TikTok is valued at about $140 billion but it wields a very massive control over the global social media ads market which is expected to grow to beyond 20% this year and close to 25% by 2024.
The level of innovation amongst social media giants is taking shape to redefine the competition for ads across the board. While each of the dominant players has its inherent market share, the growth in the traction being showcased by TikTok, owned by ByteDance is becoming of concern to not just social media platforms but also big tech giants in general.
TikTok offers its diverse users short-form videos that are all shades of entertaining and educational. With a creator economy built in, users can produce their own contents through which they can gain a massive following. TikTok was amongst the primary pioneers of this short-form video model which is now largely being adopted in the form of Reels by Instagram from Meta Platforms Inc (NASDAQ: FB), and Shorts from YouTube owned by Alphabet Inc (NASDAQ: GOOGL).
TikTok is valued at about $140 billion but it wields a very massive control over the global social media ads market which is expected to grow to beyond 20% this year and close to 25% by 2024. The platform is currently estimated to record more than 755 million monthly active users by the end of this year according to Insider Intelligence. This impressive growth expectation and traction is serving as a cause for alarm for Facebook, YouTube, and the rest.
“Across the industry, short-form video continues to take a greater proportion of time spent,” Atlantic Equities analysts wrote in a note Thursday as reported by CNBC. “Primarily driving and benefiting from this trend has been TikTok, with some concern that this was creating a competitive challenge for Meta.”
While Twitter Inc (NYSE: TWTR) is currently in a transitory phase as Elon Musk’s $44 billion deal to acquire the company was approved by the board a few days ago, gaining a share of the ads market is a discussion that the firm will face later, leaving Facebook and YouTube to deal with the growing TikTok influence for now.
Social Media Firms to Tackle Competition with Innovative Offerings
In the probe to understand how the firm is dealing with threats from the competition, Facebook CFO Dave Wehner said the maintenance of innovative products that can combat any threat from its competitors is the first point of call, and that it can achieve this fight for share through Reels.
“I think it’s clear that short-form video is a massive opportunity for the industry broadly, and we’re very pleased about the offering that we have with Reels and the opportunity for us to compete for share and time in the market,” Wehner said. “Obviously, other competitors are – have strong offerings like TikTok, but we’re pleased with what we’ve got with Reels and the efforts that we’re making to grow that important product.”
Alphabet on the other hand said it is building and testing ad formats for the “Shorts” on its YouTube platform. While the service is relatively new, it said it is exercising caution with what it roles out across the board.