Artificial Intelligence driven Marketing Communications
Illustration by Alex Castro / The Verge
This year, TikTok became one of the biggest social media platforms in the world. The shortform app finally reached over a billion active users worldwide and, in the US, it provided a launching pad for the biggest song of the year. But while influencers have struck it rich on smaller platforms like Pinterest and Snapchat, TikTok’s sponsorship marketplace has been slow to develop.
To help meet that challenge, a new industry of marketing agencies and influencers is zeroing in on TikTok content. They help companies nail the special mix of quirkiness and cool that’s required to succeed on the platform. “Gen Z doesn’t mind being marketed to, as long as it’s quality content,” says Jacob Pace, the 20-year old CEO of media company Flighthouse.
As TikTok becomes a crucial avenue for companies looking to find a teen audience, these groups are poised to win big. As Pace’s agency lands contracts with startups and corporations, however, many influencers have yet to see the massive gains enjoyed by their peers on other platforms. That’s probably all about to change.
“It’s interesting, right, because there’s a lot of people saying TikTok is the new Instagram. But I think it’s more comparable to YouTube,” he explains. “You don’t go there to see what your friends are doing — you go there to be entertained. There are a lot fewer creators knowing how to use it because the barrier to entry is higher.”
Some, like TikToker Alejandro Baigorri, have found their niche working with music labels. “They hire us by campaign,” he explains. “They are usually pretty specific, not only on the content of the video but when to publish and what you should put in the description.”
Baigorri, who lives in Argentina, has 2.2 million followers and produces videos for Sony and Universal. While his personal TikToks typically feature impressive gymnastic feats (he’s extremely into parkour and backflips), his sponsored work tends to focus on songs and skits. Many feature his girlfriend, Magali, who is also a TikTok influencer.
Baigorri said he makes about $250 per video, which is a nice side hustle but nothing compared to the $10,000 influencers on Instagram and YouTube have been known to command for a single post. “If you’re 15 and you’re making $500 to do a video, that’s a lot,” says Alessandro Bogliari, CEO of The Influencer Marketing Factory, who’s hired Baigorri in the past. But if a seven-year-old YouTuber can make $11 million a year, age is probably not going to be a good excuse once influencers start demanding more.
The price is also likely to pay off. “With a fraction of what you spend on Insta, you can get amazing reach on TikTok,” says Bogliari. The platform has fewer advertisers than Instagram or Snapchat, making the potential reach of a campaign that much wider.
Last November, TikTok started allowing companies to buy traditional ads on the app. Now, businesses can access a self-serve platform for an average of $10 per CPM (cost per thousand impressions). That’s a steep price, even when compared to Instagram’s average price, which is just under $8 per CPM, according to marketing analytics firm Ad Stage.
Agencies like Flighthouse and The Influencer Marketing Factory focus on organic ads, which look more like regular TikTok videos and are particularly good for brand awareness. “On Instagram, it’s a lot of buy this, buy that, use my promo code,” says Bogliari. “But on TikTok, it’s about being funny and entertaining. You put the product inside a video and do a soft sell.”
Creative agencies like Bogliari’s work with brands to create TikTok-specific content, with the goal of starting viral challenges. On the app, challenges are videos the TikTok community riffs on, and they can spawn hundreds of thousands of imitations. “It’s about awareness much more than acquisition,” Bogliari explains.
Those with bigger budgets can also go directly to TikTok. In May, Chipotle partnered with the app to run a six-day lid flip challenge where people tried to land a burrito bowl lid directly on their food container. (It looks slightly cooler than it sounds.) The #ChipotleLidFlip hashtag got more than 230 million views. “The cream of the crop is to be the viral challenge,” explains Pace.
Other companies have simply gotten lucky. The Home Depot jingle, a bizarrely catchy tune, went viral earlier this year. The company didn’t pay to promote the #HomeDepot hashtag, but it got 62 million views regardless. For a company that’s mostly popular with boomers, Gen Z awareness went a long way, even if it didn’t immediately result in sales.
Music is a core part of the app, and many challenges involve remixed songs. Flighthouse works with artists like Ariana Grande and Austin Brown to make music specifically for the app. Other TikTok hits, like the 1996 Halloween song “Spooky Scary Skeletons,” have gone viral with amateur creators.
Brands like makeup company ELF Cosmetics have also seen enormous success by working with creative agencies to create original songs for the app. “Eyes Lips Face,” a song the makeup brand produced with the Brooklyn-based agency Movers + Shakers and Grammy-winning producer iLL Wayno, spawned nearly 18,000 imitation videos when it launched in early October. ELF hit the jackpot with this campaign; it created a viral TikTok challenge.
According to some sources, paying to promote a challenge hashtag on TikTok’s Discover page can cost hundreds of thousands of dollars, while working with an agency typically starts around $10,000.
The decision of whether to put a sponsored hashtag, like the ones required on Instagram, is still somewhat up to the brand. “It’s still blurry, it’s so new,” says Bogliari. Some brands use the hashtag #spon or #ad to tell users the video was paid for, while others choose to leave it ambiguous.
That’s likely going to change as TikTok’s advertising market continues to grow. “It’s like the wild west, at the moment,” Bogliari says. “Everyone is doing something different.” If the trajectory is anything like Instagram or YouTube, however, the regulations will get more stringent as more money is poured into TikTok and those outside the music, retail, and food industries start to advertise.
To Pace, these changes are somewhat inevitable, given TikTok’s enormous success. “The media industry in general is going more towards short form,” he says. “When you go home you open Netflix, but if you’re on the bus you’re on TikTok.” The shift could also be good for the TikTok creator community as it starts to get fame outside the app and wield more creative control.
“It’s all driven by the creators,” Pace says. “They have a lot of power.”