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Digital Transformation Ad Spend Influencer Marketing

How TikTok plans to steal SMB ad spend from rivals

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By Chris Sutcliffe | Senior reporter

March 8, 2023 | 6 min read

TikTok is eating into Meta’s ad dominance – but it has its sights set on growing its small business ad growth even further.

The Euro currency symbol in the style and colours of the TikTok logo

Where is TikTok looking to grow its SMB adspend across EMEA?

TikTok has been a growing challenger in the digital ad market for years. In spite of its ongoing issues with regulation and reputation among policymakers, the Bytedance-owned social network recently reported it has 150 million users in the EU alone. That puts it at the top table among social networks and its particular demographics make it increasingly attractive to advertisers.

According to TikTok, 42% of advertisers say that TikTok has helped them achieve more from their ad spend. Around three-quarters (73%) on the platform believe it’s helped them reach new customers too. Most importantly, given TikTok’s position as an e-commerce hub, over a third (34%) say that they have increased sales of their products or services as a direct result of advertising on TikTok.

Its head of SMB, EMEA, Lisa Friedrich, explains: “We know that almost 60% of the people on TikTok who have come across SMB content have gone on to make a purchase. I haven’t met an SMB yet who didn’t want that. That is, they want discovery, but they need the conversion.”

While the platform has yet to break out the number of the individual SMBs spending in the EU – for context, 11m businesses use Meta’s platforms for advertising – Friedrich believes the platform’s range of resources allows them to cut through the hassle that comes with launching a business online.

“Creative for video is hard. It can be really intimidating for people who are not used to making videos of themselves and their businesses… but we have created tools with that in mind.”

Per IAB UK research, paid social media is the most used form of paid digital marketing – used by 38% of SMEs that use digital advertising. The biggest beneficiary of that spend has historically been Meta.

Last August, Meta expanded the flexibility of its Advantage+ ad tools to individual buys, rather than relegating it to entire campaigns. It was seen as a way for SMBs to experiment with ad creative on a lower budget. It was, in part, a response to the news that Facebook had reported its first-ever fall in ad revenue in the US, and was also seen as a way to head off encroaching competition from TikTok and streamers for that SME ad revenue.

TikTok and entrepreneurs

With many businesses still recovering from the dual shocks of high inflation and a cost of living crisis, encouraging any business to advertise can be difficult.

But Friedrich remains bullish: “I can’t think of any business that really couldn't benefit from being part of our ecosystem. We have an opportunity for them to reach new audiences. And we have proof that that has worked for others.”

She cites the examples of HealthXL – a vegan supplements company – and the automotive specialist Needcarhelp. She specifically notes that the TikTok SMB community benefits from sharing expertise, noting that Marta Sol Molina of Needcarhelp has inspired other entrepreneurs to launch on the platform: “We then try to showcase those stories on our SMB hub so that we can say not just “look, somebody else did it’, but ‘how did she do it’? Making it digestible for other potential small business owners who are just trying to figure things out.”

Demonstrable ROI is at the top of the agenda for many however, and it is here as well that Friedrich believes there’s an opportunity for TikTok to steal a march from its rivals. She says: “We have heard that our CPMs allow them to get more reach and at a more affordable rate. That’s really powerful for SMEs who need to reach a large audience want to be discovered, want proof that they can get conversions, and they need to be really efficient with their budget.”

Despite the regulatory headwinds facing TikTok, its user base is still undeniably growing. That offers an opportunity – and more importantly, more choice – for SMBs looking to convert consumers as they start up and scale.

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