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By Melissa Daniels

On this week’s episode of the Modern Retail Podcast, co-hosts Gabriela Barkho and Melissa Daniels are joined by Modern Retail’s platforms reporter, Allison Smith, to dig into why TikTok Shop is becoming a more legitimate sales channel in the eyes of bigger brands.

Less than three years old, TikTok Shop now makes up roughly 20% of all social commerce sales, according to data from eMarketer. The rest of the category is dominated by Meta. Last year, the company drove $500 million in sales during the four-day stretch from Black Friday to Cyber Monday.

In response, more established legacy brands and mid-sized companies are popping up on TikTok Shop. Smith reported this March that sales from big-name brands — those with at least $30 million in annual revenue — increased 97% year-over-year on TikTok Shop.

Here’s a rundown of their conversation.

Affiliate and incentives powering acquisition

To help boost their presence on TikTok Shop and get eyes on their products, some brands are launching affiliate networks that use creators to drive sales. Companies like Portland Leather Goods have marshalled hundreds of fans into their affiliate channel and are seeing it drive first-time customer growth.

TikTok Shop has also deliberately courted companies to join by offering co-branded partnerships where it picks up the share of a major discount or free shipping offer. At one point, it had a program called Project Horizon to incentivize agencies to onboard large brands, driving at least $10 million in annual sales on competing platforms. But as the platform matures, such incentives might be less common.

Small versus big brands

Early successes on TikTok Shop often came from digitally-native startups. And their playbook that relied on UGC, live shopping or flash sales may not be a fit for major multinational companies like Samsung, Disney, Ulta and others that are newer to the platform. They may also not be able to post as frequently or authentically as a founder-led brand can, due to the approvals and processes that corporate marketing typically involves.

But those larger companies may have an edge when it comes to price competition. And they also may see more of a halo effect on their other sales channels if they’re showing up in front of TikTok Shop buyers who aren’t quite ready to add to cart.

Discovery and awareness over retention

Despite the success any brands are seeing, the trio discusses how TikTok Shop won’t be for everybody. Companies are still losing margin by selling on a different platform, meaning they have to make sure they can handle a potential hit. There’s also the question of whether TikTok Shop sales could cannibalize the growth they’re seeing in other channels, whether direct-to-consumer or Amazon.

Still, there’s evidence that TikTok Shop is growing at a rate that requires brands to pay attention and determine if it plays a role in their customer journey. EMarketer’s research from December also shows that TikTok Shop sales are poised to surpass $20 billion in 2026 and reach over $30 billion in 2028. The podcast concludes with a discussion on whether it’s a “must-have” or “nice-to-have.” As with many retail choices, the answer depends on the brand’s unique positioning

By Melissa Daniels

Sourced from Modern Retail

Major brands are paying for ads on these sites and funding the latest wave of clickbait, according to a new report.

This article is from The Technocrat, MIT Technology Review’s weekly tech policy newsletter about power, politics, and Silicon Valley. To receive it in your inbox every Friday, sign up here.

We’ve heard a lot about AI risks in the era of large language models like ChatGPT (including from me!)—risks such as prolific mis- and disinformation and the erosion of privacy. Back in April, my colleague Melissa Heikkilä also predicted that these new AI models would soon flood the internet with spam and scams. Today’s story explains that this new wave has already arrived, and it’s incentivized by ad money.

People are using AI to quickly spin up junk websites in order to capture some of the programmatic advertising money that’s sloshing around online, according to a new report by NewsGuard, exclusively shared with MIT Technology Review. That means that blue chip advertisers and major brands are essentially funding the next wave of content farms, likely without their knowledge.

NewsGuard, which rates the quality of websites, found over 140 major brands advertising on sites using AI-generated text that it considers “unreliable”, and the ads they found come from some of the most recognized companies in the world. Ninety percent of the ads from major brands were served through Google’s ad technology, despite the company’s own policies that prohibit sites from placing Google-served ads on pages with “spammy automatically generated content.”

The ploy works because programmatic advertising allows companies to buy ad spots on the internet without human oversight: algorithms bid on placements to optimize the number of relevant eyeballs likely to see that ad. Even before generative AI entered the scene, around 21% of ad impressions were taking place on junk “made for advertising” websites, wasting about $13 billion each year.

Now, people are using generative AI to make sites that capture ad dollars. NewsGuard has tracked over 200 “unreliable AI-generated news and information sites” since April 2023, and most seem to be seeking to profit off advertising money from, often, reputable companies.

NewsGuard identifies these websites by using AI to check whether they contain text that matches the standard error messages from large language models like ChatGPT. Those flagged are then reviewed by human researchers.

Most of the websites’ creators are completely anonymous, and some sites even feature fake, AI-generated creator bios and photos.

As Lorenzo Arvanitis, a researcher at NewsGuard, told me, “This is just kind of the name of the game on the internet.” Often, perfectly well-meaning companies end up paying for junk—and sometimes inaccurate, misleading, or fake—content because they are so keen to compete for online user attention. (There’s been some good stuff written about this before.)

The big story here is that generative AI is being used to supercharge this whole ploy, and it’s likely that this phenomenon is “going to become even more pervasive as these language models become more advanced and accessible,” according to Arvanitis.

And though we can expect it to be used by malign actors in disinformation campaigns, we shouldn’t overlook the less dramatic but perhaps more likely consequence of generative AI: huge amounts of wasted money and resources.

