting sales resources and pulling forward some investments in direct response to better serve the advertisers who are trying to reach our audience during this time. For example, we can help movie studios pivot to digital releases by supporting them with a suite of products designed to track titles over a dynamic and flexible release window. We’ve also seen many large brands doing a lot of important things to help their community and the broader world, and we’re helping these brands communicate their efforts to our audience in a thoughtful and approachable way that inspires others to make a positive impact.”
Snapchat recently worked with Universal on the promotion of the animated film ‘Trolls World Tour’ released digitally incorporating Trolls AR masks into Snap Camera add-on a feature that gained significant momentum as more people work from home.
Snap has worked immensely hard over the past few years to build out measurement capabilities and ad products to interest the direct advertisers resulting in nearly double total ad revenues in two years.
So what has Snap done to get this?
Snap introduced conversion-optimized bidding- which allows advertisers to optimize toward their sales or app install gaols, conversion-tracking advertising pixels, and improved ad-targeting capabilities. This has attracted performance advertisers who already buy those types from other platforms.
Snap has focused on offering unique ad products like augmented reality platforms and easy self serve ad platform.
Chief business officer Jeremi Gorman said,
“Advertisers are looking for a way to make a dollar go further. “We have efficient pricing, and we’re a great place to come to get ROAS for the audience they’re looking for.”
There is also something for Snap’s brand advertisers. The company has doubled the amount of money committed via upfronts in 2020 vs. 2019. Snap is using its creative services to help brands distribute their PSAs related to COVID-19, like the filter from Adidas encouraging people across the United Kingdom and Germany to stay at home that was viewed more than 14 million times.
Snap has a lot of potential and capacity to reach a young audience. Although things look gloomy for the remaining year of 2020, Snap appears more stable and an attractive platform for advertisers and partners. If Snap manages to expand its market appeal geographically, it will be well-positioned beyond COVID-19.
Google Withhold Programmatic Data, Advertisers Pulls Back Ad Spend
Advertisers around the world are looking for more transparency and data into their programmatic buys from their ad tech vendors. However, one hold out is Google in the negotiation, a dominant player in the ad tech world.
Recently, a US-based retailer decided to not buy ads from the world’s largest online ad Digimarketplace Google Ad Exchange. They wanted granular log-level data about the bids won or lost by them over a festive period last year however Google refused. So, the advertiser spent dollars on the other programmatic platforms who were willing to share data and offer discounts.
As quoted by Digiday, the Head of Display at the U.S based retailer said,
“Google’s ad exchange didn’t make the list primarily because they’re not willing to give us any transparency or data around not only their take rates on our media sped but also anything we could already pull from our demand-side platform.”
Advertisers are unaware of how much money is Google making from the bids. Google shares aggregated information rather than impression-level data CPMs (Cost Per 1000 Impressions). Therefore, many advertisers are now looking for an alternative that gives them better CPMs and complete transparency over the data.
Some of the US-based advertisers are reducing, if not completely, stopping their spending on Google’s platform. Procter and Gamble’s marketers are one of them who are in the process of reducing the amount of money they spend on Google’s Ad Exchange, as explained by ad tech executives to DigiDay. He further expanded on the point, that it is unlikely that P&G will pull of the media dollars from Google’ s Ad Exchange. After all, Google holds power over auctions which means it can keep prices lower for advertisers and can perform better than other marketplaces.
For now, a handful of the larger programmatic advertisers are weighing their options on how much money to pull off from the Google marketplace. However, companies that have achieved better CPMs with other publishers have stopped buying ads completely from Google. On the other hand, some big programmatic spenders are pushing Google to share more granular data or else they will seek other ad exchanges.
“We’re seeing Google’s ad exchange become slightly less of the total pie,” said Jay Friedman, president at programmatic agency Goodway Group to DigiDay.
”I don’t have a percentage but it’s less but not significant.”, he further added.
However, it seems clear that Google would rather loose a few smart programmatic advertisers to protect the share of a multitude of other advertisers that buy Ads regardless of the price that they are paying.
