Here is How TikTok Will Die ☠︎

[00:00:00] Eadies Friday, April 26th, Today, ban or no ban were TikTok's days as the marketers

[00:00:08] darling numbered anyway. The world's largest ad agency may be considering breaking up,

[00:00:14] and getting your AI to explain its recommendations to consumers might boost your sales.

[00:00:20] I'm Tod Maffin, that's ahead, today in Digital Marketing.

[00:00:25] Eadies Friday, that means we're checking in with our meta ads correspondent,

[00:00:28] Andrew Foxwell. Andrew has visibility into $300 million in meta ad spend through his slack

[00:00:35] community called Foxwell Founders. Big day yesterday, meta announcing their Q1 results.

[00:00:41] Andrew, what stood out for you? I mean, you know, we kind of had this juxtaposition between

[00:00:46] the ad business that meta is running making, you know, all of the money essentially. And

[00:00:52] then we have the, you know, the reality labs and all these other things that are happening,

[00:01:00] kind of obviously losing a lot of money. And even the guidance going up for the amount of money

[00:01:04] that they're going to spend for this. And I think it's hard because right now,

[00:01:10] you look and talk to advertisers and, you know, rising CPMs, there's really no

[00:01:16] ad inventory. It seems like that squeeze has fully come on. We've talked about this before,

[00:01:21] like, and it's sort of like, what are they thinking? I think it's an important topic to talk about.

[00:01:27] So for me, it's kind of like Zuck said a quote I thought was interesting. He said,

[00:01:33] I think it's worth calling out historically. We've seen a lot of volatility in this,

[00:01:36] in our stock, in this phase of our product playbook where we're investing in scaling a new

[00:01:41] product but aren't monetizing it yet. And then he cited Reels, Stories, and the transition

[00:01:47] to mobile. So to me, like, we know that they feel like this is a real thing in terms of AI and in

[00:01:56] terms of, you know, wearing the Ray-Ban glasses and Oculus and all this. And I don't disagree,

[00:02:03] but I feel like it's less translatable in a very short time in which they're going to be able

[00:02:10] to make this into something that you can put advertising on. So I think that the transition

[00:02:16] to mobile was like, mobile adoption was skyrocketing. Reels was already like something that was just a

[00:02:22] new ad placement and it wasn't used immediately but they started putting it in all of the current

[00:02:27] family of apps. And they're bringing in, you know, AI obviously in a lot of different places,

[00:02:32] you know, there's the AI assistant and things, but it feels like that window is not,

[00:02:37] I feel like equating those things is bad and I feel like that window is much longer.

[00:02:42] And that feels really frustrating, I guess as an advertiser because it's like, when are they going to

[00:02:48] actually understand that the engine that's running them is really not seeing that this is going to

[00:02:54] translate in the short term in terms of bringing down ad prices or giving us more places to show

[00:02:58] ads. Yeah. And you mentioned inventory, of course, being under crunch, not just at Meta in a lot

[00:03:03] of other places as well, but I wonder like, is it really in Meta's interest to be opening up

[00:03:07] inventory? Like, you know, if you're going to add more inventory into threads, for instance,

[00:03:11] will that not bring the average ad rates down a little bit with increased inventory and isn't that

[00:03:17] bad for Meta's business? Like maybe they're playing us in a way we haven't even thought about yet.

[00:03:22] It could be certainly that that's the case. It could be that they don't care and they have

[00:03:26] a certain amount of inventory and that's what they're going to leave it at. I don't think

[00:03:29] that's true. I don't think that's actually what they want to do. I think they, I think

[00:03:33] you can take an example of like what they did with Reels as a way that they were like,

[00:03:36] we need to figure this out. And it could be that, it could be that that was Cheryl's move and like

[00:03:41] she's gone now and there isn't the product vision necessarily to see that. But if they did the

[00:03:46] same playbook in my opinion, which is what he's saying, like the monetization playbook,

[00:03:51] they took Reels and they put it everywhere. Meta, AI and the things that they're doing with it,

[00:03:56] I just don't know that they're that impactful at this point or they're that translatable.

[00:04:04] And so I think that they're not, I think they want more inventory and I think they're trying to get

[00:04:09] that going. But the adoption I think hasn't been necessarily what they've wanted is would be my

[00:04:15] take. And I worry that a year from now we're talking about how a lot of people have continued to

[00:04:21] find challenges on Meta and there isn't necessarily a lot of places to go. There's more businesses

[00:04:26] closing doors. And we're still talking about how they're bleeding cash out of the reality labs and

[00:04:34] there's just not much to show for it in terms of an advertising business.

[00:04:38] Do you think AI search results will be a placement in the future?

