US digital ad spend Q3 2022: TikTok is the new hotspot for advertising by streaming brands

The social channels received 61% of all US digital ad spending in Q3 2022. Facebook continues to lead the list of top advertisers in the United States. However, TikTok stole the limelight. With an impressive 29% QoQ increase, TikTok witnessed the highest growth in US ad spending in Q3 2022.

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Brands are spending billions of dollars every quarter on advertising. According to the latest Sensor Tower report, the total US digital ad spending reached over $23 billion in Q3 2022, with over 5% quarter-over-quarter growth. Interestingly, social channels accounted for 61% of all US digital ad spending, indicating the fast-changing preferences of brands when it comes to spending on digital ads. Social media companies like Facebook, Instagram, TikTok, Twitter, Snapchat, etc. are largely dependent on their advertising businesses to generate revenues. Hence they are now leaving no stone unturned to attract every advertising dollar.

Facebook continues to lead the list of top advertisers in the United States. However, once again, it was TikTok that stole the limelight. With an impressive 29% QoQ increase, TikTok witnessed the highest growth in US ad spending in Q3 2022. The e-commerce giant Amazon remained the top advertiser on TikTok, followed by Google and Disney.

Streaming giants’ ad spending on TikTok, Facebook

It is important to note that video streaming companies such as HBO Max, Disney+, Hulu and Netflix began concentrating on social media platforms like Facebook, Instagram, Twitter, Snapchat, and TikTok for promoting their content. This decision is well-understood given that the target audience of these streaming platforms is mostly teens and millennials who spend at least 3-4 hours every day on social media apps.

Disney+ increased its TikTok advertising expenditures from just under $3 million in Q1 2022 to $17.9 million in Q3 2022. That’s a crazy 496%. This helped Disney move up 40 spots to third place on the TikTok US advertisers list in Q3 2022.

Hulu, a US subscription streaming service, has also dramatically increased its ad budget on TikTok this year. Hulu’s ad spending on TikTok increased a mind-boggling 667% from Q1 to Q3 2022. As a result, Hulu rose to become the fourth largest advertiser on TikTok’s US platform, up from 59th.

As the below image shows how the ad strategy of Netflix, HBO Max and Disney+ shifted from Display and Video to social media channels in the last 3 quarters of 2022.

In Q3 2022, Netflix spent 24% of its total US ad budget on Facebook, 22% on TikTok, and 8% on Snapchat. Surprisingly, the streaming giant scaled back its Instagram promotion, with ad spend share falling from 47% in Q1 2022 to just 27% in Q3 2022. On the other hand, Netflix’s US ad spend share on Facebook has drastically increased from just 7% to 24% during the same period.

TikTok vs Facebook in advertising business

Facebook has always been the first choice for all brands to market or advertise their products or services. In spite of that, in Q3 2022, Meta’s global revenue declined 4% YoY, to $27.71 billion. A staggering 98.3% came from advertisements displayed on its family of apps (Facebook, Instagram, Messenger, WhatsApp, and other services).

TikTok has emerged as the biggest threat to Meta’s dominance in spite of lagging far behind in terms of ad revenue. TikTok’s increasing popularity and threat to Meta could be well understood from the fact that it’s the fastest-growing entertainment app in terms of popularity and number of downloads. Market experts are confident about TikTok’s future as they have predicted that TikTok’s ad revenues would exceed those of Meta and YouTube combined by 2027.

According to Omdia, TikTok’s ad revenue will increase from $13 billion in 2022 to $44 billion in 2027, while the revenue of TikTok Douyin (the app in China) will soar from $28 billion to $76 billion during the same period.

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