Marketing Briefing: ‘Success is tied to its creators’: As TikTok offers ad rev sharing, it courts creators and recognizes its shift to entertainment platform

By Kristina Monllos

As consumer viewing habits are increasingly focused on creators, the revenue plays associated with the trend have taken on considerably more urgency, sophistication and scale.

With TikTok’s announcement last week of its new ad product, TikTok Pulse, it’s clear that it is looking to further court creators and recognize its position as an entertainment platform versus a social media app. And with Pulse, TikTok announced it was exploring its first advertising revenue sharing program available to creators and publishers with over 100,000 followers.

“So much of TikTok’s success is tied to its creators,” said Swap Patel, executive director of media at McKinney. “Larger, more established players like Google/YouTube have, for years, not only helped creators make a name for themselves but also incentivized them with a cut of the revenue amassed via the YouTube Partner Program. So it’s only natural that TikTok now offers this as well.”

With the announcement of the Pulse ad product, agency execs believe this is part of a larger shift for TikTok to more fully embrace the fact that users turn to the platform for entertainment more than social media. “This change will reinforce TikTok’s position as an entertainment platform, closer to YouTube and further from Instagram,” said Danielle Kim, associate director of strategy at Stink Studios.

Agency execs noted that while TikTok had been garnering roughly 10% of the social media ad budget in previous years, they expect that percentage to increase to between 10-20% of the spend. At the same time, some agency execs wondered if the shift to be more of an entertainment platform could have brands move ad dollars from other entertainment sources like linear TV rather than simply getting more of the social media budget.

Given that TikTok’s entertainment comes from creators, courting them to continue to build on the platform with an ad revenue share makes sense to agency execs. “This is one big step on a path of much more needed steps,” said Alexis Madison, associate director of digital strategy at Deutsch NY. “Creators give TikTok their power.”

However some questioned the platform’s cap of 100,000 followers for the program, noting the power of smaller creators. “[Marketers shouldn’t] just stop at creators with 100k followers,” said Chelsea Smith, associate director of influencer marketing at Campbell Ewald. “Micro influencers have a wealth of knowledge and influence that enable brands to go beyond mass reach to engage with more specific audiences.”

Others question TikTok Pulse’s focus on the top 4% of content and whether or not that would differ from where brand content is already showing up. “All advertisers want more control of placement, adjacency, etc., so this is certainly a benefit,” said Jason Dille, evp, media at Chemistry. “However, with the top 4% of videos already taking a large portion of user’s consumption, many brands were probably already there.”