← Behind the Numbers: an EMARKETER Podcast
Behind the Numbers: an EMARKETER Podcast
Will TikTok be battling bias this year? How big can TikTok Shop get? And More — The 3 Big Questions for TikTok | Behind the Numbers
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A
Foreign.
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B
Hey, gang. It's Monday, February 23rd. Emmy, Max. And listeners, welcome to behind the Numbers and E Marketer video podcast. I'm Marcus, and joining me for the conversation today, we have one of our analysts living in New York, it's Emmy Lederman.
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C
Hello. Thanks for having me.
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B
Hello there. Of course. Happy to have you. Also joined by principal social media analyst living in Philly, Max Willens.
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A
Yo.
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B
Bang. There he is. Today's fact. How old do you think and how young do you think were the oldest and youngest people to win Olympic medals? Youngest. Want to take a guess, take a stab at it?
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A
Let's say I'm gonna say it's 14.
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B
Okay. Emmy.
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A
It feels like the. A gymnast's age.
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C
Yeah, I. I think I have to hop on the 14 bandwagon.
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B
Okay. Makes it less interesting. But you're both wrong. It's 13. But she was 13.
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C
13. And then I think.
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B
Yeah, well, I think it was 13 and like 200 something days. So I think if you round up, you guys are actually spot on. American springboard diver Marjorie Guestring won gold. So this is to win gold, I should say. She won gold at just 13 years old at the 1936 Summer Olympics. Oldest to win gold.
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C
How do you think she's doing today?
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B
She pretty? Probably good. I don't know her personally. This is just research.
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C
Oh, okay.
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B
I'm sure she's doing well. She might be.
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A
Yeah.
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B
She could be around.
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A
Marcus opens the door behind him, yells, hey.
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C
Yeah, I figured she was right.
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B
You good?
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C
I figured she was involved in this. In this fun fact somehow.
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B
Still wearing a medal. I'd never take it off.
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A
Neither would I.
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B
Oldest. How old to win gold?
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C
45.
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B
If you'd said 50, I'd have lost it. Emmy, 64, Swedish Oscar Swan. Won gold at 64 years old in 1912 Stockholm Games and then won a silver. 72 years old in the 1920 Antwerp Games. The oldest medalist in Olympic history. He won it for a sport called. Which is no longer with us, thank goodness. Running. Although they shot. I think it was plastic. They weren't real. But running deer shooting, which at first I thought meant that you ran whilst you shot the gun, but the deer is the plastic thing. The plastic deer is moving.
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A
So it's like the carnival game where the thing is hopping and you shoot it with a water gun. Except you win an Olympic gold medal for it.
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B
Well, they also give you a giant teddy bear with your.
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C
That's not good enough. That's not hard enough to be in the Olympics.
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B
Oh, my goodness. You don't know how far away. Emmy. Emmy's like, easy.
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A
I'm going to echo what she's saying, only to say that anything that you can any kind of athletic pursuit that can be won by someone who is in their 70s is, I think, not an appropriate Olympic sport. And I say that as someone who is, you know, sorry, old and getting older. And my best chance at an Olympic gold is probably in running, deer shooting or competitive leg crossing. So it's, you know, I say this with, with a heavy heart.
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B
It does feel like an Olympic sport for me.
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C
I feel like this episode is sponsored by a healthy dose of ageism. Not too much.
