Specialist
Former senior executive at TikTok Pte Ltd (ByteDance Ltd)
Agenda
- TikTok’s short-form video platform, progress on monetisation and advertising dynamics
- Short-form video competitive landscape, noting Reels across Facebook and Instagram (NASDAQ: META) and YouTube’s (NASDAQ: GOOGL) Shorts
- Corporate governance considerations related to TikTok’s ownership, operations and growth
- 1-3-year outlook, noting opportunities and risks
Questions
1.
Looking at the broader economic backdrop, at best, people are talking about an uncertain economy, and at worst, they’re expecting it to become a global recession. How do you think about that and the impact on TikTok? Many people probably think about advertising businesses being impacted by the macro economy. They foresee budget cuts, pricing declines and potential shifts from brand to performance advertising. What’s your assessment of the macro environment and how it is and will be impacting the company?
2.
You said there might be more that TikTok can do around a platform with tools, and suggested making more tools available to people in the current environment could be particularly helpful. You also mentioned doing a better job of promotion and education around some of those options and opportunities that might not necessarily be as well-understood or obvious to current and would-be advertisers. How might this play out in the current environment?
3.
You discussed the challenges for hard-core performance marketers to get the most out of TikTok. Would you say that some advertisers, even if they’re on the platform, might not use it as much because of their own preference to shift more to performance advertising? You also said TikTok isn’t quite there in terms of targeting when it comes to behaviour, interest, geography and so on. Will the platform get there in 2023? What timetable should we be thinking about?
4.
IDFA [Identifier for Advertisers] has disrupted or had a huge impact on a lot of digital and social media advertising platforms over more than one year, and I think there’s continuing impact. How do you think this has impacted TikTok, given you were with the company when this was rolled out and started to have a broad impact? How did the business prepare? How do you think it responded when IDFA was finally deployed?
5.
Do you think TikTok has arrived at a steady state where it’s operating in the post-IDFA environment and is satisfied with where it is, or do you think there’s more work to be done? You mentioned the small team, although I would guess the company might have added significantly to that team. A lot has probably been learned over the year-plus since IDFA’s deployment. How do you think it’s positioned to deal with the issues that IDFA presents?
6.
I think many platforms are still dealing with the negative implications of IDFA. Do you think TikTok was positioned a bit differently or responded differently? You seemed to be suggesting the company had a smaller team, but adhered to best practices and worked through it like everyone else. Should we be aware of anything that enabled it to recover quicker or take advantage of IDFA? On the flip side, is there anywhere TikTok may have been more significantly hurt by IDFA because it was newer or had a smaller team?
7.
I think many were surprised by how much the short-form video category has gained not just traction but momentum and even leadership as perhaps the predominant form factor for content consumption across social media. What do you think is the reason for that? TikTok clearly had tremendous success early on, but why has everyone gravitated to this particular format?
8.
How do you assess TikTok and others platforms’ ability to attract and engage creators, who are a big part of this? There seemed to be a land grab a couple of years ago, where you saw these platforms and businesses seemingly spending a lot of money to get creators to come to their platforms, and maybe it was exclusive and maybe it wasn’t. What about now? What dictates how creators will choose their primary platforms for activity and distribution?
9.
Although perhaps not quite as high a percentage as I thought, it does seem as if a lot of Instagram Reels content is directly from TikTok. To what extent was that monitored? Could you share any metrics around that? I think it’s pretty significant, particularly as Reels increasingly tries to gain share and differentiate in the marketplace.
10.
You mentioned comparing TikTok to YouTube, and alluded to the fact that long-form video monetises at higher levels. What are your thoughts about the relative CPMs here? Where are they and where do you expect them to go? Do you expect CPM parity over time? The two businesses seem to have been on a collision course, with YouTube launching Shorts and then TikTok making it more possible to distribute longer-form content. You talked about some efforts around monetisation, but could you discuss long- vs short-form video and what the CPM disparity might be now vs in a couple of years?
11.
You said TikTok CPMs have historically been somewhere between USD 3.5 and USD 8 or even USD 10, which is a huge range. Can you give me more of a sense of the average CPM or maybe a tighter range? Can you qualify that based on certain sets of circumstances or types of buys?
12.
How do TikTok’s CPMs compare with those of major competitors? We’ve talked about Reels and YouTube, and we can break out YouTube across the standard platform vs Shorts. You’ve highlighted that historically, and perhaps even now, TikTok has to some extent commanded lower auction-based CPMs. What discount might you expect to see right now if you were on all three platforms looking for advertisers? What could the difference in CPMs be?
13.
To what extent do you think TikTok’s lower CPMs are driven by users and advertisers? Or are they driven by TikTok proper because it wants the lower CPMs to attract more advertisers and advertising?
14.
In terms of other KPIs we should monitor across TikTok and competitors, you referenced ROI and its importance to advertisers, and I think it arguably becomes even more important now. Many people have spoken to me about how ROI has taken a hit with IDFA, even though CPMs have been going up. How should we think about ROI as it pertains to TikTok, and how does that compare to competing platforms?
15.
What details might be helpful to understand as it pertains to DAUs [daily active users] vs MAUs [monthly active users] and unduplicated audience?
16.
You mentioned TikTok’s intentional effort not to disseminate much information around the DAU number. Could you estimate a percentage of the MAUs that are DAUs? Other companies obviously disseminate that kind of information. Would you think that’s higher or lower than the average? Is it more than 50% or 75%?
17.
