Specialist
Former Product manager at TikTok Inc
Agenda
- Macroeconomic impacts on social media and short-form video offerings, including potential advertising budget cuts
- Relevance of brand vs direct-response advertising, as well as e-commerce and live-streaming
- Overview of short-form video offerings that have become popular across social media, emphasising importance of content graph vs social graph
- Competitive landscape – TikTok’s success, Meta Platforms’ (NASDAQ: FB) focus across Facebook and Instagram, Snap’s (NYSE: SNAP) challenges with Spotlight and YouTube’s plans for Shorts
- TikTok’s 2022-23 revenue outlook and ability for others to catch up
Questions
1.
What are your views on the economy and how it is affecting companies and businesses such as TikTok, Meta Platforms and Snap? Snap pre-announced late yesterday that the macroeconomic environment has deteriorated further and faster than anticipated – that’s largely a quote from its SEC [Securities and Exchange Commission] filing – since it issued guidance about one month ago. This seems to be a pretty substantial communication that the business has taken a considerable turn for the worse.
2.
When you talk about upper funnel vs lower funnel, a lot of people may think about that as brand vs direct-response advertising. Is that a reasonable analogy?
3.
To confirm, do you believe advertisers are cutting some brand advertising efforts and not necessarily reallocating to more direct-response outlets or types of advertising?
4.
Is a 5-10% cut in brand advertising what people should be thinking about when it comes to budgets? What are the lead times for these types of programmes? Commitments have obviously been made, so if you make cuts, are those instant? Are those 1-2 weeks or months out?
5.
Could you summarise the short video technologies, products and features that have been particularly popular across social media? You worked for TikTok, which I think a lot of people perceive as the pre-eminent provider of short-form video content. There are obviously other companies and businesses in the mix, including Meta with Facebook, Instagram and Reels, and then I think people are also considering what Snap is trying to do with Spotlight and YouTube with Shorts. Where are we and how have we got here?
6.
You mentioned the conundrum that Meta seems to have around people shifting their social media activity towards consuming or creating short-form video. This trend seems to have, if not momentum, then staying power. You seem to be saying this creates challenges from a fundamental perspective, so what does Meta do in this context? Is it about figuring out the right format and monetisation approach? Is this a structural impediment, meaning there will always be a disconnect between what it has been doing vs what will come with short-form video? How do you see that evolving?
7.
How would you estimate the economics of Meta shifting over to more of a Reels approach across CPM and ROI? What quantitative impact would a user going to Reels have vs going through the newsfeed or even Stories?
8.
Short-form video seems to have started with more of an e-commerce direct-response orientation to monetisation. In a strange way, could we see short-form video picking up more momentum from a monetisation perspective, given the relative weakness in brand advertising that we talked about?
9.
You alluded to when the pandemic began and the shock from a lot of perspectives, one of which was obviously advertisers pausing or cutting budgets substantially. I heard repeatedly that advertisers essentially went back to basics, reverting to the platforms and formats that historically worked best for them. You seem to suggest we should expect something along those lines to happen now, given recent revelations, and what all of us are aware of from a macroeconomic perspective. Is that a reasonable way to think about the backdrop, at least for now? If so, what are the implications of this? Does this mean a sudden pause in the momentum of monetisation efforts around short-form video?
10.
Reversions to the mean or difficult comparisons for e-commerce-related companies and businesses have been a theme over the last 3-6 months. Amid the pandemic and lockdowns, the only ways people were really shopping were online, via those companies. However, as people return to stores, those players have shown pretty substantial slowing of growth. In the context of social media companies with short-form video offerings, Meta has made a big push around e-commerce and shopping over the past 1-2 years, and this seems to have been flipped on its head. What is the impact of the weakened and perhaps weakening economy on further monetisation efforts that connect short-form video and e-commerce?
11.
Disruption, budget cuts and other marketplace issues often contribute to accelerated innovation. Are any areas ripe for changes that appeal to users or advertisers?
12.
What is the role of agencies as short-form video has moved from emerging to established, especially for some of the companies and businesses we’ve been talking about? The disruptions we’ve highlighted could augur a change in the role agencies play. What are you seeing, especially given the backdrop?
13.
Why won’t brands that want to sell their wares via short-form video increasingly scout and partner with creators themselves? Celebrities themselves have been somewhat of a theme over the last couple of years, but I think some people would say this has slowed. We saw Snap in particular committing huge amounts of money to creator funds and specific creators who were responsible for viral videos. How do you see those dynamics playing out? Do you see signing these creators or celebrities increasingly taking place, getting agencies more out of the mix?
14.
How do you see the competitive landscape evolving, and who has TikTok been gaining share from? People readily acknowledge that TikTok has pioneered and perfected a lot of what we’re talking about in terms of short-form video, but Meta is not going away with Facebook and Instagram. It’s investing pretty heavily, has a lot of users and is using multiple platforms to promote what it’s doing. We’ve also talked about Snap and YouTube.
15.
How much time could it take before Facebook and Instagram are more at parity with what TikTok can do?
16.
I think a lot of people would be surprised at your comments on TikTok – other specialists have suggested the platform is still in the very early stages of monetisation [see TikTok – China-owned Social Media App Generating Global Growth & Success – 17 March 2020 & Snap Inc – Innovative Offerings, Evolving Competition & Appealing Opportunities – 28 October 2021]. Yet, eMarketer talks about USD 4bn in revenues in 2021, USD 11bn in 2022 and about USD 24bn in 2023. While those projections were made before some of the recent revelations we talked about earlier in, they’re very big numbers. Are these estimates reasonable for TikTok? How far along are its monetisation efforts? What inning are we in?
17.
Do Meta and others even have a fighting chance vs TikTok, especially given the way you talk about TikTok’s focus, algorithm, user base and the early stages of its monetisation differentiation efforts? How can other platforms more effectively compete? Do they have a chance, or will they take table scraps in this category?
18.
You seemed to dismiss YouTube as outside the short-form video market, but it has Shorts, and TikTok recently indicated that creators can now provide videos up to ten minutes in length. Anecdotally, I understand that creators will use TikTok and point people towards longer-form versions of videos on YouTube. There’s a fair amount of interplay, so do you see increasing competitive dynamics between the platforms, or will they remain in their currently delineated swim lanes?
19.
What’s your 1-3-year outlook for short-form video? Who do you see as the category winners and losers?
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