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B
Anyway, today's real topic the Big three Questions Surrounding Tick Tock. All right, so let's catch you up on what's happening with Tick Tock. A little more than a week ago, Tick Tock stepped onto US shores as a naturalized citizen. Ever since, the video app has been fighting for its life, writes Blake Montgomery of the Guardian. Marissa Jones explains that the short form video leader has now transitioned into a majority American entity helmed by TikTok USDS Joint Venture LLC. Ownership looks like this 19.9% ByteDance 15 for software and cloud giant Oracle acting as managing investor and data secure private equity firm Silver Lake has 15%, UAE state owned investment firm MGX has 15% and then the leftovers 35.1 for the other partners. Marisa Jones, our Marissa Jones notes also that TikTok's first days of US ownership were marked by widespread errors and new data collection practices, raising questions about how new ownership will impact users and marketers. Users were encountering upload issues and many said TikTok's famous for your algorithm had completely reset following the ownership change. Estimates from SimilarWeb found that TikTok usage in the US fell from 92 million people daily active users to around 88 point before bouncing back up a little to 90. So that's just to catch you up, but with what's going on with TikTok, we're talking today about the three big questions for them. I've talked enough so I'm going to start with Max. Max, what do you think is one of the main questions for TikTok at the moment?
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A
So I have been going back and forth about how to phrase this question precisely, but maybe the three of us together can can settle on the the optimal version of it. But the thing that I've been fiddling with is the question of is TikTok going to spend this year dealing with perceptions of bias in its platform Right. So in addition to all of the technical problems that Marissa laid out in her coverage of the switch over to a US company, there were a ton of accusations lobbed at TikTok at the end of January into February that its system was sort of artificially suppressing the reach of posts that were critical of Donald Trump that dealt with the murder of Alex Preddy in Minneapolis. And these were, you know, there are people that complain about getting shadow banned or suppressed by social platforms all the time, but in this case, a lot of the people lobbying those accusations were quite famous. They ranged from hit singer Billie Eilish to California Governor Gavin Newsom, who said at the end of January that he was going to open a formal inquiry into whether post critical of Trump had been artificially suppressed on TikTok. And the thing about the way an algorithm is tuned is that it's very difficult to prove, or at least social networks have proven pretty disinclined to prove that their algorithms are unbiased or that they are, you know, equally weighting content of different political, you know, persuasions. But the reality is that if, if a critical mass of American users start to develop the idea that TikTok is, has turned into some kind of mouthpiece for, you know, or organ of the United States government, that's a potentially huge problem for its own cultural standing, for its, you know, popularity among its youngest users. And here, again, like you and I and the three of us can figure out the right way to phrase this, because I think, you know, whether or not it's not so much a question of, you know, are they going to be dealing with the problem of bias, but to me, it's. The perception is almost more important than the reality. And so that, to me, is the one that kind of sprang to mind first.
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B
I like this one. I phrased it as, Can TikTok convince users it's the same old app they used to love? Which is another way of putting exactly what you just said, but it is, yeah, I think they could have a big perception issue on their hands. I think a lot of people are looking to that can shift after an ownership change, because Emmett Linder of New York Times, noting that billionaire Elon Musk drastically loosened restrictions on the types of content that users could post on X, which he bought in 2022 when it was Twitter. And so pointing to that example here
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A
again, the issue of perception is probably more important than reality when it comes to the minds of advertisers, right? I mean, TikTok has certainly become a very, very important investment place for lots and lots of brands. But I don't know that you could say that it has climbed into the kind of non negotiable we must spend money and keep spending more money in this platform yet for lots of brands. And so if, you know, it becomes this kind of pervasive question of is TikTok just kind of an organ of, you know, the presidential administration's viewpoints on all kinds of things, there's a not insignificant number of brands that's going to sort of respond to that by saying this is probably not a great place for us to be really, really visible. Yeah, it's, it doesn't apply to all of them but it's, it's a non zero number of them for sure.
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C
Just to add to that, we covered a study in January from Collabster that said that TikTok heavy campaigns fell 48% year over year while plat agnostic content campaign surged 133% year over year. This is one study, but this was before even all of the content, the current content moderation conversations were happening. I think people just had like a general discomfort, advertisers had general discomfort towards what was happening with TikTok. So I can only imagine that this is going to add to that fire and make people say why would I like kind of put all my eggs in one basket and just invest in this platform when it has a slew of controversies. So I think the question for TikTok is like, how are you gonna stay competitive if you have all this working against you?