Some people say TikTok didn’t create the short-form video category and it’s been around for a while – Vine was out there, which Twitter acquired and then shuttered, Snap has been in there with Spotlight, we talked about YouTube Shorts, and there’s obviously Reels. Who do you see as the most formidable competitors? How do you think they do and will stack up over the next couple of years? People seem to be talking about Reels and then YouTube, and I thought it was interesting, given some of your comments, that you might say YouTube and then Reels. What are your thoughts?
18.
You mentioned Flavrs, but we haven’t discussed Pinterest, which has increasingly been looking at, investing in and rolling out video. How formidable do you think this platform could be? It’s clearly not in the top tier of competitors that we’ve discussed, but do you see it as a possibly emerging competitor or do you think TikTok, to some extent, should reasonably discount Pinterest, Snap and Twitter and some other also-rans in the category?
19.
I think the New York Times published a story about how TikTok and the Biden administration are moving towards some type of settlement. You alluded to the Trump administration taking a lot of actions related to TikTok. Some of those had gone by the wayside, and I think some had continued. How much of a negative overhang has the related uncertainty been on TikTok, given you mentioned people having duplicate accounts or hedging their bets and using Reels? On the flip side, how much of a positive could it be if there was more certainty about TikTok’s standing and safety?
20.
You talked about TikTok having 80 to 100 million MAUs in the US. That’s a figure that’s been thrown around. How do you think that compares with the overall global user base, obviously not including the China-focused platform, which I don’t think is within the TikTok rubric? I’ve seen references to 1.5 billion MAUs globally. Do you think that’s about right?
21.
What growth would you expect for TikTok? I think people have talked about the business generating USD 4.7bn revenue in 2021, and then you referenced the 1.2 billion MAUs in that year. What growth should we be thinking about for those two metrics over the next three years? Can the company sustain the high growth levels? I think I saw it grew revenues by something in the order of 2.5x in 2021 and users, at least in Q2 2022, were up 60%. Can you give me a sense of not necessarily solely the growth rate, but where you see those metrics in three years?
22.
To achieve the user numbers we’ve discussed, TikTok will clearly have to grow and particularly, as you mentioned, grow outside the US. What 2-3 countries would you highlight as having the most opportunity? You mentioned the ban in India. Do you see a possibility of that being reversed, or something along those lines? What are your general thoughts on how TikTok achieves this growth?
23.
You mentioned TikTok’s algorithm, and everyone talks about how the platform’s success is attributable to this. You also mentioned the notion of a content graph vs a social graph. I would have thought companies, businesses and platforms have gotten wise to this approach and changed how they do things. Do you see the possibility of competitors not just gaining but almost reaching parity with TikTok within 1-2 years? You’ve mentioned this concept of a moat, and I think many wonder if the algorithm is perceived as a moat or if the moat is going to get smaller.
24.
You mentioned TikTok’s product or feature road map and how people aren’t necessarily privy to those specifics, but as someone who understands how the business thinks and where the opportunities are, what do you think might be coming from a product and innovation perspective?
25.
We discussed monetisation, and that was clearly focused on more traditional notions of current advertising formats. Do you have any further thoughts on other vehicles for monetisation? You mentioned advertising that comes within the videos themselves – before, during and after them. You can clearly make use of the hashtag from a monetisation perspective. I think there’s been a lot of interest in and around e-commerce as a vehicle for monetising, although it seems many players, including TikTok, have been stepping away from that slightly. How do you see monetisation growing and evolving over the next few years?
26.
You mentioned five advertising products. Could you outline those?
27.
Of Tiktok’s five advertising products – reservation-based campaigns, in-feed video, auction-based campaigns, hashtag challenges and the AR lens – it seems there’s a strong emphasis on the reservation set of offerings, but what would you say is the most significant contributor to revenues? What percentage are we talking about? I’m assuming that’s the reservation product SKUs, but could you discuss that?
28.
We discussed the connection between the advertising formats and brand vs performance advertising. Where do you think that mix is now and where might it be in three years?
29.
ByteDance acquired Musical.ly in November 2017, which really jump-started TikTok in many ways, including its exposure to and success in the US. Could you see the company making another acquisition, perhaps a more significant one, especially if it can strike some type of agreement with the Biden administration so there isn’t as much potential regulatory pressure?
30.
You seem to be suggesting TikTok might focus on verticals and geographies it’s less strong in or that it wants to emphasise more. You highlighted some opportunities in places such as LATAM or Africa. Do you think the platform will look at these places from an acquisition perspective?
31.
What’s your 1-3-year outlook for Tiktok? What do you see as the biggest opportunity and risk for the platform? I would assume legal and regulatory are big risks, but is there anything else?
32.
When you mention TikTok’s management, can you be more specific? I think of management in a few ways.
33.
Looking at TikTok’s management, members of the platform’s top leadership – CEO Shou Zi Chew and COO Vanessa Pappas, who I think were installed about 1.5 years ago, along with some other changes – have experience at some pretty large and important companies. I think Chew was at Xiaomi and Pappas at YouTube, which would be in keeping with the notion of making the business bigger and bigger. I think its Head of Corporate Affairs and General Counsel came from Microsoft a couple of years ago. What can or should TikTok do to build out the middle-manager level that seems to be challenging to some extent? I think it’s pretty key if people go there and want to stay there.
34.
We’ve used the 70/30 split to talk about reservation vs auction, and then extrapolating to talk about brand vs performance. What about big enterprise vs SMB? Does that match those percentages from a revenue mix perspective?
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