TMW #088 | The war on TikTok

Welcome to The Martech Weekly, where every week I review some of the most interesting ideas, research, and latest news. I look to where the industry is going and what you should be paying attention to.

👋 Get TMW every Sunday

TMW is the fastest and easiest way to stay ahead of the Martech industry.  Sign up to get the full version delivered every Sunday for this and every TMW, along with an invite to the TMW community. Learn more here.

Here’s the week in Martech:

• The war on TikTok: Re-evaluating the world’s fastest-growing social network
• Integration vs acquisition: Which one are companies spending more time on?
• Everything is an ad network now: Another marketplace app offers ads
• Everything else: SXSW expands to Australia, anti-personalization, the ad spend slowdown, understanding networks, and the future of CAPTCHAs

✍ Commentary

The war on TikTok.

TikTok is one of the most frightening apps I’ve ever encountered. It’s not its exponential growth or the way the app turns regular people into expert content producers, or its ability to capture a disproportionate amount of our teenager’s time, or the insanely accurate content recommendation algorithm. All of the above are table stakes in a matured social media landscape.

The thing that really freaks me out about TikTok is the rapid rate and volume at which data is collected by the company. A letter sent this week from the US Federal Communications Commission asked Apple and Google to remove TikTok from their respective app stores. Based on original reporting from Buzzfeed, TikTok was exposed to giving Chinese team members ongoing access to US consumer data, despite agreements that this data would only stay in the US. This is how commissioner Brendan Carr describes the risk that TikTok poses to the United States:

The open letter goes on to detail TikTok’s ongoing data practices like the circumvention of Android privacy controls to track users beyond the app, the accessing of sensitive information like passwords, and personal messages, and allegations that the app has illegally collected personal data on children under the age of 13.

Unlike Meta or Google, TikTok’s rapid growth and unchecked access to the vast troves of user data has gone underreported. We don’t have a figurehead like Zuckerberg or a Pichai to blame for privacy violations and the app has notoriously offered little in operating metrics or governance policy on content moderation and use of data.

In a global economy of social networks, TikTok is growing so fast (signing up more than 6 new users a second), that its influence in society and culture is rapidly overtaking many of the apps we use today. Despite this, we are mostly in the dark on what and where TikTok stores user data and how the company operates.


Globalization and the problem of social media

The US is facing a reality that’s been the norm for most other countries for years. I live in a nation where literally all our technology comes from elsewhere, and data collection by companies like Meta, Google, and Amazon is the norm.

Where I live in Australia, there’s never been a serious political discussion about the role of technology companies in collecting and storing data from other countries until very recently. It’s a non-question to ask where my Twitter data is stored and accessed. Mostly because Australia and the United States, where apps like Twitter are headquartered, are allies and share similar political values.

For the US, however, and other western democracies, TikTok is increasingly viewed as a giant data vacuum collecting our purchasing behaviors, content preferences, and social graphs to be used to inform a hostile nation-state. TikTok used to be a funny app where you watch people dance to pop songs, it’s now seen as an existential threat.

TikTok is unique in how rapidly the company is growing. There have been many large technology companies to come out of China in the past, like WeChat, and Alibaba. However, where these companies have only had a tangential relationship with the US and other western nations, TikTok is a completely different beast.

The tension between the US and China, particularly as it relates to data privacy and security should not be understated. Both countries have a drastically different understanding of personal freedom and privacy. The New York Times recently reported on the country’s growing capabilities to surveil its citizens by connecting social media, spending, video tracking, and DNA data to build a comprehensive profile on their own citizens. This kind of data is increasingly used for law enforcement and government ministries.

Insofar as national security is concerned, China is one of the US government's greatest threats but is also one of the largest trading partners in the world. TikTok may end up becoming a major aspect in forcing deeper and stronger negotiations on the role of data and technology privacy across borders. Negotiations, at a global level, are long overdue. But how did TikTok go from a harmless, yet foreign social media app to a national security threat?


The mystery of TikTok.

In 2021, TikTok was the most viewed website in the world. Since 2019 the app has grown its user base by more than 500%, and revenue is growing faster than any social media app ever. But how it got there is shrouded in mystery, partially due to the lack of operating metrics coming from Beijing, but more importantly the departure TikTok has taken in how the app asks for more from creators and users in ways that older social media apps historically did not.

