Demystifying the TikTok Economy: What Brands Need to Know

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What is the TikTok Economy?

Most marketers have heard this term in weekly meetings, but few truly understand what it means. 

No, it’s not some catchy thought leadership term tossed around on LinkedIn. 

It’s a tidal wave flooding the internet with bite-sized pieces of content that are hooking users of all ages and demographics on one single platform: TikTok 

The TikTok Economy is taking command of social media and with it, the attention of a new era of consumers who want to devour content at a rapid pace. This economy is changing the way brands and businesses operate online. 

If you’re one of those brands, turning a blind eye to this trend could prove to be a major miss in your marketing scheme. So before you go back to your marketing slide deck, do yourself a favor and check out how TikTok is taking control one video at a time. 

How TikTok became the world’s top entertainment platform.

Before TikTok took over the internet there was Music.ly—a Chinese-developed social media platform filled with lip-syncing and dancing videos. Created in 2014 by entrepreneurs Alex Zhu and Luyu Yang, the entertainment app reached the top charts in 2017 with over 200 million users. In late 2017, the brand was acquired by ByteDance and merged with TikTok in the summer of 2018 where it started to explode in popularity across the globe. 

In the early years of TikTok, you’d see a constant stream of music-based content which consisted of viral dance moves like the infamous Gangnam Style and singing impressions that rivaled your personal in-shower performances. As users continued to flock to the platform, content diversified amongst different industries and niches such as sports, fashion, beauty, food, and comedy (shoutout to the Vine days).

Then came the global pandemic—two and a half years of shut-in where social media usage increased 20% to 65 minutes daily. This spike in screen-time thrusted TikTok into the limelight, growing usage by 75%. With this, TikTok started its hostile takeover of social media thanks to creators that amassed millions of followers who migrated from traditional platforms like Instagram and Facebook. 

15-second clips captured the attention of everyone, from pre-teens trying to one-up their friends in a viral dance, to millennials tired of seeing the same old lifestyle photos that had become customary on IG, TikTok had a grip on the cultural subconscious of users all over the globe. Over the course of the pandemic, people found new ways to cook food, hack their health, fashion new looks, listen to emerging music, and most of all entertain their brains. 

But how did this simple yet addictive social media platform capture the culture in a way that felt like Facebook in the mid-2000s? By venturing away from the Facebook model that focused on connecting people with mutual interests and focusing on one thing only: entertainment. 

TikTok President of Global Business Solutions, Blake Chandlee, put it this way. “Facebook is a “social graph” company, harvesting data from users to deliver personalized ads. TikTok on the other hand, is a “content graph” company with the primary goal of entertaining, not connecting.

You see this flowing in the veins of every TikTok video on the feed. Both creators and brands alike are finding new and unique ways to share content that feels more like short-form snippets and less like a social media network. Users are fed hundreds of pieces of content every single day, ranging in topic, niche, and format garnering millions of views which then turns around and serves up more content that piques the interest of users.

With an established base of over 1 billion monthly active users, of which 60% fall into Gen Z, it’s no surprise that the social media giant continues to experience rapid expansion in a demographic that is glued to their mobile devices.

But what is it that keeps these users engaged for over 12 hours a week? It’s a careful combination of elements that captivate them, as well as other generations, and make the social media giant irresistible. Here’s how it works. 

1. Rapid, Short-Form Content. 

In a world where people and brands are fighting for our gold-fish attention span, users only have so much bandwidth to spare on content. That said, long-form content isn’t at the top of the mental priority list. Unlike YouTube or TV, TikTok pumps out 15 to 30-second videos that align with our bandwidth, taking up less mental space and often providing reprieve from the sameness that is found on other outlets.

