TikTok has tremendous cultural clout, but what about advertising dollars? Not quite there—yet.
That’s where Smart+ comes in: TikTok’s answer to Google’s Performance Max and Meta’s Advantage+, AI-powered ad-buying technologies that claim to make campaign administration easier, allowing advertisers to spend their ad money more freely.
Smart+, which is officially debuting today (Oct. 7), automates everything from creative development to targeting and optimization, expediting the app’s whole ad buying process.
In practice, marketers can let TikTok’s AI do the heavy lifting, such as creating and delivering advertising to generate conversions, leads, or app downloads. They do, however, have the option of taking control at important points, as Smart+ allows them to selectively activate its functions.
For example, marketers can use the tool to generate and optimize ads before deciding whether to handle the campaigns themselves or delegate it to artificial intelligence. This modular approach enables marketers to pick and choose which functionalities to use, distinguishing it from competing solutions that frequently require complete commitment to the suite.
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This flexibility may alleviate fears that systems like Smart+ require marketers to give up too much control to mysterious algorithms.
However, it also shows a more serious issue with tools like Smart+: while these “black box” models promise improved performance through powerful machine learning, they frequently require a high level of trust from marketers, leaving them with less information and control than they are used to.
Nonetheless, many are willing to exchange a little oversight for faster results and better ad performance.
That is precisely what TikTok is betting on with Smart+. The pitch focuses on simplicity and quickness, with no more weeks of guesswork and tedious A/B testing, according to Adolfo Fernandez, TikTok’s director, global head of product strategy and operations, commerce.
TikTok’s AI is already trained on what drives successful ad campaigns on the site, so advertisers should expect quick rewards with minimal effort, he added. The same is true for creative; Smart+ is linked to TikTok’s other AI product, Symphony, which helps marketers produce and enhance ad concepts.
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“Advertisers optimizing for value with Smart+ web campaigns achieve a 53% improvement in return on ad spend on average [compared to without it],” according to Fernandez.
Ray-Ban is an example. Over the summer, the company tested a beta Smart+ campaign that reduced cost per acquisition by 50% compared to earlier efforts without the tool. Conversion rates jumped 47%, resulting in a 42% increase in return on investment for the eyeglass brand.
Results like this are intended to appeal to a specific type of advertiser — one who has previously shunned TikTok because they are unsure whether the platform will produce faster results or are hesitant to invest the time and money to find out. Smart+ is TikTok’s method of luring them in. And if it works, it has the potential to change TikTok’s ad revenue by focusing on smaller advertisers, as Meta and Google have.
“In my mind, with the advent of Smart+, the gap will close almost entirely with Meta,” Blake Chandlee, TikTok’s head of global business solutions, told Digiday. “That [Meta’s Advantage+] has set the standard in the industry. Historically, we have been extremely powerful in branding, to the point that our branding products beat anything in the market. However, I believe that our performance goods, particularly Smart+, can compete.”
Closing that deficit, however, will be difficult, as TikTok’s ad business still needs to catch up with Meta.
TikTok’s global ad revenue is predicted to be $22.32 billion by the end of the year, rising 27.3% to $28.42 billion by the end of 2025, according to eMarketer’s March 2024 prediction. Meta’s worldwide ad revenue is estimated to reach $154.16 billion by the end of this year, rising 23.2% to $173.92 billion by the end of 2025, according to eMarketer.
“Automation is a key step for us as we enable advertisers to further invest in TikTok and achieve even greater return on investment,” said David Kaufman, TikTok’s global head of monetization product and solutions, during the TikTok event.
Shop remains a vital element in those goals, so much so that it has launched its own AI tool to increase merchant sales. The AI technology, named GMV (Gross Merchandise Value) Max, automatically tests and selects the best-performing creative assets for sellers. It optimizes traffic, organic content, paid ads, and affiliate posts to reach shoppers throughout TikTok’s shoppable real estate, including the For You Page, Shop tab, and search results. It cannot, however, optimise for return on sales, only overall ROI inside TikTok. But TikTok executives don’t see this as a disadvantage; in fact, they regard it as a feature rather than a flaw.
“If you put that in perspective — moving from ROAS to overall ROI — is a major step forward in our vision of moving from being a media partner to becoming a true business partner for our customers,” Fernandez told me.
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In other words, TikTok prefers to focus on long-term growth and marketing efficiency across its network over generating quick purchases through commercials. According to Fernandez, early test results show that retailers who used GMV Max witnessed an average 30% increase in gross merchandise value.
All signals point to a shift in TikTok’s approach to advertisers. The startup aims to be recognized as more than just an entertainment app where users may waste time watching viral videos. It’s evolving into a platform where people choose to spend their time, and as a result, they’re increasingly searching, discovering, and purchasing what they see.
TikTok’s head of measurement product solutions and operations provided solid data to back up his claim. “Research shows that 79% of TikTok-driven purchases aren’t attributed to the platform, and conversions are undervalued by 73%,” said Ann Nguyen, TikTok’s head of measurement product solutions and operations.
According to the executive, this tendency has been brewing for some time, but traditional measurement systems were unable to capture it. So, rather than waiting for third-party measurements to catch up, TikTok created its own.
When external data failed to tell the desired message, TikTok developed its own narrative, supported by its own tools, including conversion lift studies. These studies use a randomized controlled trial approach, similar to that used in scientific research, to quantify sales that would not have occurred without a TikTok ad. TikTok executives are urging Smart+ advertisers to harness these studies, but marketers will also be able to use their own techniques.
“They consistently show that TiKTok is a highly incremental platform that generates demand with results that far surpass last-click attribution,” Nguyen told me. “Advertisers are, for instance, seeing on average a conversion lift of at least 25%.”
This isn’t a new strategy; Google and Meta have been using similar tactics for years to create a “undervalued, underinvested” narrative. However, TikTok is attempting to differentiate itself by focusing on privacy-enhancing technologies such as data clean rooms and trusted execution environments to protect marketers’ data while demonstrating its value.
And, as TikTok repositions itself as a major participant in advertising, the pressure is on to demonstrate that it can deliver where it counts the most: bottom line.
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