But what about TikTok’s ROI?

Though TikTok gives marketers a way to reach young consumers with a seamless ad experience, the app’s return on investment (ROI) potential is still unproven, marketers said. For some, reaching those audiences are their only goal, and therefore the ROI isn’t as important. But brands looking to see precisely measured returns on their investments, in terms of sales or some other metric, may not get that from TikTok.

“That’s where they’re going to need to continue to invest, and do more to show that on a dollar-in, dollar-out basis, it’s driving sales,” Goldman said.

TikTok ranked below Facebook, Instagram, YouTube, Pinterest, and Twitter in ROI, based on a survey of over 30 c-suite advertising executives that work with TikTok, according to the research platform Vancery. TikTok did, however, rank above Snapchat in ROI.

Goldman said that’s mainly due to “structural challenges.” Unlike Amazon, where consumers go specifically to buy things, or Google, where users go to search for answers to questions they have, no one goes to TikTok to shop (yet). “They go to entertain or be entertained,” Goldman said. That could change once TikTok becomes known more for its commerce integration, but right now, users don’t use the app expecting to pull out their wallets, which affects its ROI appeal.

And aren’t there concerns over brand safety?

In that same Vancery survey, TikTok ranked dead last in brand safety—the ability of a company to protect its reputation based on the content it’s surrounded by. The app, of course, is embroiled in a geopolitical controversy as US president Donald Trump has tried banning its use within the US. The courts have temporarily prevented that from happening, but pending the results of the 2020 US presidential election, the app’s future in the country remains up in the air.

On top of that, TikTok has been forced to combat waves of misinformation, election interference, and other dangerous ideologies in videos that appear on users’ feeds. Users also have reported numerous scams, usually involving fake companies trying to get them to share information or pay money for something that doesn’t exist.

Brands that want to advertise on TikTok need to know it’s possible their ads could appear alongside all of that hazardous content. But some think the risk might be overblown. Goldman, for instance, noted that all content on TikTok is ephemeral.

“The concerns are present, but they’re fleeting, the same way the content is present but fleeting,” Goldman said. “Brand safety is only an issue if you get caught.” Because TikTok videos are integrated into an ever-changing feed users scroll through, it’s harder to ascribe any malicious intent to an advertiser that might incidentally appear next to a nefarious video. Marketers certainly monitor for it, but Goldman argued it’s less a concern for them than it is on Facebook or YouTube, simply due to how the platform is set up.

What businesses are succeeding on TikTok?

Ou said direct-to-consumer brands selling products under $200 are doing really well on the platform. On the flip side, companies that sell luxury items—or products with long sell cycles, like furniture, which require re-targeting custom audiences several times over—have struggled. Products under $200 are seeing better conversion rates on TikTok than even Facebook or Instagram, proving the app’s young user base is willing and able to buy things.

Goldman pointed to Elf Cosmetics as one brand that’s done well both with paid video ads and also campaigns that have flourished organically. The company’s “Eyes Lips Face” challenge went viral last year: Videos with the #eyeslipsface hashtag were viewed more than 1.2 billion times.

Perhaps not surprisingly, mobile apps are also advertising well on TikTok. “It’s an easy ask of the consumer,” Goldman said. “You clearly have a phone and like apps, here’s another one for you, just click to install.”

One such app is Grammarly, a writing assistant that worked with Nativex on its TikTok campaigns. At first, it made a highly polished, studio-produced video ad, but that didn’t perform well, Ou said. So it then turned to TikTok’s creators, hiring an influencer to market the app to her hundreds of thousands of followers.

“A video shot in an influencer’s bathroom works way better than a polished brand video,” Ou said.

The future of TikTok

Both Goldman and Ou said marketers at smaller firms aren’t too worried about the potential US ban, since they can pivot their resources to other platforms easily. “The app is still available now and billions of people are using it, so it’s a place where you want to be,” Goldman said. “There’s plenty of places to move those budgets [if the app is successfully banned].”

Marketers are excited by Walmart’s potential investment in TikTok in the US because of the retail giant’s e-commerce assets and infrastructure. As one of the world’s leading e-commerce companies, Walmart would presumably know how to help TikTok build an e-commerce platform of its own and turn it into a sustainable business model. That could be exactly what the app needs to go to the next level—from a popular app with a thriving advertising business, to a popular app with a thriving advertising business on top of one of the world’s prevailing e-commerce operations.

“TikTok is here to stay as a stalwart of new media,” Goldman said. The looming ban represents a real risk, but if it isn’t enforced, there’s little in the way of preventing TikTok from being the next vessel with which brands profit.

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