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A
Yeah, I mean what's so interesting about this too is like, you know, in light of, I don't know if the collapser research kind of touched on what motivated those changes. But you know, one of the things that we saw throughout last year when the, this deal was still getting ironed out between ByteDance and the US government was a lot of brands did either you know, pause their spending or at least kind of hold the amount of spending they were doing rather than continuing to ramp it up. And in the process what that led to was a lot of advertisers having to sort of reassess their investment in this platform. Right. Some of it was sort of pragmatic because they weren't sure if it was just going to get wiped off of the US map. But some of it too did kind of crack open this door of brands maybe thinking, okay, can I live without this or not? And you know, the question of bias versus something, whether something is literally accessible or not is very, are very Different. But if the, the answer in both cases to an ad, an advertiser's questions is I can reach this audience somewhere else or via some other means, then that is a, that is a meaningful problem for them got to solve.
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B
Yeah, I'm just looking up the TikTok ad revenues. 20, 24, 41% last year. A lot of question marks 16% growth in the US and then we're expecting, we're expecting it to go up this year 28%. But that's predicated on, I mean this forecast is from December. So it doesn't, you know, we, we had an idea of who was going to buy it, but it doesn't fully take that into the ownership into account. Also it's predicated on there being users there and us TikTok users growth was already quite anemic, which surprised me. According to our forecast team, the share of Internet users in America who use TikTok will only go from 39% to 42% in the next three years.
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C
Yeah, well I think it's kind of a badge of honor to be one of those that never downloaded TikTok. Like I know the people that have, that are like mere millennials that are like, I never let myself go down that like rabbit hole that is like the TikTok universe. So I just feel like it's good, it's kind of the people that you have try to hold on to them. But beyond that I really don't see much growth with like new consumers.
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B
Yeah. So Oracle said that temporary weather related power outage impacted TikTok users and advertisers. But Blake Montgomery again of the Guardian was noting that it's uncommon for a physical event like a storm to affect TikTok. Such popular apps often have backups to their backups, but it can happen. So if this happens again, I think it could be a much bigger deal than them ownership changing and them trying to work things out. However, the Economist was noting in Oracle TikTok we'll have a steward whose owner Larry Ellison is friendly with the President and has already overseen Trumpy changes at CBS News, which his family controls. So yeah, there's lots of ways to phrase Marissa writing new conservative ownership could eventually alienate TikTok's majority left leaning user base because of content moderation concerns. So a lot of different ways to phrase kind of the question that we're guessing at here. But I like this one. Max Emmy questions do you think TikTok has in their mind at the moment?
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C
So the other thing that I saw that they just released was a local feed. So when you open up TikTok you can do, you can look at the people that you're following. You can look at your for you page, which is what TikTok is most known for, kind of the main feedback. And you can also have a feed where you click on it, you opt in to share your precise location data and you can see people posting in your neighborhood. To me, this feels like TikTok knowing that it is being perceived in a very like negative Big Brother type light and just saying I want to do something that feels more community oriented and maybe maybe feed you content of like the woman baking scones down the street to distract you from knowing all the stuff that we might be doing behind the scenes. But I would love to ask TikTok about that choice and also the how they knew that consumers would respond well to this, given that would require consumers to give up a lot of their data.
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B
Do we think PR move or do we think there's some real expectations behind this then? Max?
