The TikTok Takeover: How Lower CPMs Are Shifting Ad Spend

From TikTok changing the social media ad game to additional ad-supported CTV and OTT opportunities, digital media is rapidly evolving for both consumers and advertisers. As we continue making our way through Q1, we’re beginning to understand how to effectively navigate these (and other) changes in the industry. 

Here, we’ll explore the latest ad spending trends and how your marketing team can make the most of these changes. 

2023 Digital Ad Spend Trends

According to Insider Intelligence, the anticipated digital ad spend is still expected to grow to $278.59 billion in the US—up from $248.72 billion in 2022. 

Though ad spending continues to grow, it’s happening slower than initially expected. In October 2022, Insider Intelligence lowered their overall digital ad spend forecast by $5.5 billion in 2023. They updated the forecast for three reasons: 

  1. Privacy changes. Across the US, privacy regulations continue to evolve and provide more opportunities for consumers to take control of their information. This, however, forces marketers to make adjustments to meet compliance and will likely cause roadblocks in many teams’ marketing efforts. 
  2. Macroeconomic headwinds. With economic uncertainty looming around us, many marketing teams are managing their goals with reduced budgets. 
  3. Post-pandemic normalization in ad spending. Many businesses are still working out what their post-pandemic strategies look like—including how much they’re willing to spend on advertising and marketing. 

Even with these concerns, digital advertising is continuing to grow, making room for new and evolving ad formats. 

How Digital Ad Spend is Shifting 

As digital ad spending continues to increase overall, there’s a significant focus on video in 2023 due to the increase in digital video viewing. According to Statista, the digital video ad spend in 2023 will reach $78.45 billion, making it clear that video is also becoming a priority in marketing budgets. 

How exactly is video content commanding the digital advertising industry? 

The TikTok Takeover Continues 

Even though marketing budgets are tightening, TikTok is taking over the digital ad spend market. How? Lower CPMs than their competitors. 

According to Insider Intelligence, “…the CPM (cost per 1,000 impressions) from video advertising on TikTok is almost half that of Instagram Reels, a third less than Twitter, and 62% less than Snapchat.” They also reported, “Measurement firm Measured pegs the average Q3 2022 Meta CPM at $14, versus $8 for TikTok.”

Late in 2022, TikTok reduced their revenue forecast by 20%, citing an unstable ad market. This uncertainty stems from several factors, including fluctuations in customer spending, changes in data regulations, and businesses continuing to iron out their budgets. 

Even so, many marketers and advertisers are moving over to the platform due to the low CPM. The lower cost allows more teams to take advantage of their smaller budgets as they wade through and continue preparing for extended economic uncertainty. 

Learn more about QuickFrame’s partnership with TikTok

Advertisers are Spending More on CTV 

But, social media isn’t the only area seeing developments. While all digital video spending is increasing, CTV is the main focus for advertisers this year—even more than it was in 2022, when 76% of marketers said CTV was a must-buy video ad type. 

In addition, Statista expects CTV to make up about 6.2% of all advertising spending in the US in 2023. Clearly, marketers are moving their focus to CTV and OTT platforms—but why? Statista respondents said they were shifting their ad spend for many reasons, including: 

  • Targeting and efficiency 
  • Incremental reach 
  • The opportunity to optimize creative 
  • A cost-effective CPM 
  • Proven ROI 

As more marketing teams use CTV to reach their audience, many traditional media budgets—including linear TV, print, and direct mail—are declining to make room for this new format. 

Looking for some CTV ad inspiration? Explore Made with QuickFrame! 

The Importance of Channel Diversification 

In today’s competitive digital market, advertising on one platform alone won’t cut it. Now, it’s critical to bring different outlets together in a holistic video marketing strategy

In addition to low CPMs, TikTok also reported high engagement among users. Even so, Insider Intelligence found YouTube Shorts’ engagement still came out on top. Using these two platforms together might be the right formula if a marketing team is looking to meet reach and engagement goals. In addition, as we stated above, many teams add CTV to their marketing mix to effectively target their ideal audience when they are not staring at the screens in their pockets. 

One platform, for example, might be great for helping you reach new customers, while another might provide you with incredible engagement. With effective channel diversification, you can meet your goals, including reaching a wider audience and driving qualified customers to your site. 

Making the Most of Ad Spend in 2023 (and Beyond)

For the foreseeable future, marketers will likely deal with reduced, stagnant, or scrutinized budgets. At this time, it’s essential to examine your goals and align your overall marketing strategy to help you reach them. 

It’s also critical to take advantage of digital video—from TikTok to CTV and beyond. With the right content, you can reach more consumers, drive increased engagement, and grow your business. But, especially with these budget constraints, you have to make the most of your video strategy by utilizing recent data, optimizing your content, and diversifying your media mix. 

While additional video content needs (among other challenges) have already strained many marketing teams, utilizing available resources—including QuickFrame—can help you optimize your existing content and effectively prepare for your next video production

Do More with Video

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