Over the last decade, Google’s auction model has media buyers in a bind as on one hand, Google gave advertisers audience targeting specific data and a better chance of winning the Ads auction on its own platform rather than on the rival platform. Whereas, on the other hand, those benefits were only for those advertisers who used Google’s ad tech products to buy its inventory. Some advertisers stopped short over the setup but many believed that working on Google’s platform has more advantages and limited downsides.
The rival ad tech vendors, also known as Supply-side platforms soon turned the tide in their favor using header bidding to bid every impression. They started the first-price auction where the advertiser could bid exactly what he is willing to pay unlike in Google’s ad exchange where the price an advertiser pay is slightly higher than the bid they made.
Eventually, Google caved in and changed its policy in 2019 and introducing unified auction that would put Google in the level playing field with the rival platforms like Pubmatic and Rubicon Project that give advertisers access to granular data as per their need. Data from rival platforms is helping advertisers to chart the best course for a low-fee route to CPMs in this highly competitive market. In these auctions, there are chances of the same publisher inventory is made available through multiple ad tech vendors at the same time leading to advertisers paying more for inventory. To avoid this, advertisers are using the supply-path optimization technique to broker better programmatic deals, many of which are dependant on the data they receive from the vendors.
Digital Advertising Industry Plans To Replace Cookies With First-Party Data
As the third-party cookies crumble and in the wake of privacy regulation coming into effect, the online advertising industry is facing an identity crisis. They are in search of a new identity and one possible solution is people’s email addresses and phone numbers.
At the Interactive Advertising Bureau’s Annual Leadership Meeting in Palm Springs, California, on 10th February, the IAB wants to partner across brands, agencies, publishers and tech companies to develop new means to power digital advertising.
“Project ReArc”, a chosen name for re-architecture, a critical part of their multi-phase plans to build a replacement for the third-party cookies presently blocked by Safari and Firefox browsers and Google Chrome to follow soon.
IAB Tech labs proposed to build a new identity based on e-mail addresses or phone numbers, which provide a constant and rational way of recognizing someone than the third-party cookie did, without giving up on user’s privacy.
The IAB and all the involved entities are supporting the future of online advertising based on email advertising and phone numbers. They have witnessed Facebook and Google dominate the online ad world thanks to their platforms logged-in user bases and see e-mail addresses and phone number identifiers as a way for the open web to rival the walled gardens.
However, Megan Pagliuca, Chief Media and Data Officer at Hearts & Science says the people with signed-in users are going to win. If grounding the identifier on first-party data will create a disadvantage for long-tail and mid-tier publishers as they don’t have a sizeable number of registers. It is also unlikely to benefit the open web as a whole.
To protect the advertising business, if publishers are pressured to compel users to provide their email address or phone numbers, it is highly possible that many sites will put content open after registration so that only logged-in users can access it. While this can be a precarious situation for publishers to gain user registries, it could also lead them to lose a part of their audience. As a result, there is a potential negative impact on the small and mid-sized publishers leading to an unanticipated consequence.
A publishing executive asked earnestly, “Do ad networks have a chance of returning?”
Ad networks started for small publishers like individual bloggers and act as mediators between publishers and advertisers to curate ad inventory from publishers and sell to advertisers. Eventually, supply-side platforms came up and replaced ad networks with third-party cookies on these sites to auction off their inventory to sell targeted ads. However, without third-party cookies, these small publishers will face difficulties to collect email addresses or phone numbers and once again will have to be under the umbrella of the ad network.
The primary reason for ad networks struggles to attract advertisers is generally they are not transparent about where an advertisers’ ad appeared. However, this is not true in the case of brand advertisers who care about the context in which their ads appear while performance advertisers care whether the ad drove sales or any conversion event.
I could see a world where performance buyers return to using ad networks because they don’t care about transparency,” said the unnamed SSP executive to Digiday.
The return of the ad network is a concern for publishers because of the possibility for ad networks to siphon some of their revenue. While some ad buyers direct their money to big publishers as they have signed-in users, others may see ad networks offering a lower price and move their money in that direction to become cost-effective.
