The Speed Read

• TikTok ad spend down ~30% since January, with small brands seeing lower CPMs.

• Meta is capitalizing on budget shifts, particularly with Reels outperforming.

• Small/mid-size brands are still finding success on TikTok despite larger ad pullbacks.

• Uncertainty around TikTok’s future continues to hinder larger advertisers.

This Week’s Analysis

Navigating the TikTok Terrain

What DTC Brands Should Know

As 2023 progresses, the landscape for TikTok advertising remains a subject of intrigue—and confusion. Recent reports indicate that spending on the platform has dipped roughly 30% compared to early January.

While this may sound alarming, it’s actually creating a unique opportunity for smaller and mid-sized brands to seize the moment. With larger advertisers cautious and hesitant to return, those nimble enough to adapt could find themselves in an advantageous position.

Interestingly, many SMBs seem unfazed by TikTok’s recent challenges. The platform’s CPMs are experiencing a welcome drop, allowing smaller brands to maintain or even increase their ad spend without overextending their budgets.

This is a prime example of how market shifts can open doors for those willing to seize the moment.

By the Numbers

• 30%: Decrease in TikTok ad spend since January.

• ~Normal Levels: Spending continues for SMBs/mid-market brands.

• Strong ROI: Meta’s Reels benefits from TikTok’s pullback.

Bigger Budget Shifts

Advertisers are increasingly turning to Meta as a go-to alternative for their ad budgets. According to insider reports, Meta’s Reels has emerged as the biggest winner of this shift, offering impressive ROI and audience scale.

One source mentioned, “With the uncertainty surrounding TikTok, agencies are more inclined to recommend Reels over TikTok.”

The Small Brand Advantage

Despite larger brands pulling back, smaller advertisers are finding success on TikTok. “We haven’t seen any significant degradation in performance,” a marketing director from a mid-sized brand told us. “The drop in CPMs is making it more feasible for us to invest in TikTok ads.”

This sentiment is echoed across the board, underscoring the platform’s resilience.

The App Store Comeback

With TikTok recently reintroduced into app stores, many are closely monitoring how this may influence advertiser confidence.

However, there’s still skepticism. As one industry expert noted, “Brands are digesting what this means for their strategy. It’s too early to predict how it will impact budgets.”

Quick Takes: Platform Updates That Matter

Meta Reels vs. TikTok

• What happened: Brands shift their budgets to Meta.

• Why it matters: Increases competition for ad dollars, making CPMs more favorable.

• What to watch: How this impacts the ad landscape for DTC brands

TikTok’s App Store Return

• What changed: TikTok reintroduced to Apple/Google app stores.

• Early results: Initial interest but cautious spending.

• The catch: Many brands remain hesitant due to ongoing concerns.

Last Word

In uncertain times, opportunity often knocks quietly.

For DTC brands, the current landscape may feel daunting, but it also presents an opportunity to capitalize on lower CPMs and increased flexibility.

While larger players hesitate, the nimble can thrive—so don’t wait for the noise to settle.

The Ad Insider is presented by Acceler8 Labs
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