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Oh, I mean when I saw them release this, to me it just instantly read as a way to keep pouring gas on their efforts to build more of an advertising base of SMBs. Right. So like, you know, it's one way to ensure or kind of continue to boost the efficacy of local advertisers is to, you know, put their content in a space that feels even more contextually relevant. Right. So like if I'm just scrolling through my for you page and I get an ad for, you know, like a local bakery or a local car dealership, like it's probably going to resonate with me a fair amount. Like they, they've done a fine job of, you know, building up an ad platform that's, you know, good at targeting people with relevant advertising. But if you can have that same experience happen inside of the, you know, Philly specific area of the app, then like it's likely to resonate with me even more. So that to me was what I took away from them launching it. It also builds on a question that I had sort of, you know, put in my chamber, which is kind of like what is going to happen to TikTok search platform or its sort of status as a search player potentially. I it's funny to think about this because it was so long ago, but you know, that viral post I don't Google I Tik Tok was like arguably like the most important, you know, post of, of the media year in 2023. And since then TikTok's done a lot to sort of build itself out as a place where you can spend or rather treat it like a search engine. Right. I mean it's not completely analogous to spending in Google for example, but they have really been quite focused on and quite diligent about like thinking about the way that they can make their platform work for brands that want to treat it like a search play. And one of the very best ways to do that is to sort of build out a local dimension to the offering. Right. So like that way if you're, you know, really looking to reach people within a certain metropolitan area, for example, this both makes it easier for people to kind of gather that information up, but it also creates a more, an even more brand suitable environment for the ads that get served that way. And so I, that to me feels like a, a big reason why they've, they've debuted this, this component of the app.
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B
Yeah. Before. Over the last year or two has been a lot of conversation about where people are going to search and younger people moving their search to social media. Some people are depending on what the search is. Obviously if you're searching for a product could be on Amazon. If you're searching for a question about something, maybe it could be Google etc, etc, maybe news is on social. But how much do you think TikTok has lost out in terms of being the destination, the search destination for people in the last year or so? Because obviously it's been a lot of question marks around TikTok. And at that same time, here comes OpenAI, here comes Google with Gemini, here comes these AI models that are saying actually this is going to be the new way to search for things. Where is TikTok in that race in your mind?
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A
You know, it's funny you ask this question because it dovetails with the other big question that I had about them, which is about TikTok shop. So like, oh yes, one of, as we've pointed out, like there's lots of, when we say search, we're actually talking about a lot of different behaviors same time. Right. There's kind of, you know, news gathering which as you say is sort of distributed by varying degrees between Google and maybe certain social networks. There's searching for local information which is I think a play that lots of social platforms are trying to capitalize on more. You see that with, you know, Snap Maps and Snapchat. You see that with this local play that TikTok is making. But you also search for stuff to buy, right. And you know, a great example of, you know, how much people are turning to TikTok shop as a place to buy stuff is the fact that we think that ECOM or that TikTok shop is going to be the 8th largest retail E commerce player in the United States in 2026. And you know, considering the fact that
- [19:15]
B
shocking, it's going to overtake Target in terms of E commerce sales this year.
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A
That's right. And so that to me, if you're asking did TikTok lose out on any search ground, to me that number says not so much. They are quite comfortably established as a place that people know they can go for a certain kind of product. And you see in the kinds of brands that have started to test out TikTok shop as a way to sort of merchandise things or trial balloon new products or even just market themselves to a certain kind of consumer in a, in a cost effective way. The, the, you know, definition of what you can, you know, find on TikTok shop and buy on TikTok shop is, is expanding. And so, and that to me is a testament to, you know, how, how well they've grown that service. But the question that I had really was, you know, how much bigger can TikTok shop get? So we obviously have a number which is, you know, embedded in our forecast. But anybody that follows this space understands that, you know, the things that shape those rankings and those numbers are manifold. Like consumer confidence is a big one. Just changing cultural, you know, mores and tastes is another, even just more large brands deciding to come aboard. And that also again, like ties into what we were talking about earlier. Right? Like if all of a sudden I want to stress that what I'm describing is like a hyperbolic, extreme edge outcome. But you know, if all of a sudden, in 10 months time, the sort of general cultural perception is that TikTok is this like maga mouthpiece, you know, place for groipers. A lot of brands are going to go. You know, maybe we don't sell all of our stuff in TikTok Shop now or maybe we, we step back from this a teensy bit and that has real ramifications for their upside as an E comm player. Now again, like that's kind of an extreme cartoonish version of one outcome, but like all of this stuff is kind of up in the air when we think about the, you know, kind of role that we think TikTok shop could wind up playing for for U.S. consumers.