[00:04:41] I think that AI search results certainly could be something or essentially AI like

[00:04:47] informed necessarily, like yeah, yeah, hey, this is, you're looking for this like, oh,

[00:04:53] by the way, have you seen this shirt? Like maybe they would initially just stick an ad like in this

[00:04:59] where you're searching for things or something like in the assistant. I just don't know that it's,

[00:05:05] that if the engine of that is that powerful right now. So to me, it's like what are advertisers

[00:05:09] to do? Like what are the things that we can do? And it's almost, it's almost like I wish

[00:05:15] I had a magic bullet and we don't there's there isn't necessarily something that we can do.

[00:05:20] There isn't necessarily something that we can do to make it easier. It's the same playbook.

[00:05:24] It's better creative. It's trying different audiences. It's trying to adapt where you can to

[00:05:28] advantage while shopping campaigns and utilizing the AI that they are within campaign serving

[00:05:34] and trying to simplify where you can. Those are really the pieces that you have control

[00:05:38] of right now, but right now it's like I wish it was, I just wish it was so much different

[00:05:43] than it was. And I wish we were able to say like, yes, that that's where they're going,

[00:05:47] the adoption of this, of all this stuff they're spending billions of dollars on is actually working.

[00:05:52] But I just don't see that happening in long term. I think if you're a long-term investor though,

[00:05:56] Meta still obviously is attractive. You know, one like Wall Street has essentially their stock

[00:06:01] price has price target around 600. So there's room to run in this thing in terms of their

[00:06:07] opinion, in terms of valuation. And a lot of media ourselves included were,

[00:06:12] we're talking yesterday about how the stock price had kind of crashed on the news of

[00:06:16] the Q1. But I mean, your Slack community, you and I were chatting earlier today over DMs and you

[00:06:21] reminded me that actually Meta stock price is doing really well when you look at it kind of overall.

[00:06:26] Yeah, it definitely is. And it's on discount now. If you believe in Meta over a 10-year period

[00:06:30] and you believe, especially in a five-year period that you think they're going to solve

[00:06:34] the issue that I'm worried about right now, if you feel confident in that, and you feel

[00:06:38] confident in the Zuck being able to do that, then I think it's definitely a good buy.

[00:06:43] Dollar cost averaging, I think is what my financial guy keeps telling me to look into.

[00:06:48] All right, Andrew, thank you. Thank you.

[00:06:50] Andrew Foxwell is our Meta ads correspondent. He's here every Friday. You can learn more about

[00:06:54] Andrew's digital ads training at b.link slash Foxwell or his Slack community of senior Meta

[00:07:01] ad buyers at b.link slash founders. Both of those are affiliate links and you can find

[00:07:06] those at the bottom of our show notes. You can also watch the full unedited interview.

[00:07:10] There is a link to it in today's email newsletter, which you can sign up to for free

[00:07:14] by tapping the link in the show notes or going to today in digital.com slash newsletter.

[00:07:23] So lots of talk in the last 24 hours about reports that TikTok is willing to sell its

[00:07:28] U.S. operations to another group but would not sell its discovery algorithm as part of that deal.

[00:07:34] Reports that TikTok's parent company denies, by the way. Some industry analysts are now

[00:07:38] weighing in on what that would look like and whether it's even possible.

[00:07:43] Part of what made TikTok's algorithm better was that it relied more on the actions you took

[00:07:48] on specific videos, how long you watched, at what point you swiped away,

[00:07:52] unless on how the other platforms algorithms worked, who you followed,

[00:07:56] and what accounts you engaged with. Quoting business insider, now that we all kind of

[00:08:01] know how the algorithm works, if a new owner bought TikTok and wanted to build a new version

[00:08:05] of the For You page, perhaps it wouldn't be a completely impossible task.

[00:08:10] It's kind of those Bon Appetit videos where chefs would try to recreate junk food like

[00:08:15] ruffles potato chips. It's a stroke of genius to invent ruffles in the first place,

[00:08:18] but if a talented cook already knows what a ruffle looks like and tastes like,

[00:08:23] they can do an approximation of it. The piece points out that, even so,

[00:08:28] this wouldn't be as simple as just hiring a bunch of engineers and throwing their attention

[00:08:32] behind it. Meta has a million engineers, and Real's algorithm still isn't nearly as captivating as

[00:08:38] TikTok's. Part of that is because TikTok is more than an app, it's become a culture,

[00:08:44] with its own in-jokes and slang. Consider threads and X, both are microblogging platforms,

[00:08:50] but you only need a few seconds on each to understand how different the vibe is between

[00:08:55] them. And there's something else that could weigh TikTok down in the year ahead

[00:08:59] that's not related to the algorithm at all. Quoting Business Insider,

[00:09:03] quote, it's likely that the next year of waiting for a potential sale of TikTok will cause a talent

[00:09:09] drain and low morale across all parts of the company, including non-technical roles.