Facebook is about friendship, Instagram is about creativity, Twitter is about breaking news, and Snapchat is about fun, but what makes TikTok such a compelling app for the next generation is its focus on entertainment. TikTok reminds me of the impact television made when it was invented in 1927 - it created an entirely new social and economic paradigm.

The mystery of TikTok is how it can motivate people to consume media using all of their senses. One of the most important user patterns which predicated the growth of all major social apps today and particularly with the rise of the smartphone is the concept of asynchronicity - I can pull out my phone anywhere on earth and consume content without having to do more than stare at a screen.

Because of this, content must be digestible and enjoyable with minimal friction. Most social apps up until the dawn of TikTok were about reading and writing with the occasional watching and listening. Written and photo content made it easy for people to consume content and easier for creators to build a following. Twitter and Facebook have been the hallmarks of low friction content creation and consumption, and because of this, they grew quickly.

The apps that are focused on getting us to use our ears are just as powerful. Spotify is an $18 billion business and the popularity of podcasting only continues to grow but notice that apps that ask us to listen are less flexible - people need headphones on or to be in a place where we can listen uninterrupted. But this also means that content consumption is deeper and more personal, and is highly portable. When was the last time you did the dishes without a podcast going on in the background?

TikTok breaks all of these unwritten rules of user engagement by asking the user to listen and watch. This asks a lot from consumers to not only scroll through content but to have the ability to listen to it too. And for creators, doing video content is more expensive, time-consuming and more challenging to iterate upon.

Despite TikTok asking more from its users and creators, the app is gaining a competitive advantage over other social networks because it’s more immersive. I can read a Twitter thread while waiting for the train, but I can’t do that with TikTok unless I have headphones in to truly appreciate the content. But when I’m dialed in to a specific TikTok creator I can spend hours consuming video. This is why users spend on average 20 hours a month on the app - almost three full workdays.

Content immersion is not the only driving force for user growth, it’s also the way the app disrupts a variety of other mediums. TikTok integrates with music providers, which disrupts the Spotify model for music discoverability. Before TikTok musicians hoped to be discovered on a Spotify playlist or on Youtube, now many create content to ride the wave of organic reach and virality.

Tiktok is also changing the talent industry. Many creators are producing organic content on the platform with the hope of fame. One of the original creators, Charli D’ Amelio was an early viral success story, who earned more than Tom Cruise, Keanu Reeves, and most S&P 500 CEOs in 2021. TikTok is not just a place where celebrities go to connect with fans, the algorithm functions as its own celebrity kingmaker.

Because of this, the app is creating its own army of mediocre videographers, building shows and content for people to consume, all in the hope of finding fame and fortune. In this way, TikTok resembles entertainment businesses like Netflix. Scott Galloway points this out when he compares the original content budgets of media firms, Netflix and TikTok.

Where Netflix needs to pay creators to build professional shows, TikTok can get people to do it for free. It is incredible how much our social media economy has changed in the mind of the consumer. Because TikTok’s social graph is not primarily built for social connection (like friends), but on content affinities, it can offer far greater reach for online content creators, which makes it a more attractive place for influencers to quickly build a large following.

As I discussed in TMW #080 - where social networks used to be about fostering human connection, there’s now a new paradigm that is primarily focused on building influence. Today, people will move mountains for the chance to influence thousands of strangers online. And I can see why TikTok is the fastest growing app reaching one billion users in the world, and its not slowing down.

We can’t compete with TikTok

For Instagram, the future of the app and perhaps Meta’s entire social media positioning is based on a greater reliance on Reels. Reels, like the story before it is yet another clone to keep up with innovative competitors. It’s no secret that Meta’s innovation across all products is to copy and then dominate other innovative ideas, but for TikTok the situation has changed.

Because TikTok is headquartered in China, its operating metrics are harder to discern and so is the AI technology that Bytedance is pioneering within the app. It also means that the engineers, data architects, and strategic roles in the company are harder to poach to US social media networks. TikTok is also operating outside in, influencing the billions of users around the globe as well as in the US, and because of this, it can penetrate new markets more efficiently. Does anyone remember when LinkedIn tried to enter China? It didn’t work.

In this way, TikTok’s growth can continue unabated. For an app that is still very limited with features, and its strong affinities with eCommerce and marketplace dynamics, TikTok is only getting started.


Ethical nuance and the war on TikTok.

We need to have a serious discussion about the role of TikTok in the social marketing and AdTech stack.