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C
Yeah, and I feel like when you look at TikTok now, it reads so much like Amazon, but I would say like the big difference between TikTok and Amazon is that trust element and also the efficiency and just making sure that, like, just feeling confident that you're actually gonna get the thing that you ordered.
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B
Yeah. Which Amazon struggle with in the early days, too. Takes time.
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C
Yes, exactly. So it's really following this, this Amazon trajectory, I think especially now that we see, like, these huge brands opening up storefronts, I feel like that's the ultimate kind of case study, that, that it is progressing and maturing. So, yeah, I'm curious how it. What's going to happen this year?
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A
Yeah.
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B
All right, gang, we've got four questions right now. Any others you want to throw into the ring?
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A
I guess it's. It's not confined to TikTok, so it's. That was why I didn't lead with it. But it's still a big question, which is just how much of a distraction or, you know, an issue are all of these lawsuits going to be for them? So, as anybody kind of, you know, following media knows, there have, has been this really big storm of lawsuits that are going to trial this year related to things like social media's role in teens, mental health, and things like that. And TikTok has been named as a party in a lot of those or a defendant in a lot of those lawsuits. And, you know, the time horizon over which those things get played out and the extent to which any of them even reach verdicts versus settlements is an open question. But this is a big enough issue that Facebook's, or, excuse me, Meta's leadership disclosed on their most recent quarterly earnings that the results of those lawsuits could materially affect their business. Now, some of that is, again, just them, you know, coloring the lines with the FTC and, you know, disclosing that lawsuits could adversely affect their business. But it's. It's not anything that potentially is a big problem for Meta, for example, is going to potentially be a big problem for TikTok. And you saw earlier this year that they are already sort of making. Taking steps to minimize their exposure on these fronts. There was one suit that at the 11th hour, TikTok settled with the defendants sort of get themselves out of it. And I think that it's fair to ask whether this is something that's going to be a pain in the butt for them all year because these have turned into very, very visible trials. And I think that it's worth asking whether it's going to be something that they have to deal with all the time.
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B
Emmy, anything to add?
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C
Yeah, I think going off of that, the impact of the lawsuits is definitely on my mind and also more generally when you think about all of the negative PR that TikTok has had lately and the sense the alleged censorship, whether or not it's true. But we said at the top of the episode like it matters more what the perception is than the reality.
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B
Yeah.
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C
TikTok is investing so much in AI search. How are they going to make sure that people actually trust them as a search engine? Giving also giving that consumers are only starting to trust the concept of AI search in general.
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B
Yeah, the perception versus reality. Things are so interesting that the deals values the company at $14 billion. Analysts had said it could be worth at least 44, zero, maybe as much as 100, $100 billion. And the economist was writing the main problem here simply the fact that it was facing the ban. TikTok's Chinese owner has few options. It's like say I'm going to buy a house and if you don't sell me the house I'm going to burn it down. According to one advisor to one advisor to an American buyers. So yeah, this side, this perception that TikTok was worth or could be worth all this, the reality actually given everything that's happened and this kind of swirl of concerns, anxieties around the company at the moment is yeah, much different. The only one I had the one was will the new algorithm be as good kind of underpins a lot of what we're talking about because whether it's the users, the advertisers, will people leave. Liv McMahon of the BBC writing the content recommendation algorithm at the heart of TikTok determining which videos show up in the apps for you feed will be licensed to US TikTok from ByteDance, the original owners and be retrained on American users data leading to concerns about the effectiveness of the new algorithm.
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C
I think that again speaks to the perception thing because people really romanticize this algorithm that they perceive that they've had since like peak renegade 2020 TikTok. So like even the perception that they're starting over, I think yeah is notable considering like how connected people feel to their TikTok algorithm.
