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Ahead of the holiday season, TikTok has new ecommerce offerings for brands and retailers seeking to reach the growing number of users who are flocking to the app.
Built on a short-form video format and algorithm that delivers content based on a user’s interests, TikTok's advertising push is aiming to harness the ability to feature products in entertaining content that will in turn inspire people to buy.
The way TikTok describes the buying journey on its platform is the “Infinite Loop.” The idea is that advertisers can use TikTok’s tools to reach an audience who is likely to buy. In turn, when users purchase products, the items can be featured in other TikToks, leading to word-of-mouth. The viral powers of the platform can be used to spread brands, just as they can for dance crazes.
TikTok is designed to serve people more of what they like. This is powered by an algorithm that learns a user’s interests, and the “For You” page, where they can access the content. With advertising, TikTok is creating mechanisms to ensure the experience within includes products.
This week, the company said it is launching three new ad formats that are specifically designed for shopping.
Video Shopping ads are designed to put shoppable video in front of users who have a high intent to buy. This involves highlighting products in their in-feed video ads. These are currently available to select users for beta testing.
Catalog listing ads will allow users to promote products from their catalog in shoppable experiences placed across TikTok. In a first, they don’t require brands and retailers to make a video to advertise on TikTok. TikTok will create content featuring catalog content on the “For You” page. When clicked, this redirects to a landing page with a product catalog, or straight to a product detail page. TikTok also said it has a “related products” experience that showcases products on other product detail pages. This format is currently in testing in the US.
Live shopping ads are designed to direct people from the For You page to a livestream shopping event. The ads are designed to boost traffic and reach people who are more likely to buy. Live shopping is currently available in the UK, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. TikTok has indicated that it is shelving an expansion of this format in the US and UK at this time.
TikTok seems to be laying the groundwork to capitalize on a big ecommerce opportunity. It has already become a place to discover products, as creators on the platform are working with brands eager to find new avenues to reach consumers after Apple’s App Tracking Transparency made attribution more difficult on Meta, Snap and other properties. It has a massive audience that tends toward younger consumers in Gen Z, and a format that creates a feed of continuous watching for entertainment, as opposed to social networks.
This has created an environment where it can embed advertising into the experience. Intent to buy functions as an outgrowth of a user’s interests – another indicator that can be included in the algorithm. Delivered via short-form video, many TikTok ads look like any other content on the platform. TikTok hopes that entertaining you will lead you to buy, and has the path in place. The popularity of the #TikTokMadeMeBuyIt hashtag shows that there is also a high likelihood that users will let people know about their purchases, helping products become even more deeply enmeshed in the experience.
With the new ad formats will come new tools for advertisers to grow their presence, and effectiveness on the app. TikTok said it is improving targeting capabilities, developing fully automated creative features, expanding placements to more areas of the app beyond the For You page.
It’s an impressive machine, but it’s worth remembering that TikTok is not yet the marketing engine for brands that Facebook became in the last decade. The fact that these new formats are still in testing and the halt to live shopping expansion all point to a platform that is still looking to land on the right formula. In the process, the ByteDance-owned app will have to make sure it strikes the right balance so that users continue to see TikTok as a place of joy and community, rather than only marketing. At the same time, the app is being put under the microscope by US lawmakers who are concerned about ties to the Chinese government, with news coming this week that the algorithm is being audited by Oracle.
TikTok will be a prime test of whether social commerce can be a massive growth engine. Others will be watching. Meta is doubling down on AI-recommended content, and remaking its experience around short-form video content with Reels. Amazon is internally testing a TikTok-like shoppable feed for its app, the Wall Street Journal reported this week. Walmart is also exploring a creator marketplace, Reuters reported.
Uniquely, TikTok didn’t become the trendsetter by following others. Rather, it seems to be harnessing a deep knowledge of its audience, and following where that takes it. That's a sign it can continue to lead, and is using data and evidence as a guide of where to head next. Those are the types of elements that typically set one up for success.
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New advertising opportunities are being beta tested for in-store audio and product demos.
Retail media’s fast growth isn’t only limited to increasing spend. The advertising itself is also poised to appear in more places beyond ecommerce marketplaces, and even beyond the web.
The latest example comes from Walmart Connect, which is the retail media arm of the world’s largest retailer.
Walmart shared details on testing that it is completing for in-store retail media. To this point, Walmart Connect has been considered the advertising platform for Walmart’s ecommerce site. But these tests indicate that’s poised to expand.
Stores present a potent opportunity for Walmart. It has 4,700 big box locations around the U.S., and customers returned to them in droves last year. In 2022, 88% of the retailer’s customers visited Walmart stores.
Walmart Connect already has already dipped a toe into in-store advertising, with a TV wall, self-checkout ads and integrated marketing. The new pilots aim to take a step further.
“The next frontier of retail media is in-store experiences, and it’s one we’re excited to chart,” Whitney Cooper, head of omnichannel transformation at Walmart Connect, wrote in a blog post on the new tests. “But it’s still an emerging opportunity for us, as we continue to test what serves customers best and which solutions are scalable to Walmart’s size.”
Here’s a look at the two new offerings currently under beta test:
Walmart suppliers will be able to integrate product demos into campaigns across in-store and digital environments.
Product demos aren’t new to store floors, but Walmart Connect is seeking to give them an update that blends digital and physical experiences.
“Part of our test is how to enhance the omnichannel experience by bridging the physical back to digital: For example, by pairing a demo cart with QR codes that link back to a curated Walmart.com landing page so customers can find inspiration and shop their list all in one spot,” Cooper wrote.
Walmart is currently offering 120 demos at stores each weekend, and plans to scale to 1,000 by the end of 2023.
Walmart Connect will now offer advertising placements on Walmart’s in-store radio network. Suppliers will have the option to purchase ads by region or store, enabling targeting of key markets.
“This is the first time brands will be able to speak directly to Walmart customers through this medium,” Cooper writes. “These ads also create a new upper-funnel touchpoint for brand marketers and out-of-home (OOH) buyers to create awareness, because in-store audio is about connecting with customers wherever they are in the store — they don’t have to pass the brand in the aisle.”
With the tests, we’ll be watching for how this advertising is measured, and whether Walmart Connect is tracking impact across different types of formats, and not just a single campaign.