What else I’m reading

  • Chuck Schumer, the Senate majority leader in the US Congress, unveiled a plan for AI regulation in a speech last Wednesday, saying that innovation ought to be the “North Star” in legislation. President Biden also met with some AI experts in San Francisco last week, in another signal that regulatory action could be around the corner, but I’m not holding my breath.
  • Political campaigns are using generative AI, setting off alarm bells about disinformation, according to this great overview from the New York Times. “Political experts worry that artificial intelligence, when misused, could have a corrosive effect on the democratic process,” reporters Tiffany Hsu and Steven Lee Myers write.
  • Last week, Meta’s oversight board issued binding recommendations about how the company moderates content around war. The company will have to provide additional information about why material is left up or taken down, and preserve anything that documents human rights abuses. Meta has to share that documentation with authorities, when appropriate as well. Alexa Koenig, the executive director of the Human Rights Centre, wrote a sharp analysis for Tech Policy Press explaining why this is actually a pretty big deal.

What I learned this week

The science about the relationship between social media and mental health for teens is still pretty complicated. A few weeks ago, Kaitlyn Tiffany at the Atlantic wrote a really in-depth feature, surveying the existing, and sometimes conflicting, research in the field. Teens are indeed experiencing a sharp increase in mental-health issues in the United States, and social media is often considered a contributing factor to the crisis.

The science, however, is not as clear or illuminating as we might hope, and just exactly how and when social media is damaging is not yet well established in the research. Tiffany writes that “a decade of work and hundreds of studies have produced a mixture of results, in part because they’ve used a mixture of methods and in part because they’re trying to get at something elusive and complicated.” Importantly, “social media’s effects seem to depend a lot on the person using it.”

Sourced from MIT Technology Review

By Michael Della Penna

The unconventional virality that comes from the social platform creates real-world opportunities for brands

With one billion global active users and more expected in the coming year, TikTok is driving significant growth for brands of all sizes and industries.

From transforming side hustles to successful businesses to immortalizing a pug named Noodle, TikTok’s unconventional virality is creating tangible, real-world opportunities for brands. The social platform even inspired millions of people to recreate an ASMR salmon bowl video (which, according to Instacart, spiked ingredient orders by 97% during the trend’s peak).

Unlike legacy platforms like Facebook and Twitter that have become “cheugy”—a word coined on the platform itself and is associated with things that are out of touch and outdated—TikTok rewards originality over volume of spend, enabling any brand to reach a targeted and engaged audience.

In short, TikTok creates moments—moments that become experiences enjoyed and shared around the globe. More than a marketing channel, TikTok is a key to the future for brands. Here’s how your brand can lead TikTok in 2022.

Champion the next generations

The future prosperity of brands relies on reaching new generations.

With over half of Gen Z consumers using the platform daily, there are long-term implications to winning on the platform and they shed a light on the future of marketing—the importance of creating a moment or experience for users that form a connection and loyalty over time.

Especially as it rises in engagement and legacy platforms lose share to their younger counterparts, TikTok is the key to reaching younger demographics that are gaining significant market power.

They’re culturally driven and outspoken, and as a result, they’re turning to their trusted brands and peers on TikTok for recommendations on everything from cleaning products to travel hacks, and even how to invest in the stock market.

Denny’s, for example, is featuring student athletes to celebrate the accomplishments of underrepresented groups and connect with younger diners. Brands have an extraordinary opportunity to champion these young customers as key influencers and make a powerful impact that goes beyond a product launch.

Bring your brand personality to life

Understanding that audiences on TikTok respond better to authenticity instead of hard selling, successful brands on TikTok harness the power of entertaining content to create experience and drive engagement.

For social media marketers, this marks a new approach to content creation. When in doubt, unhinged and comedic content is the answer.

Violating all previous norms of social media marketing, Duolingo’s TikTok is the perfect example of the impact this strategy can have on a modern brand. Racking up over 58.6 million likes since February 2021, Duo the Owl pines for Dua Lipa’s love, mocks the brand’s legal team and trolls users and celebrities.

Just like the other social media platforms, TikTok is saturated with branded content, making it critical for marketers to change up their typical approach. Going beyond the scope of what the product is, marketers create exponential opportunities for content that are geared towards entertaining and engaging users and thus driving brand awareness.

Success on TikTok is driven by consistent engagement, and sometimes you have to be a little unhinged to achieve it.

Create a moment, not an ad

TikTok’s interest-based algorithm allows brands to create a moment by reaching targeted audiences in a more impactful way.

Dunkin’s partnership with TikTok superstar Charli D’Amelio is a prime example. Dunkin’ tapped into the Gen Z zeitgeist at peak popularity, leading to hundreds of thousands of drinks sold across the nation.

But you don’t have to be Dunkin’ to hit big ROI through influencer partnerships. TikTok provides a unique opportunity: A creator doesn’t need millions of followers to go viral.

Engagement is the holy grail of TikTok and should be your brand’s main focus. An influencer partnership, innovative product or unhinged video should merely be the tipping point in a larger strategy.

Ask yourself questions like: How can users duet this video to continue the conversation? How can this tag capture the attention and engagement of our target market? Is there also an opportunity to raise visibility or support for a cause that ties into the brand’s mission?

Click HERE to read the remainder of the article.

Feature Image Credit: Dunkin’s partnership with TikTok superstar Charli D’Amelio reached targeted audiences in an impactful way, as seen in sales.Dunkin’

By Michael Della Penna

Sourced from ADWEEK