TikTok is a Big Threat to Instagram and YouTube

In today’s newsletter edition, we delve into:

👉 The meteoric rise of TikTok

👉 The resulting headwinds for Meta and Alphabet and

👉 Amazon’s rapidly growing ad sales

So, let’s dive deeper.

Tik-Tok Disrupted the Short-video Market

TikTok, a short video platform, has gained massive traction in recent years, surpassing a whopping $10 billion in annual sales. Its meteoric rise in the U.S. has allowed TikTok to become the platform of choice among creators and marketers.

Here are some mind-boggling numbers for TikTok 👇

• TikTok ended 2021 with more than one billion monthly active users

• Around 67% of teens in the U.S. use TikTok

• TikTok accounts for 2.3% of the worldwide digital ad market

TikTok will soon rival Big Tech

A report from OMDIA research forecasts TikTok to snag 37% of the video ads market share by 2027 and generate $122.5 billion in sales. Comparatively, Meta Platforms has reported sales of $126 billion in the last four quarters.

So, what’s going right for TikTok?

👉 Advertisers are choosing TikTok over Meta and YouTube due to a vast follower base and rising popularity among younger consumers

👉 TikTok’s resounding success in China with e-commerce integrations signals a promising future in the APAC region as it partners with regional online players

Meta Platforms and Google Copy TikTok

TikTok’s popularity has forced Meta Platforms to pump billions of dollars to create a copycat version known as Reels. Other social media platforms such as Snap and YouTube are also investing heavily in their short-video features to compete with TikTok.

Driven by ranking and product improvements, Reels has driven more than a 40% increase in the time spent on Instagram since its launch in 2020.

The annual run rate revenue for Instagram increased to $10 billion in Q2 of 2023, up from $3 billion in Q4 of 2022. YouTube’s shorts ended Q2 with two billion monthly active users, up from 1.5 billion in 2022.

Will big tech companies such as Meta and Alphabet be able to protect their market share from the high-flying Chinese juggernaut in the upcoming decade?

Amazon Ad Sales Grow 26% in Q3

Amazon is the largest e-commerce player in the world and also leads the public cloud market. Moreover, the tech behemoth is now the third-largest digital ad platform in the U.S., behind Alphabet and Meta.

Amazon currently accounts for 7.5% of the global digital ad market. Alphabet remains the undisputed leader with a share of 28.4%, followed by Meta at 20.1%.

In Q3 of 2023, Amazon grew its ad revenue by 26% year over year to more than $12 billion. Comparatively, Meta increased ad revenue by 24%, while Google’s ad sales grew much slower by 11% in the September quarter.

Amazon has successfully capitalized on the digital ad market following Apple’s iOS privacy changes in 2021, which hurt competitors including Meta, Snap, X, and Google.

Several retailers have shifted ad budgets from Meta to Amazon due to weaker online ad targeting capabilities. Moreover, users on Amazon have a higher purchasing intent, making it the preferred platform for marketers.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.