Marketing

TikTok expands ecommerce push with new shopping ads

Video, catalog and live shopping ad formats are powering the short-form video platform's unique path to purchase.

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Photo by Solen Feyissa on Unsplash

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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