TikTok mulls revenue share with influencers in new ad format
TikTok is working on a new advertising model that will give advertisers the option of using call-to-action buttons such as ‘shop now’ within influencer content.
While there presently exists a ‘shop now’ button that is available to all advertisers, the new CTA button is different since it will be available within influencer feeds, not just in the ads that appear in the ‘for you’ feed and ‘follower’ feed. The format is in the early testing stages and only available to a select number of advertisers.
The partnership between influencers and TikTok take the form of a revenue-sharing model, but it is not yet clear what the revenue split will be, with some reports suggesting a 20/80 split in TikTok’s favour.
This innovation allows TikTok to tap into revenue that would normally be shared directly between the advertiser and the influencer and provides a platform model for this to happen. How TikTok rolls out this new format will determine how content curators react to the change.
At the moment, influencers earn money through brand partnerships in the same way they do on Instagram but this will allow TikTok to capitalize on that and move towards a revenue model that is similar to YouTube, where ad revenue from the advertisers is split between the platform and the channel operator.
This new ad format is the latest innovation from TikTok as it strives to develop more revenue streams and retain its popularity with users.
In order to keep creators on its app, TikTok needs to give them monetization incentives. Also, by giving influencers and creators more ways to monetize through a revenue sharing scheme like this, TikTok encourages creators to develop high-quality content which then drives more audience engagement. The key is the balance between the ease of use of the platform approach and the revenue it brings to influencers, in comparison with the direct deals they previously held with brands.
The new ad format means that TikTokers will be able to directly shop for brand’s products through influencer content, which is great for those brands and brings TikTok into line with similar click to shop offers on other short form content platforms like Snap and Instagram. It will blend social influencer content with commerce as more and more consumers become comfortable with purchasing on their phones.
TikTok has become increasingly popular over the last year but it is still early days for its monetisation and advertising options. Last year, TikTok rolled out the option for users to link shops in their bios and launched a Creator Marketplace which helps brands find influencers to work with.