Home >Industry >Advertising >Can TikTok bite into YouTube, Instagram's ad revenue pie?
According to industry estimates, TikTok charges Rs40-50 lakh for a home screen ad, compared to YouTube's home screen banner ad, which comes at a tag of  ₹1.5 crore a day.
According to industry estimates, TikTok charges Rs40-50 lakh for a home screen ad, compared to YouTube's home screen banner ad, which comes at a tag of 1.5 crore a day.

Can TikTok bite into YouTube, Instagram's ad revenue pie?

  • China's Bytedance-owned TikTok is bullish on India as it has witnessed a meteoric rise in user base, generating 611 million lifetime downloads so far, nearly a third of the app's overall global downloads of 2 billion

NEW DELHI: Short video platform, TikTok, which was recently embroiled in a debate with YouTube over which is superior in terms of video content, is gradually attracting advertising money from brands, experts said. With a unique feature of high user generated content (UGC) churned out in big volumes in form of challenges and DIY (do-it-yourself) content, TikTok is getting fast moving consumer goods (FMCG), smartphones and consumer durables categories that leverage platform engagement, shareability and small town reach.

According to industry estimates, TikTok advertising revenue has witnessed a 50% growth in the past one year. However, it is yet to take a significant share of the country’s 17,000 crore digital ad market, which is dominated by Google and Facebook.

"It is inevitable that any new platform (TikTok in this case) will eat into ad revenue of existing platforms (YouTube). This phenomenon is not unique to TikTok. Instagram has become the primary platform for influencers, which once used to be Twitter. This is a cyclical process that will continue to happen," said Kartik Nagarajan, chief content officer (COO), Wavemaker India, a GroupM-owned media agency.

China's Bytedance-owned TikTok is bullish on India as it has witnessed a meteoric rise in user base, generating 611 million lifetime downloads so far, nearly a third of the app's overall global downloads of 2 billion. The platform has brands such as Pepsi, Puma, Clean and Clear, Flipkart, Myntra and Olx advertising on the app.

In March, RB India-owned hygiene brand, Dettol, hosted hand washing challenge on TikTok to fight coronavirus outbreak. It garnered over 18 billion views.

Pankaj Duhan, chief marketing officer (CMO), RB Health South Asia said, “The participation by TikTok users across India has helped deliver the right message in a more engaging and interactive manner."

PepsiCo India also executed multiple TikTok campaigns such as Swag Step Challenge in 2019 that crossed 30 billion views.

Sachin Sharma, director of sales and partnerships at TikTok said, “TikTok successfully allows brands to engage with audiences in an entertaining format. Multiple brands repeated collaboration with us is a testament of the power of short format videos."

Most of the TikTok ad deals are bundled, which include home screen ad, hashtag promotion as well as influencer outreach. However, it comes nowhere close to what the premium 15-year old Google-owned streaming platform, YouTube, commands. According to industry estimates, TikTok charges Rs40-50 lakh for a home screen ad, compared to YouTube's home screen banner ad, which comes at a tag of 1.5 crore a day.

"YouTube is a seeker platform where people actively look for content and spend time watching 15-20 minute long videos which often come with embedded unskippable ads. Therefore, efficiency and value creation is high. However, TikTok will take over rural marketing including most below the line, outdoor and on ground promotions shifting to the short video app in the future," said Ashutosh Harbola, founder of influencer marketing company, Buzzoka.

Digital experts believe that despite its rise, TikTok is yet to make a dent in the ad revenues of mature platforms such as YouTube and Instagram, which continue to command high premium due to engaging content, celebrity presence and interesting ad formats.

"TikTok is also not for all brands because of the tonality of content that the platform hosts. A brand is unlikely to activate its rather serious CSR campaign there. The platform will evolve but it will be a place for UGC content," said Wavemaker's Nagarajan.

While TikTok works well with challenges, entertainment-led videos, a more detailed review of a product like a car or tech device needs a YouTube video format. Instagram works like magic when it comes to celebrity-led brand activities around food, fashion and travel, that could be in form of a short IGTV video, post or a story.

"Brand content also tends to stay for a long time and can be easily accessed on platforms such as Instagram and YouTube unlike TikTok where the sheer volume of content being created everyday makes discovery of a branded content difficult. However, its small town appeal and interactivity makes it an important platform for a brand," said a FMCG firm's executive, on condition of anonymity.

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