If TikTok were to go away, Meta would win: MikMak CEO

Big Tech and media companies like Meta (META), Amazon (AMZN), Reddit (RDDT), and more are seeing large jumps in their ad revenue year-over-year, with Reddit even seeing a 39% gain. As these companies realize potential in their data sets and money to be made from digital advertising, they continue to vie for any competitive edge they can find.

TikTok is an incredibly powerful platform that sees huge volumes of user traffic which in turn can drive consumer growth for companies, both large brands and small businesses. With the US leveraging a potential ban against TikTok if its parent company ByteDance doesn't divest from it, how can these tech giants stir up even tighter competition if a ban ends up going through?

MikMak CEO Rachel Tipograph joins Catalysts to discuss her company's findings from ad revenue data and the power TikTok holds in the business world.

Tipograph explains: "TikTok is typically now around our second most trafficked social platform. It goes Meta, then TikTok, then an environment like YouTube (GOOGL, GOOG), Pinterest (PINS), Snap (SNAP), and then X is irrelevant. I share this because I'm not seeing brands pull back from TikTok. I think right now they're actually trying to put their pedal on the gas while TikTok's around. TikTok is an amazing channel to drive consumer growth. We're seeing it in beauty, we're starting to see it in grocery."

She then affirms: "If TikTok was to go away, Meta would win, YouTube would win, CTV would win. TikTok is really a play of brand awareness and video, and so those dollars would just get reallocated."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino

Video transcript

Rebound and advertising sales is giving companies a boost this quarter.Latest results from Instacart showing a 9% jump in ad revenue from a year ago coming after reddit meta, Amazon and alphabet all seen double digit growth.The company still dealing with a cautious consumer.Recent data from Mick Mac showing a pull back and purchase sizes from a year ago.Joining us now is Rachel Tm Mac, Ceo Rachel, great to speak with you.Thank you for coming in studio with us.So Mick Mac as a reminder of leading global platform for e commerce and you have a lot of analytics that help you understand and really get a picture of what's going on with the consumer.So what are you seeing?Yeah, absolutely.Advertising is definitely back.The investments that the platforms have made in A I have lowered the barrier to entry for businesses of all sizes.And the reality is what every consumer company is focused right now on is profitable growth and they're willing to invest in channels that will deliver a strong return on ad spent.And as platforms have become more sophisticated in advertising, brands are seeing greater results.I'm talking about platforms like meta like tiktok, like the trade desk, even reddit has seen a boom lately.So Rachel, when you talk about the fact that you think ad revenue growth then is back, what then does that growth look like going forward?Yeah, it's super competitive because there are more places to invest your dollars than ever before.It's no longer the digital and social platforms.It's the retailers too.Amazon Target Walmart Instacart, they've all woken up and realized that they have an enormous amount of first party data.Why?Because consumers every single day are shopping on those platforms.It's now actually giving them a competitive advantage over the digital and social platforms because of changes in I OS 14 and cookie less internet.So while advertising spend is back from a platform, they have more competition than ever before.Can we talk a little bit about Instacart because they have this new Uber partnership, which is a big deal for them?Obviously, I wonder in your data, what you're seeing that indicates to you that Instacart does have a stake in the game like a real position when you have those competitors like Amazon like Walmart.Yeah.So at Mic Mac, we work with over 1200 brands.These are the biggest brands in the world and on any given day, Instacart is our fourth most preferred retailer, meaning it goes Amazon Target, Walmart, Instacart, why consumers want convenience?So Instacart teaming up with Uber I thought that was brilliant because what's happening right now is because there's more fragmentation in the market and consumers want convenience, you're actually seeing channels converge.So for example, last year you saw Sephora and Coles's come together, Instacart and Uber coming together is a great value proposition for the consumer.Because what does the consumer want to do?They want to order Chinese food delivery and then add a pint of ice cream to it.Instacart and Uber can deliver on that.And doordash recognized that strategy a year ago.So this is gonna be really interesting in terms of being a competitive threat to doordash Rachel.Do you have to see more of those types of partnerships just given if we zoom out a little bit, there's a lot to be optimistic about like you're talking about.But then there are certainly macro concerns.We do see pressure on the consumer.We do see the consumers beginning to pull back their spend.So are these top brands going to be more reliant than on those types of strategic partnerships?Absolutely.But the reality is margins are now being compressed across the board.What happened during the pandemic is that big consumer brands realized that they could raise prices because the need was there all of a sudden, consumers are like, wait a second, I'm not gonna pay more for avocados and now there's resilience towards the increase in price.What that does for a brand manufacturer is it makes them think twice about their margins.The same thing is happening for retailers.And so as there's more competition and there's more convergence, the reality is Instacart and Uber are now going to share revenue.So if I'm on Wall Street, I'm just wondering where is the margin compression gonna stop?And how are brands and retailers gonna find growth in tomorrow's environment?Well, as we start to get to the end of our conversation here, I do wanna take a moment to talk about Tik Tok.Are you seeing any evidence of companies starting to prepare for a world where they may not have access to tiktok?So on any given day at Mic Mac Tik Tok is typically now around our second most trafficked social platform, it goes meta, then tiktok, then an environment like youtube, Pinterest Snap and then X is irrelevant.I share this because I'm not seeing brands pull back from Tik Tok.I think right now they're actually trying to put their pedal on the gas while Tik Tok's around Tik Tok is an amazing channel to drive consumer growth.You're, we're seeing it in beauty, we're starting to see it in grocery.And so if Tik Tok was to go away, which personally, I don't think that's gonna happen.I think there will be a divestiture and my money's on Microsoft.But uh why is that?Because I think that the FTC is gonna block everything.But with Microsoft, there's an opportunity for them to truly become one of the biggest players in advertising with their inroads and A I and if they acquire tiktok, this is a home run rich.I so I know this isn't what you think is likely to happen, but let's just play devil's advocate.And if we were to see a band and they weren't to divest um that part of the business here in the US, what then does that ultimately mean here for some of these other social media players just in terms of gaining the edge?And I guess where do you see those ad dollars going?If tiktok were to go away, meta would win, youtube would win C TV, would win.Tik Tok is really a play of brand awareness and video and so those dollars would just get real located.I saw it happen when Elon Musk took ownership over X our Twitter traffic plummeted and then overnight just reallocation.And that's the thing.Consumer brands have a lot of choice of where to place their advertising dollars.But tiktok is so a part of culture.And so I do think it will have a, a big pullback from consumers because where is Gen Z gonna hang out?They don't want to hang out on Instagram.Maybe they'll go back to snap.Maybe Reddit has an opportunity.Well, Rachel, it's great to have you here in the studio.Thanks so much for stopping by here with us.Thanks for having me.