Starcom’s Paul Kasamias on TikTok Ecommerce, Airbnb, and US digital ad spend
On this week’s episode of The MadTech Podcast, Paul Kasamias, Managing Partner at Starcom, joins Grace Dillon and Lindsay Rowntree of ExchangeWire to discuss the latest in advertising technology and martech.
Together they discuss:
– Abridged video sensation TikTok is testing in-app sales in Europe. The feature, which is currently being tested with streetwear label Hype, seeks to replicate the success of TikTok’s Chinese counterpart, Douyin, which generated $ 26 billion (£ 18.5 billion) in sales via the application during the first year of launching an e-commerce offering.
TikTok has promoted buying campaigns in the region in the past, but the current project indicates an ambition to make e-commerce a permanent part of the platform. The move reflects the determination of the app’s parent company, ByteDance, to claim China’s burgeoning e-commerce market at $ 1.7 billion (£ 1.2 billion). According to a report by Bloomberg, the Beijing-based company aspires to derive US $ 185 billion (£ 131.8 billion) from digital purchases by 2022.
It is not yet clear when the offer will launch, with Bloomberg reporting that “the prototype is so far only visible to some attendees and it is not known when the company will launch the official launch.” The offer is expected to bring TikTok into more fierce competition with other social media heavyweights, namely Instagram, owned by Facebook, who have long been developing their own in-app buying capabilities in the goal of tapping into the $ 5 billion (£ 3.6 billion) global e-commerce market.
– Airbnb reduced the amount they spent on marketing in the past year, from $ 1.14 billion (£ 803 million) to $ 482 million (£ 339.6 million). The company revealed in a stock exchange file that it had reduced total marketing spend for the first quarter of 2021 to US $ 98.6million (£ 69.5million), 45% below the $ 119.2million million (£ 84 million) in the first quarter of 2020, increased 5% to US $ 887 million (£ 625 million).
The decrease in spend is primarily due to “a reduction in performance marketing, partially offset by an increase in brand marketing” following the rental company’s largest global campaign in the past 5 years. Airbnb also reported that “unpaid or direct” accounted for 90% of traffic in the first 3 months of 2021.
The results reflect Airbnb’s distance from performance marketing driven by the pandemic. CFO Brian Chesky told investors in February that the company “would never spend” as much as it did before the pandemic, after finding online traffic to be 95% despite performance marketing falling behind. zero. CEO Dave Stephenson says the company started the change of tactics ahead of COVID-19, with the pandemic accelerating the change. Going public at the end of last year, the company said it plans to “dramatically increase the efficiency of our market” during the year.
– The first quarter 2021 digital marketing report from customer experience agency Merkle found that US ad spending increased in most categories during the first 3 months of the year. January saw a particularly strong increase in ad spend (33% year-on-year) as brands looked to capitalize on increased consumer demand. With retailers experiencing fewer shipping and inventory issues, the growth in retail clicks has also accelerated.
The report’s findings on Google indicate that paid search spending has increased by 20%. Spending by travel brands grew 5% year-on-year, while the drop in clicks fell to 10%, from 14% in Q4 2020. Retail and consumer goods benefited from demand increased ecommerce, reporting higher clicks, spend and CPC. 59% of Google’s organic search visits to brands’ websites were from mobiles and tablets, down slightly from 62% in Q4 2020, and the organic mobile share remained below the giant’s paid mobile share of technology.
For Amazon, clicks on their new Sponsored Brand ads increased 38%, and spend increased 26%. As it opened up new locations for the format in 2020, Amazon saw impressions skyrocket 113% year-over-year, but sales did not keep up with the growth in clicks. Despite the increase in sales per click, Sponsored Products’ YOY click growth only increased 11%, while YOY spend was almost flat due to a 10% drop in CPCs. However, sales growth remained strong at 36%, and Sponsored Products outperformed Sponsored Brands and Sponsored Display in terms of investment.
Despite higher investments, impressions increased only slightly on Facebook, indicating increased competition and rising CPMs. A more profitable CPM (down 5%) made Instagram more popular with brands, with ad spend increasing 58% year-over-year and 30% quarter-over-quarter. Pinterest and LinkedIn recorded positive investment levels, while Snapchat ad spend fell dramatically and Twitter was left out of the top 3 social platforms for advertisers. Emerging digital channels, such as CTV and audio, averaged 33% of first-quarter media spend among brands investing in multiple digital channels with display and social media.