The social media advertising market has been controlled by just two players for some time.
Getting your ad in front of as many eyeballs as possible is the name of the game, and no companies have more eyes on them than Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report, formerly Facebook, and Google parent company Alphabet (GOOGL) – Get Alphabet Inc. Class A Report.
If you add Amazon (AMZN) – Get Amazon.com, Inc. Report into the mix, 74% of the global digital ad spend (not just on social media) was controlled by less than a handful of companies in 2021, according to Digiday.
Google saw fourth quarter revenue generated by advertising spend jump to $75.3 billion in the fourth quarter, up from about $57 billion in the year ago period.
YouTube, which has ostensibly become Google’s social media presence, saw advertising revenue rise 25% year over year to $8.6 billion in the quarter.
Meanwhile, earlier this year Meta said it expects Apple’s new privacy settings to cost the company about $10 billion in lost revenue for the full year, but Wall Street is still expecting the company to grow ad revenue by high double digits this year.
Social media ad spend in the U.S. is expected to jump from $63 billion this year to $88.3 billion in 2026.
There are plenty of new players that are looking to take a bite out of the duopoly and TikTok might have the plan and influence to make it happen.
TikTok Introduces ‘Pulse’ Advertising Push
TikTok is a short-form social media company owned by Chinese tech company ByteDance, and right now it is eating the lunch of legacy social media platforms like Facebook and Twitter (TWTR) – Get Twitter, Inc. Report.
TikTok is set to surpass 1.5 billion monthly active users in 2022, according to App Annie’s 2022 Mobile Forecast report. For comparison, Instagram hasn’t updated the number of monthly active users since at least 2018.
As it grows, TikTok has a plan to maximize the bang advertisers get for their bucks.
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TikTok announced TikTok Pulse this week.
Pulse will allow advertisers to place their ads directly next to the most-watched videos on the platform. Pulse ads will be placed next to the top 4% of all videos on TikTok.
Pulse will launch to U.S. advertisers in June, TechCrunch reported.
TikTok plans to share the windfall from this new program with publishers on the platform that have at least 100,000 followers. Those users will get a 50/50 revenue split.
TikTok says that the new program is about ensuring advertisers a more “brand-safe” environment for their content.
TikTok Is Learning Lessons From Its Rivals
YouTube is still the market leader when it comes to ad revenue in the online video space, and TikTok is borrowing YouTube’s blueprint to take it to the next level.
YouTube introduced its Partner Program to lure content creators to its platform in 2007. Partners who met certain metrics would earn money from the ads running on their videos.
It has worked great for the company, which brought in nearly $30 billion in ad revenue last year.
While TikTok is looking to recreate YouTube’s partner program success, YouTube is looking to copy TikTok’s success with short-form videos.
YouTube recently launched ‘Shorts,’ to convince users to endlessly scroll on its platform. The program is already paying dividends, according to the company management.
“YouTube Shorts continues to drive significant engagement. We just hit five trillion all time views, and have over fifteen billion views each day globally. This is helping our creator community reach newer and bigger audiences. In fact, more people are creating content on YouTube than ever before,” Alphabet CEO Sundar Pichai.
With the top tech companies stealing ideas from each other and content creators on all platforms stealing ideas from each other also, consumers may be entering the golden age of social media.
