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Advertisers in 'Wait and See Mode' · THE DAILY BRIEF

• 0:00
  Speaker 1: With all these questions remaining about how on earth the
• 0:04
  Speaker 1: algorithm continues and whether we all remain one hundred and
• 0:07
  Speaker 1: seventy million US uses using it as much, what are
• 0:10
  Speaker 1: advertising decisions being made right now?
• 0:14
  Speaker 2: Advertisers in a weight and see mode Right now, it
• 0:17
  Speaker 2: is still commonplace for TikTok, and we're actually seeing all
• 0:22
  Speaker 2: time high traffic. In September first twenty percent of total
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  Speaker 2: traffic from advertisers was allocated to TikTok. If we date
• 0:31
  Speaker 2: back to Q one, it was ten percent. So people
• 0:35
  Speaker 2: still see TikTok as a place to build brand and
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  Speaker 2: drive performance all at once. That being said, major advertisers
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  Speaker 2: have contingency plans. The moment that TikTok America is created,
• 0:48
  Speaker 2: I don't think we're going to see traffic at twenty percent.
• 0:51
  Speaker 2: These major advertisers are going to wait to see if
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  Speaker 2: the user base is still there, if the engagement is
• 0:58
  Speaker 2: still there, and if the ad performance results are still there.
• 1:01
  Speaker 2: If those things are to be true, then absolutely you'll
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  Speaker 2: see dollars move into TikTok America. But in the meantime,
• 1:08
  Speaker 2: you're going to probably see a short term boom to
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  Speaker 2: environments like meta and alphabet where there are other places
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  Speaker 2: to invest your short form video ad dollars.
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  Speaker 3: How is this going to impact efficiencies for brands because
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  Speaker 3: at the moment you can go to one platform and
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  Speaker 3: have global reach. That's going to be really important for
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  Speaker 3: some of these global companies if they have to silo
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  Speaker 3: off a US targeted ad versus global.
• 1:36
  Speaker 2: Absolutely, there's a domino effect here. A lot of these
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  Speaker 2: major advertisers, they have these global joint business plans in
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  Speaker 2: place where they're guaranteeing ad dollars across multiple geographies. Advertisers
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  Speaker 2: have major question marks. Are those agreements going to be
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  Speaker 2: thrown out the window? And then from the actual operating standpoint,
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  Speaker 2: there has been a single platform to do buying, measurement
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  Speaker 2: and optimizations. It is unclear now if advertisers are going
• 2:03
  Speaker 2: to have to log into multiple platforms and then Carolyn
• 2:06
  Speaker 2: pre your point, what are the results going to be?
• 2:09
  Speaker 2: Which is why major advertisers they have choices they can
• 2:12
  Speaker 2: go invest dollars in other places. It's the S and
• 2:15
  Speaker 2: B businesses that have been heavily reliant on an environment
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  Speaker 2: like TikTok or Amazon where they might go all in,
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  Speaker 2: but if they don't see those results, I promise you
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  Speaker 2: you're going to see dollars move out of that environment
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  Speaker 2: back into places like Meta and Google.
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  Speaker 4: Rachel. What we do know from the reporting is that
• 2:35
  Speaker 4: there will be a retraining or even from the ground
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  Speaker 4: up rebuild of the algorithm. How worried are people in
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  Speaker 4: your community and your network that that basically removes what
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  Speaker 4: makes TikTok good for them, that the algorithm is not
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  Speaker 4: as effective as it currently is when Oracle has been
• 3:00
  Speaker 4: able to review it and change it.
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  Speaker 2: Yeah, it's less about the algorithm, and it's more about
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  Speaker 2: will user engagement still hold and will the effectiveness of
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  Speaker 2: the ads, meaning the cost per impression or the cost
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  Speaker 2: per click or the cost per sale. Will those hold.
• 3:18
  Speaker 2: If those things don't hold, you will see dollars move out.
