The news: TikTok is providing less expensive ad rates than competing platforms: 2022 data from marketing agency VaynerMedia and reported by FT shows the CPM (cost per 1,000 impressions) from video advertising on TikTok is almost half that of Instagram Reels, a third less than Twitter, and 62% less than Snapchat.
We expect TikTok’s market share of social media ad spending to increase 3.2 points from 2022 to 2024, with Meta’s to drop 4.1 points during that period.
Zoom out: This insight comes as TikTok advertising continues to gain market share: According to data from Pathmatics, the top 1,000 US advertisers boosted their spending on the viral video platform by 66% to $467 million from September to October of 2022.
Why it matters: TikTok is trying to demonstrate value at a time when ad budgets are being cut and/or scrutinized; in October, nearly 30% of major advertisers said they planned to cut their ad budgets into 2023, and those that expect to decrease their social media ad spend outnumber those looking to increase it by a five-to-one margin.
Our take: If TikTok can continue to keep its CPM prices low, allowing advertisers to reach more consumers (not to mention deliver high levels of engagement in the process) more ad spending will continue to shift away from companies like Meta, Snap, and Twitter—and toward TikTok.
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