TikTok capturing users’ hearts, but not the marketers’ bucks?

Tech startups would turn green at how quickly TikTok has emerged to rival companies such as Netflix, YouTube, Snapchat, and Facebook. With over 700 million downloads in 2019, it overtook Facebook and its messenger app as well as Instagram, and Snapchat. It’s now the world’s second most downloaded app, just behind WhatsApp.

Analysis by Business of Apps supports this, with the media company reporting that the platform’s penetration is at its highest in Asia, where over a third of users aged 16-64 have a TikTok account.

Photo credit: Alexey Malkin/123RF

However, according to estimates seen by Tech in Asia, TikTok is still trailing behind the Facebook family of apps in the region when it comes to monthly active users (or MAUs), though the caveat is that the platform is the new kid on the block.

The Bytedance-owned app is closing in on the competition, though, rising up one spot to eighth place in Indonesia and Malaysia since January, according to mobile app analytics firm App Annie. It also debuted at seventh place in the Philippines in March.

It’s a similar picture when it comes to TikTok’s download stats in Southeast Asia, according to estimates from App Annie and Sensor Tower. “In the first quarter [of 2020], TikTok had more downloads than Facebook’s apps (Facebook, Messenger, WhatsApp and Instagram) in the region,” says Sensor Tower’s mobile insights strategist Craig Chapple.

Corresponding with the data is Bytedance’s statement to Tech in Asia regarding the app’s “rapid growth” outside of China, especially in Southeast Asia where it “received an overwhelming response.” The company’s spokesperson, however, declined to reveal exact figures or its plans for expansion.

At face value, Facebook and TikTok are competing to capture users’ hearts, with the latter attempting to take a leaf out of its predecessor’s book by poaching Facebook employees to shore up its talent pool. But beneath the surface, there’s a bigger fight brewing for the social media platforms: advertising dollars.

With TikTok’s impressive user engagement scorecard and ballooning revenues, one could easily assume that marketers would have been all over the 15-second video app by now. But that isn’t the case.

Half of the 10 agencies Tech in Asia have spoken to have yet to work with clients looking to advertise on the app, while the rest say that their clients are spending less than 10% of their advertising budgets on TikTok.

Not really built for performance-based advertising

The latter is the case for Hustlr, a content marketing agency that works with clients in the APAC region. Its founder Jeremy Ong attributes this to TikTok’s machine-learning algorithm and user behavior-tracking capabilities, which he says are not as “mature” as Facebook and Google’s.

“Clients are looking for specific outcomes like sales, web and app conversions, in-store visits and lead generation,” he tells Tech in Asia, adding that Facebook and Instagram serve these goals better for now.

“TikTok is not really built for performance-based advertising. That’s why it’s taking up only about 2-3% of our total advertising spend per month across all our clients,” says Marcus Ho, managing director of Singapore-based digital marketing agency Brew Interactive.

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