[00:09:15] There are tons of tiny things that make TikTok so fun to use aside from the next video showing

[00:09:19] up from your feed, and that means tons of tiny ways for it to get worse. Selling TikTok

[00:09:26] without the algorithm, whatever that means, is not ideal, but it might not be the one thing that

[00:09:31] sends TikTok down a path toward my space status. Unquote. So that's one scenario. Another one

[00:09:38] apparently being considered, the take our toys and go home approach, quoting Reuters, quote,

[00:09:43] according to four sources, TikTok owner Bite Dance would prefer to shut down its loss-making

[00:09:49] app rather than sell it if the Chinese company exhausts all legal options to fight

[00:09:54] legislation to ban the platform from app stores in the US, unquote. So what does this mean for

[00:09:59] marketers? Honestly, probably not much at this point. Although Reels isn't quite as strong

[00:10:05] in discovery and Shorts isn't as set up in creator compensation, marketers really only care

[00:10:10] about two things. Can I reach a lot of my potential customers on similar platforms? Yes.

[00:10:17] And can I use the same format and production as we did on TikTok? Also yes.

[00:10:22] And with the war chests that both YouTube and Meta seem ready to keep plowing into vertical video,

[00:10:28] TikTok's days as a standalone unicorn were probably numbered anyway.

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[00:11:33] That's Bluehost.com slash Wondersuite. When selling online using AI tools, your brand's

[00:11:41] ability to make a personal touch can make all the difference. That's the key finding behind

[00:11:46] some recent research that found that when AI explains why it recommends a product,

[00:11:52] customers are more likely to purchase. For instance, an explanation like,

[00:11:57] this cream is our most repurchased item can increase customer trust and interest.

[00:12:02] Research has conducted four experiments focusing on items like sneakers,

[00:12:06] shirts, and face creams. Explanations led to about a 15% increase in purchasing likelihood

[00:12:13] and a stunning 55% more clicks on a See More Details link for t-shirts compared to those that

[00:12:22] didn't receive any explanation. The rationale is simple. Transparency fosters trust. Most shoppers

[00:12:29] aren't familiar with how AI really works, and a bit of insight into its logic might help mitigate

[00:12:34] this mystery, making the technology less daunting than the brand seemed more friendly.

[00:12:40] A couple of caveats. The researchers tested against relatively inexpensive products,

[00:12:45] so that may not align with what you sell, and they did these experiments via a Chinese

[00:12:49] survey site which might not directly translate to other cultures. Still though,

[00:12:53] the take-home message for e-commerce businesses is clear. Explain your AI's logic,

[00:12:58] particularly for functional products. A well-placed, CYU Got This Recommendation button

[00:13:05] could give you a sales uplift. If nothing else, it's worth testing. The research was

[00:13:10] published recently in the Journal of Interactive Marketing. It's called,

[00:13:13] When Post-Talk Explanation Knocks, Consumer Responses to Explainable AI Recommendations.

[00:13:24] There is growing speculation that the world's largest ad agency, WPP, might soon break up.

[00:13:31] The group's Q1 revenues were down somewhere between 1 and 5%,

[00:13:35] depending on which accounting model you use, and its market cap is lower than its competitors

[00:13:39] like Publis' Group or Omnicom. Quoting Digidae, quote, internal speculation, albeit formal,

[00:13:45] has been rife in recent weeks, with some noting that selling off specific units to

[00:13:50] private equity could be an outcome, unquote. Over the last few years, the holding group

[00:13:55] has worked to try to integrate all its component agencies a little tighter.

[00:13:59] These smaller sub-agencies came to WPP through acquisitions,

[00:14:03] and many maintain their own brand and siloed teams.

[00:14:11] And finally, some other ad platforms reported Q1 results yesterday, so here is a quick lightning

[00:14:15] round rundown for you. Alphabet reported strong earnings driven by growth in Google's ad

[00:14:19] revenue, which jumped 10%, and its thriving cloud computing business. Snapchat saw a surge

[00:14:25] in users in revenue in Q1, with daily active users increasing by 17% year over year,

[00:14:31] and revenue growing 12% from the same period last year. And Microsoft's Bing ads saw a 14% rise

[00:14:39] in revenue earn. Don't forget to follow us on social media. We are on Facebook, Instagram,

[00:14:47] YouTube, LinkedIn, TikTok, Threads, Mastodon, Blue Sky, Snapchat, and Pinterest. For all of

[00:14:53] those links, go to today in digital.com slash social or tap the link in the show notes.

[00:14:59] That'll do it for the week. Today in digital marketing is produced by Engage Q Digital on

[00:15:02] the traditional territories of the Sunamik First Nation on Vancouver Island.

[00:15:06] Our production coordinator is Sarah Gild. Our theme is by Mark Blevis,

[00:15:10] ad coordination by Red Circle. I'm Todd Maffin. Thank you for listening. Have a restful weekend.

[00:15:15] I will see you on Monday.