Editor’s note: Gunnar Gregory is CEO of Vancery, a New York-based software and information services firm.
In order to better understand the potential impact of the TikTok-Oracle partnership on the digital advertising landscape, Vancery surveyed over 30 C-suite executives and senior leaders in marketing within the United States. Among them, there is a pervasive belief that TikTok’s explosive user growth and content engine position the company’s platform to maintain dominance within Gen Z user cohorts and to further expand into other demographics.
Users and corporate marketeers have broadly questioned the safety of TikTok, however, and the platform has infamously drawn the ire of politicians. As expected, this has given pause to many would be advertisers on TikTok. Given the unique strength and popularity of the platform, many respondents agree with the sentiment among the general public that a deal with Oracle, a prominent American company, will position TikTok to mitigate concerns over safety. As a result, TikTok could more easily unlock its potential to be a dominant advertising platform for corporate marketers.
The results of Vancery’s survey clearly indicated that marketing leaders expect the social networking company to impact their industry and their respective companies. In fact, 100% of respondents are following the deal, with 64% of respondents reporting to be “very closely monitoring” it.
Of our respondents, 86% reported that they are not concerned with Oracle becoming a leading aggregator of advertising data. However, standalone TikTok ranked the lowest in brand safety of all social media platforms among survey respondents by 70 basis points. This data confirms the general consensus that a proforma platform managed by both TikTok and Oracle will benefit from the backing of Oracle’s brand equity by defanging data protection concerns of those allocating marketing budgets.
Respondents broadly expect to adapt their advertising strategy in response to the outcome of the deal, with 73% saying the outcome would impact corporate advertising plans for 2021. Ninety-four percent of respondents anticipate the post-deal entity to roll out material changes to advertising products, and 75% expect new consumer behaviors from increased adoption. Additionally, 38% believe TikTok will roll out the new products in the coming year.
Interestingly, one chief innovation officer surveyed suggested that the deal will also affect “data collection techniques and planning.” Two other executives explained that Walmart’s interest in TikTok stemmed from its positioning with consumer data and to bring in younger consumers for e-commerce, particularly “fickle” Gen Z. Perhaps further illuminating the logic behind Walmart’s interest in the platform is the fact that 41% of those surveyed believe that Walmart has the potential to rise above Amazon in e-commerce if the deal is completed.
Currently, 97% of the advertisement buyers surveyed said 0-10% of their budget is spent on TikTok. Interestingly, 84% indicated that spending on TikTok would increase over the next 12 months. Ten percent indicated that TikTok would be their preferred platform for incremental dollars in their advertising budget, a number that could be boosted if stakeholders perceive TikTok as safer.
User growth
A combined entity could be dominant in the long term given rapid user growth at the most important cohorts: Gen Z and Millennials. TikTok’s user growth was 738 million users in 2019 despite questions about its safety emerging late in the year. Legitimacy and safeguards from Oracle open up the possibility that it could rival Facebook and Instagram in the long term, both in terms of popularity among users and among advertisers. Snapchat, which recently had a quarterly miss on revenue, could suffer greatly as a competitor. If return on investment and user growth continue to be compelling, watch out for continued underperformance at smaller competitors like Snapchat and for aggressive product changes by Facebook’s Instagram as marketeers allocated more to a combined TikTok-Oracle managed platform.