• 3:22
  Speaker 2: So the algorithm is a mechanism to make those things true.
• 3:26
  Speaker 2: But what advertisers are really concerned about is results.
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  Speaker 4: What Bloomberg has reported is that byte Dance is still
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  Speaker 4: going to get fifty percent of the profits from a
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  Speaker 4: US TikTok and that MGX, a state backed investment vehicle
• 3:43
  Speaker 4: of UAE, is one of the anchor investors. If you're
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  Speaker 4: a content creator on TikTok, or you're an advertiser on TikTok,
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  Speaker 4: do you care about either of those considerations?
• 3:55
  Speaker 2: If you're an advertiser on TikTok and you're a global
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  Speaker 2: brand I'm talking for one thousand brands, you care about
• 4:02
  Speaker 2: two things. You care about performance, but then you also
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  Speaker 2: care about brand safety. And so if they don't feel
• 4:08
  Speaker 2: that their concerns are being addressed by this new ownership
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  Speaker 2: structure around brand safety, then yes they will care. If
• 4:16
  Speaker 2: they believe it's being addressed, then it's irrelevant to them creators.
• 4:21
  Speaker 2: Creators care more about the culture and the community. Will
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  Speaker 2: the community still stay in TikTok? Will the vibes still
• 4:29
  Speaker 2: be the same? They don't really care about the ownership
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  Speaker 2: structure as long as the community engagement is there.
• 4:36
  Speaker 5: Let's talk about a name that you said that maybe
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  Speaker 5: will be benefiting amid all of this, and is Meta
• 4:41
  Speaker 5: and the move to Instagram in this moment by advertising dollars,
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  Speaker 5: But what's happening in Europe at the moment is interesting
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  Speaker 5: with Meta as well and the UK and being forced
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  Speaker 5: to basically add a subscription offer rather than offering just advertising.
• 4:54
  Speaker 5: How advertisers looking at that, how much do they anticipate
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  Speaker 5: people will go for an ad free version of Instagram.
• 5:02
  Speaker 2: I love what's happening right now because we can look
• 5:04
  Speaker 2: at mcmac's data globally. We do operate globally, and it's
• 5:09
  Speaker 2: really interesting. The laws that are taking place in the
• 5:13
  Speaker 2: EU and UK when it comes to advertising is way
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  Speaker 2: more stricter than the US, and as a result, platforms
• 5:21
  Speaker 2: like Meta have struggled in recent years in those environments.
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  Speaker 2: In twenty twenty three, Meta had to introduce the same
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  Speaker 2: ad free tier in the EU and there's been no
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  Speaker 2: public data whether users have adopted that or not. The
• 5:37
  Speaker 2: only thing that we've seen happen is that the price
• 5:40
  Speaker 2: per tier come down, which is a signal that maybe
• 5:42
  Speaker 2: adoption wasn't initially there. Fast forward, the UK government is
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  Speaker 2: adopting very similar rules as the EU, where they're putting
• 5:52
  Speaker 2: very strict guardrails in place and how platforms can target
• 5:56
  Speaker 2: users and essentially you have to opt in one hundred
• 5:59
  Speaker 2: percent and if you don't opt in one hundred percent,
• 6:01
  Speaker 2: then you have to pay for an ad free tier.
• 6:06
  Speaker 2: What's interesting is that right now in the UK, seventy
• 6:10
  Speaker 2: five percent of ad investment is happening in Meta. Meanwhile,
• 6:14
  Speaker 2: in the EU it's closer to thirty six percent, which
• 6:18
  Speaker 2: is another signal that if this happens in the UK,
• 6:23
  Speaker 2: you're going to start to see ad diversification outside of
• 6:27
  Speaker 2: Meta into other platforms. So it's actually the reverse of
• 6:31
  Speaker 2: what's happening in the US. In the US opportunity for
• 6:35
  Speaker 2: meta to grab market share. In the UK, they might
• 6:39
  Speaker 2: actually lose market share right now,