2. Diversity Of Content. 

TikTok does it differently when it comes to sharing content with users. The algorithm isn’t based heavily on follower counts but rather, engagement and screen time. The platform delivers a slew of content and tracks user behavior up to the point of whether or not you watched all the way to the end. This information is then digested and processed which results in more content that aligns with what you like as well as showcasing some content that may touch other areas you may have never stumbled upon otherwise. What started as some highschool basketball highlights, quickly turns into watching someone repurpose an old basketball into a trendy plant potter, which then translates into a how-to on growing your own vegetable garden in a NYC apartment. The rabbit holes are endless.

3. Infectious Viralty. 

We’re all familiar with virality, it’s nothing new to the social media space. But achieving such has always felt like a fleeting cloud. As mentioned, TikTok doesn’t focus on followership, hence it doesn’t matter if someone has 100 followers or 100 million, the chances of going viral are near equal amongst all platform users. This alone drives people to the platform with the hopes of grabbing the eyes of users who are compelled by their content and express appreciation for it. 

Allow me to share an example…

Back in October of 2022, HBO Max shared a 20-second clip that rocked the internet. A simple interview with House of Dragons stars Olivia Cooke and Emma D’Acry introduced the world to the negroni sbagliato, which caught fire (no pun intended) amongst users and garnered over 11.7 million views and 2.3 million likes. 

From there, the audio clip was used over 17,000 times by other TikTokers, all giving their own impressions of the viral drink. As a result, inquiries for Campari and prosecco spiked dramatically, with brands like Drizly, an alcohol delivery service, reporting a 40% increase in sales less than two weeks after the video came out.

That’s just one of the million examples you can trace on TikTok where a simple piece of content catapulted an idea into the zeitgeist bringing brands closer to customers who were not only intrigued but eager to buy. 

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So what is it about TikTok that keeps people hooked?

That’s a great question, and the answer is simple. No matter who you are or what you like, your interests are going to be served to you on TikTok. Once you hit that heart button on a piece of content, TikTok identifies what about that content that makes it unique and then seeks out other creators and content that is similar to what you’re a fan of.

This is drastically different from Instagram, Facebook, and YouTube. Instagram and Facebook are mostly linear and incremental, meaning content sits in silos making it harder for users to get exposed to new things. YouTube is search oriented, backed by Google’s heavy SEO, and driven by users. They search the content and find what they want to watch next, rather than being served something fresh on a silver platter.

It’s largely understood that TikTok analyzes users actions and recommends other content from similar interests, repeating the process over and over again, resulting in a wider variety of content.

My best understanding of it is that every piece of content is shared to roughly 100 users. If that content performs well, the video is promoted to a broader audience of 1,000 users, then 10k, then 100k, and can essentially go on forever. That’s how we come across videos like Jamie Big Sorrel Horse’s wildly-viral rendition of “Say It Right” (58 million likes) or @420doggface208’s skateboard vibe session (13 million likes).

What used to be 15 minutes of fame can now be caught in a matter of 15-seconds with the help of a smartphone and a TikTok account. While this can happen on other social media platforms, TikTok has earned its reputation as the silver bullet for creators and brands alike who want to obtain virality without having to sell their souls to the ever-changing algorithm.

For eager advertisers, this is the equivalent to a lion finding a wagyu steak in the wild. First, it helps identify an audience who is interested in a particular style of content. Once that content is put out into the world, the likes and comments on it will direct that video to others who align with that message, helping others find the brand. Second, it gives advertisers a better understanding of what the audience likes to watch so they can continue to make similar content that will strike a chord with more users. With this strategy, brands can take hold of their niche and grow a following that propels them to new heights. 

Speaking of advertisements…

TikTok is forging a new path of advertising that puts traditional methods—yes Facebook, we’re talking about you—to shame.

Check this out, 70% of the world’s top 500 brands are using TikTok to promote and run advertisements. That means the brands that you see on your feed every single day are flocking to TikTok to share content that captivates audiences and convinces them to check out their products.

TikTok’s Ad Manager is simple and intuitive. It allows you to take content that is performing well on TikTok and convert it straight into ads, making it all the more obvious for brands who want to move fast and get in front of audiences. While it still requires a bit of testing, it’s much easier to implement than other forms of paid advertising on social media.

