After being originally announced in May 2022, TikTok Pulse – an ad revenue-sharing feature on the platform – is finally being rolled out. We explore how it works for both creators and brands and whether it will affect the digital advertising landscape, particularly rival video-sharing platform YouTube.
Any ‘creator’ with 100,000 + followers is eligible as long as they have posted 5 videos in the last 30 days. They also need to be at least 18 years old.
In return for placing adverts alongside their videos, creators will receive 50% of the ad revenue earned, with TikTok taking the other 50%. However, TikTok does state that eligibility for the program does not guarantee that creators will earn revenue from videos, as adverts will only be shown on certain videos.
This ad revenue-sharing feature gives an alternative to creators who previously made most of their money through sponsored posts on the platform. Although there was a TikTok Creator Fund, this has a history of low payouts, so creators would earn most of their money directly from brands who want to pay them to produce sponsored or advertorial content.
Brands and advertisers will be able to place ads alongside the top 4% of posts shared on any given day, or what you might refer to as the platform’s trending content.
Brands will have some say over the types of videos their ads appear on – TikTok describe TikTok Pulse as a “contextual advertising solution”. Contextual advertising is not a new concept in the digital advertising space – in fact, you’d be surprised not to see it – but TikTok will be following in the footsteps of tech giant counterparts with an advertising solution that appeals to advertisers and users alike by placing adverts only on relevant videos.
They will be able to choose from 12 categories to ensure their ads are placed on videos that correspond with the products or services they are advertising. These categories include the following (with more to be revealed):
– Beauty and personal care
– Cooking and baking
Of course, many advertisers will have valid concerns about their adverts appearing alongside unsuitable or questionable content on the platform. To combat this, TikTok state that their “proprietary inventory filter ensures that TikTok Pulse ads are running adjacent to verified content with our highest level of brand suitability applied on the platform”.
TikTok has also said that there will be measurement tools available, including third-party brand suitability and viewability verification, to allow advertisers to analyze and understand the impact of their campaigns.
Previously, YouTube was one of the most generous big ad revenue-sharing platforms, giving creators 45% of ad revenue. However, TikTok tops this by giving creators 50%.
TikTok also appeals to brands by promising that their ads will appear alongside the top 4% of videos shown that day – in other words, the most popular content that will get a lot of views.
With the rise of short-form video content in recent years, will this draw creators and advertisers away from YouTube and onto TikTok?
Not necessarily – there is still huge potential for advertising on YouTube due to the sheer volume of users on the platform. As of 2021, YouTube had 2.1 billion active users worldwide, while it is estimated that TikTok had approximately 656 million users worldwide in 2021.
Therefore, advertisers will likely see the benefits of advertising on both platforms, rather than moving from YouTube to TikTok. The platforms may simply require different approaches due to the different types of video content that is served on both.
YouTube is also stepping up to the challenge of competing against increasingly popular short-form content on TikTok with ‘Shorts’.
To combat the rise of TikTok, YouTube launched ‘Shorts’ in September 2020 as a way for creators to upload short-form video content to YouTube alongside, or instead of, longer videos.
YouTube Shorts will be eligible for monetization in a similar way to standard YouTube videos from 2023 onwards.
Creators will need to apply to be part of the YouTube Partner Program – which, in terms of Shorts, will require that they have 1,000 subscribers and 10 million views over 90 days.
However, rather than just placing ads on the top 4% of videos like TikTok, YouTube will share 45% of revenue among all those who create Shorts and are part of the Youtube Partner Program. This is then allocated based on their share of total Shorts views.
They believe this will incentivise the whole community to produce more Shorts and rival TikTok. Despite the revenue share of TikTok Pulse being higher for creators, YouTube’s approach is potentially a more egalitarian way of sharing revenue than TikTok has opted for because more creators have the chance to make money from advertising.
While TikTok Pulse is advertiser-friendly – with your placements guaranteed to sit alongside trending content – it may not be as popular with creators as they would need to be in the top 4% of content that day to qualify.
With reports that YouTube Shorts is set to become TikTok’s biggest rival, this may be one of the major challenges TikTok faces in the future, even with its new monetization programme. It’s a pattern we’ve seen before with newer social media platforms facing off against longstanding tech giants, such as when Facebook adopted features from Snapchat and TikTok.
Related article: Is Facebook’s Success Built on Copying Its Competitors?
With pressure from YouTube Shorts, perhaps we will see TikTok expand the percentage of videos it displays ads on in the future. Either way, it will be interesting to see how these two short-form video platforms battle it out in the future to continue to appeal to both creators and advertisers!