TikTok and the Attention Economy
While the name ‘TikTok’ initially conjures up images of teenagers taking part in dance trends and challenges, in reality the app is becoming extremely influential as a platform that provides small businesses, creators and brands with exposure to an extremely wide-ranging audience. Although the age demographic is predominantly young people, with over 40% of users aged between 16 and 25, increasingly older age groups are choosing to sign up, consume and create content on the platform. Media consumption habits are changing: every age demographic other than those aged over 65 are watching less TV over time, choosing instead to switch to platforms such as Netflix, Youtube and TikTok, with shorter and more readily accessible, personalised content. Over lockdown, TikTok is predicted to have grown by around 75%, and currently hosts over 1 million video views everyday. Valued at $50 billion, it boasts more active users than Twitter, Reddit, Snapchat and Pinterest, with 90% of TikTok users spending over 40 minutes per day on average consuming content.
As social media is such a prevalent part of everyday life, sites such as TikTok, Instagram and Facebook act as an essential advertisement platform for brands looking to expand their consumer base. Advertisement is also a vital and lucrative source of income for the social media companies themselves as their services are often free for consumers, with Facebook generating almost $21 billion in ad revenue during 2020. Ads on these platforms are in high demand due to their influence over consumption decisions: according to a report published by Deloitte, consumers influenced by social media are 4 times more likely to spend a higher amount on goods, and 74% of consumers will make purchasing decisions based on social media. Trust is reported to be a significant factor in a consumer’s decision, with 49% of consumers saying they seek guidance from social media influencers when deciding whether to buy a good. Furthermore, a PwC Total Retail Survey conducted in 2016 found that 45% of global respondents feel that reading reviews, comments and feedback on social media significantly influences their shopping behaviour. In particular, promotions and sales are extremely effective at increasing consumption, with 64% of online purchases done so during a sale.
‘Attention Economy’ is a phrase coined by Herbert A. Simon, a Nobel Laureate economist and psychologist, who proposed that attention can be thought of as a scarce and valuable resource that acts as a limit on our ability to process information. Increasingly, social media platforms have adapted to this idea, designing their dashboards or feeds to attract and sustain consumers’ attention. The nature of TikTok’s platform, with 15 to 60 second videos, is particularly effective at drawing in consumers, as each short video releases a small amount of dopamine, which can have a similar addictive effect to drug use. As content and information is so widely accessible, advertisers are competing for consumers’ attention, and therefore it is increasingly important for brands to create more innovative and interactive content.
Although algorithms are commonly used by social media platforms to provide consumers with content tailored to their interests, TikTok’s algorithm is the central concept of the platform. The For You Page is composed of recommendations based on previously consumed content and the level of engagement, including factors such as the length of time spent watching a specific video and if the comments section is read. This makes it a powerful tool for creators and advertisers, even those with little initial exposure or few followers, to reach a wide audience, and using certain hashtags or trending sounds can significantly increase the chance of a viral video.
Companies, sceptical at first, are now flocking to the platform, including high profile brands such as Amazon, Fenty Beauty and The Washington Post. TikTok have realised the influence of their platform and are taking advantage of the opportunity, rolling out new shopping features, such as adding a ‘shop now’ button on ads that redirects consumers to the advertised product. In addition, they are in the process of partnering with Shopify to make it easier for merchants to advertise and analyse user data, as well as developing additional features including one which will enable TikTok users to browse and purchase goods through the app.
‘Hashtag challenges’ are now used by advertising campaigns to get their products trending, and as at least 50% of creators have participated in at least one ‘hashtag challenge’, consumers are clearly engaged. These hashtags cost $150,000, but the high price tag is worth it, as shown by KIND Snacks’ hashtag, #kindsimplecrunchcontest. Creators making a video featuring a KIND bar were entered into a contest to win a trip to New York; within just 24 hours of being posted, the hashtag had 18 million views. Influencers also play an important role in generating engagement with products, particularly due to the younger age demographic, and many trending products see significant increases in demand. The significance of going viral on this platform is therefore not to be dismissed: the longest running Number 1 Single in US chart history, Lil Nas X’s ‘Old Town Road’, only became popular due to a trend on TikTok. This highly interactive method of advertising, aimed to capture the scarce resource of consumers' attention, has therefore already shown itself to be incredibly powerful, and the platform’s influence will only continue to grow.