Marketers are going to TikTok in droves in the hope of better organic reach and more efficient advertising. But it’s worth considering the ethical implications of becoming a revenue source for a social media company that’s controlled by a nation that has mostly sided with Russia in the ongoing Ukraine conflict, has increasingly hostilities with Taiwan, and poses an increasing threat to our human right to privacy.  

There’s a reason you don’t see Apple ads on 4chan. Channel selection is a deeply strategic method that marketers use to drive business growth, but revenue and reach are not the only considerations. TikTok is enticing an entire generation with the promises of influence and entertainment. But the reality is that TikTok poses a real threat to national security. Marketers and advertisers should be considering the implications to customers and exposure to brands.

Apple and Google are pressured to remove the app from US app stores. It remains to be seen if anything will change but if the FCC succeeds, this will have a major impact on how marketers think about content platforms that originate from countries outside their own. The war on TikTok has already begun, which side are you on? Links: FCC LETTER. BUZZFEED. GALLOWAY. CHINA CENSORSHIP.SURVEILLANCE. TIKTOK $ GROWTH.TIKTOK USER GROWTH

📈Chart Of The Week  

Integration vs acquisition. An interesting report from Clevertouch surveying companies that are acquiring and integrating marketing technologies suggests that the vast majority are attempting to do both at the same time. Interestingly there is a much greater focus on integration. Link

📰 Latest Developments

Everything is an ad network. Deliveroo joins the growing chorus of retailers and entertainment brands by introducing an ad platform for FMCG and hospitality brands. At this point, give a marketplace enough time and they’ll magically turn into an ad platform. Link

Snowplow raises $40 million. This company has more than 10,000 brands using its tools. What is interesting is this series B round is a show of confidence in tools that sit on top of the data warehouse. Snowplow’s use cases are focused on analytics and the application of AI without by capitalizing on the data warehouse. Link

SXSW expands to Australia. My commentary on this reached the LinkedIn news pick this week. SXSW is one of the world’s most influential events in technology and marketing, and I presume that creating a version next year in Sydney is part of the event’s broader strategy to roll out other versions worldwide. Australia did have a large, influential tech conference called Pause Fest, but it was closed due to a lack of government support during the pandemic. This left a gap for another big show. It’s a shame that the Australian tech community couldn’t build something unique. Link. Post.

📚 Reading

The perils of building an audience. A fascinating deep dive into how audience demand for certain types of content can brainwash influencers to the point of self-destruction. Link

The vibecession. A great piece unpacking the changes in consumer sentiment in anticipation of a recession in the US. Pairs well with last week’s commentary. Link. TMW #087.

Anti-personalisation. A thoughtful piece discussing the problem of marketers wanting to do personalisaiton but lacking the fundamentals of understanding human behavior and what makes a segment “distinct.” The analysis suggests that instead of seeing modern marketing as a feat of engineering, making memorable, and impactful content is what creates real value. Link

🔢 Data & Insights

Martech replacement. A report from Martech.org looks at how often various marketing technologies get replaced. Surprisingly CRMs and marketing automation platforms are the products that are most often changed. Link

PWC on media and entertainment. Advertising is forecasted to become a $1 trillion industry by 2026. It's also set to overtake consumer spending and internet access as the largest share of global entertainment and media spending. Link

The ad spend slowdown. Research from Dreamdata suggests that spending on Facebook, LinkedIn, and Google ads has drastically reduced since the start of 2022, with 54% of marketing teams freezing ad budgets due to the economic environment. Link

💡 Ideas

A social network for lists. Link

Analyzing “metaverse fashion.” Meta partnered with some of the world’s most influential fashion houses, like Balenciaga and Parada. The NYTs look at the strategy and asks - “is that it”? Link

Understanding networks. There are some excellent interactive tools in this overview. Link

✨ Weird and Wonderful

The future of CAPTCHAs. Link

Gary Vee on NFTs. A bizarre post on how NFTs will transform airline tickets into valuable assets that will somehow grow in value. Link

DALL E 2 does classic portraits. This DALL E 2 prompt to expand on the background of the famous 1665 portrait “Girl with a Pearl Earring” is so realistic that I can’t see a future without AI apps influencing the art industry. Link

Stay Curious,

Make sense of marketing technology.

Sign up now to get TMW delivered to your inbox every Sunday evening plus an invite to the slack community.

Want to share something interesting or be featured in The Martech Weekly? Drop me a line at juan@themartechweekly.com.