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B
The questions we have six of them, we've got a shortlisted to three so I'll get you to pick one each. We've got will TikTok spend the year fighting perceptions of bias? Number one? Number two, why did they decide to launch a local feed and how do you know consumers will appreciate it? Number three, what happens to TikTok as a search destination? Number four, how much bigger can TikTok shop get addictive social media lawsuits is five. And will the new algorithm be as good number six? Max, I'll start with you. What are you keeping?
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A
Well, I'm gonna be.
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B
I guess not self pain at a seventh.
- [27:08]
A
No, that I'm not gonna do, but I'm gonna pick my own, be a little bit cheap and basically say how are they going to deal with perceptions of bias? That's the most important one.
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B
Yeah, yeah. And we all kind of had variations of that. So yeah, I think that's a great one to pick. Emmy.
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C
Yeah, I feel like they all kind of relate to that, but from a personal level as well. I'm just curious, will the new algorithm be as good or at least will people think. Will people be able to spot a difference even if there's no real difference? I think is kind of like at the heart of, of Tick Tock. So yeah, interesting to see.
- [27:49]
B
I'm gonna pick how much bigger can Tick Tock Shop get? Yeah, I think that would the, the what happens to TikTok as a search destination I think will play itself out in the next year or two potentially. So I think that is a big question. But for a question as of like right now with the rebrands, how much will that turn people off? Whether that's retailers or consumers from advertisers. From TikTok shop.
- [28:14]
C
Yeah.
- [28:15]
B
So yeah, I think it's a solid top three. Will TikTok spend this year fighting perceptions of bias? Will the new algorithm be as good and how much bigger can Tick Shop Tick Tock Shop get? I'll end with this because I thought this was really interesting. It's from the Economist is basically saying there's a lot of talk about TikTok and ByteDance having to sell TikTok, but they wrote this good article talking about ByteDance ironically is better off without US tick tock. So he's explaining that letting go of US TikTok removes a distraction from its 330 billion dollar parents low key global conquest. Since US TikTok is a small and not particularly profitable piece of its overall business. TikTok has over 1 billion monthly active users outside the US not including India where it's banned. Its Douyin app has an additional 800 million or so and is making real money likely responsible for most of its $33 billion in net profit ByteDance generated last year on global revenues of 155 billion. It ends with ByteDance's over 50 billion a year ad company, the third largest online shopping platform in China by value of goods changing hands. 4th largest online mover of clothes according to Morgan Stanley, and China's top AI app since. ByteDance has been a machine learning company since its inception in 2012. So ByteDance doing pretty well and it seems like it's maybe quite happy to kind of wash its hands of this, still have a stake and kind of move on with its life.
- [29:41]
C
Yeah, I think that's a good humbling perspective for us to. To leave with.
- [29:46]
B
Yeah, that's what we have time for. Thank you so much to my guests for hanging out with me today. Thank you. First to Emmy.
- [29:51]
C
Thank you. I had fun.
- [29:53]
B
Yes, indeed. And don't be shocked by that, please. Unbelievable. Actually, I had fun on this one. Marcus, Max, thanks for coming.
- [30:00]
A
Always a pleasure, Marcus. Thank you.
- [30:01]
B
Much better. Emmy.
- [30:03]
A
Believable.
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C
Wait, you didn't think I was being serious?
- [30:06]
B
No, no, I thought.
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A
Why did you?
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B
What you said, like, I actually. You seem surprised. Oh, you enjoyed yourself, which is fair. I wasn't let make them do this.
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C
I wasn't.
- [30:15]
B
But thank you. Thank you both for being here. Thanks to the production crew, Lance helping us out in the background with this one, and thanks to everyone for listening to behind the Numbers in the market video podcast. On Wednesday, Susie will be here discussing our unofficial monthly retailer awards for February.