In an interview with Fortune, Blake Chandlee explains the secret sauce every brand should use to win on the platform, “Don’t make ads. Make TikToks.

This might sound silly, but the idea here is that instead of following the standard method of ads that most marketers are used to—big headlines, product photography, direct calls to action—make content that feels organic to the feed.

Gen Z hates advertisements, opting for self-expression over everything, which is hard for a brand with no face to achieve. 

That’s where TikTok influencers come into play.

Before I give you the rundown on TikTok influencers, I want to drop a fat stat in your lap. For every million dollars that brands spend on influencer marketing on TikTok, they’re seeing $7.2 million in sales over the first 90 days. Read that again. I’m talking about a 7x return on your investment. Any good marketer’s jaw would be on the floor right now and yours should be too.

Influencers are the lifeblood of TikTok. They are the trend setters and gatekeepers to the communities that brands want to interact with. When an influencer speaks, their audience listens, and more often than not, takes action. That’s why you see so many influencers on TikTok posting content that promotes a brand or shares one of their products, because it works.

Influencer marketing isn’t some hot trend that evaporates like rain in the summer, it’s a proven method that has worked for the last decade and is only continuing to grow. In the TikTok ecosystem, influencers are the single greatest asset that a brand can leverage to get their name into the minds of consumers that would otherwise remain unaware of the brand.

It’s hard for a brand to speak the language of Millennials or Gen Z when all of the marketing executives graduated high school the same year that their target audience was born. Influencers mend this gap and speak directly to audiences in an authentic and honest way. As a result, trust and rapport is cemented, giving influencers just that, influence.

Writer Jeffrey O’Brien said it best, “Each generation’s manner of expression is developed by the technologies of its youth. The people born into this suite of capabilities—who also happen to have a surfeit of vitality, creativity, and spare time—have naturally become the masters of a platform built to cater to their technical aptitude and fickle attention spans.

In this TikTok economy, influencers are the modern day celebrity, except they’re more approachable, relatable, and impactful, than any movie star or professional athlete.

53% of women and 25% of men say they make purchases based on influencer recommendations. These numbers only increase as you move further down the generational gaps. For brands looking to win the favor of Millennials and Gen Z, influencer partnerships are the catalyst that make it happen.

How does a brand find the right TikTok influencers to work with?

This can prove to be a challenge for both established and new brands in the TikTok space. For one, the process is arduous. From searching through hashtags to identifying the right type of influencers, determining crossover compatibility to writing influencer pitches that actually get read, many brands throw in the towel without ever getting to the final stages. 

That’s where agency partners come in. Agency partners work with influencers every single day and know the challenges that come with it. They speak the language and walk the walk, hand-in-hand with influencers helping them navigate collaborations with brands.

Not only that but a solid agency partner has experience working with brands and knows the strategies and tactics that work, as well as the ones that fall flat. Partnering with one ensures that a brand doesn’t waste its time testing all sorts of collaborations and emptying its pockets with no return.

While most agencies like to flex influencer marketing as one of the many services they offer, there are few who’ve dedicated their time and energy to perfecting this process. Some on the other hand, have devoted all of their resources and talent to influencer marketing, and the results speak for themselves.

60% of marketers say that influencer-generated content performs higher than branded content. Similarly, 66% of brands recognize the high quality of customers that come from influencer marketing campaigns. 

All that said, brand marketers have been tasked with the duty of bringing in new customers. Agency partners are focused on helping those brands connect with influencers to create long-term partnerships that drive growth and convert followers into lifetime customers. When each of these groups do their jobs, it’s evident that the combination can be the spark that takes a brand from a blip on the feed to the top of the explore page.

What should you do next?

It’s simple: set up a TikTok account this afternoon—it takes less than 2 minutes.

Then find yourself an agency partner who’s seasoned in influencer marketing and start the conversation. Who knows, your 15 seconds of fame might just be waiting for you on TikTok. 

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