TikTok + Snapchat have pulled the rug under Facebook’s feet

TikTok + Snapchat together are increasingly having success competing with Facebook for marketing dollars. Surprisingly, the financial markets have yet to notice, but that may soon change.

Did we at Embee see this coming? Yes. See Footnote, below, Apps Tell The Story*, which references a few blogposts from the recent past. We are now observing even more compelling evidence of these trends in our data.

Before we get into the data, here are some recent events** to set context:

  • TikTok hired former head of advertising from Facebook to build its US Ad partnerships and moved into the former office of Whatsapp (bold!)
  • TikTok introduced features to directly buy products from within the app
  • Clickthrough rates on TikTok ads are reportedly 4x that of industry average
  • TikTok ad rates on CPM basis are reportedly cheaper than Facebook
  • TikTok has launched an audience network (like Facebook and Snapchat). This allows TikTok to capture greater ad spend and make more money from advertising that appears on other apps
  • TikTok has won over new advertisers like Walmart, Nike, Chipotle, Guess, ESPN, and even Instagram(!)
  • TikTok and Snapchat, while different products, have a large overlap in audience and compete for same mindshare. Adweek states that Snapchat’s Biggest Advertiser is TikTok
  • “TikTok for Business” was announced on June 25th 2020 – this includes In-Feed Videos, Hashtag challenges and Branded Effects; allowing Brands to directly introduce themselves into content
  • TikTok U.S. revenue is expected to hit $500m in 2020

**Sources: Financial Times, Marketing Land, CNBC, TechCrunch

What the app usage data shows us:

Embee’s data comes from the largest opt-in, first party, privacy compliant, longitudinal mobile panel in the US. The panel is geographically representative, has low churn and steady demographic composition. As a consequence, the observed shifts in app usage is strongly representative of broader national usage trends.

Based on our data, we can see that the average amount of time spent on TikTok by a US user has steadily increased over the past 18 months, having now reached to 1 hour/day where it has started to plateau.
Chart showing average use of TikTok in seconds since 1 Jan 2019. Chart grows from 1750 seconds per day through to nearly an hour at the start of March 2020, then plateauing.

Time is a finite resource. Consequently, as users spend more time on TikTok, one would expect that those users must ultimately be spending less time somewhere else. So, from whom is TikTok “stealing” time?

The answer is clear: Facebook. One hour spent on TikTok leads to reduced usage by 8-10 minutes (on days of TikTok use) on Facebook; and critically, this reduction is seen among Facebook’s most engaged users.

chart showing facebook usage by different types of tiktok user and usage

That said, just because TikTok users are spending less time on Facebook, that doesn’t mean those users are spending less time on all apps. Are there any apps where increased TikTok time correlates to increased time on other apps?

Yes! Snapchat enjoys an UPLIFT of 5-7 minutes arising from TikTok usage (this is an uptick in usage from its most engaged users). In other words, people who spend more time on TikTok additionally spend more time on Snapchat and spend less time on Facebook.

What would account for that? Perhaps it is not coincidence that there is a correlation between Snapchat and TikTok, as reportedly Snapchat’s largest advertiser is none other than TikTok. Still, that wouldn’t necessarily lead to uplift of Snapchat as one uses more TikTok. One possibility is that as people find interesting content on TikTok, they are motivated to share it “in app” to their friends; and, those TikTok users feel that Snapchat is the better platform for sharing TikTok content than Facebook. Note, too, that this is among a panel of those aged 18 and up; potentially, this effect is even more pronounced among people younger than 18.

chart showing usage of snapchat over time segmented by tiktok usage

SO WHAT?

Given the dynamics, it is only a matter of time before advertisers start shifting ad dollars, at more attractive rates, to TikTok + Snapchat by creating compelling content on TikTok which gets viral uplift from distribution on Snapchat. As noted, TikTok is already Snapchat’s largest advertiser. It is also possible there will be increasing strategic cooperation between Snap and TikTok in the future.

What is clear now is: TikTok is making fast, bold and systematic moves. Can Facebook defend itself from the onslaught? That is the multi-billion dollar question of the day.

*Apps Tell The Story:

  • What we’ve heard about TikTok (Oct 17 2019) “..we may soon see TikTok emerge as the next advertising powerhouse in mobile, alongside Facebook..” “..it would be interesting to further research whether increases in TikTok usage correlates to a reduction in usage of other popular apps; it wouldn’t be hard to imagine that someone’s use of Instagram or Facebook, for example, decreases as TikTok usage increases.”
  • Facebook’s TikToking Bomb (March 2 2020) “FBs got to be sweating bullets..they’re losing eyeballs from its most engaged users!”