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Gen-Z's favorite app TikTok is turning weird memes into money

Key Points
  • TikTok's U.S. ad business is still nascent, but brands are trying their hand at connecting with Gen Z on the app. 
  • Chipotle ran a "Lid Flip Challenge" last month and drew hundreds of millions of views.
  • Advertisers are looking for more in-depth targeting and analytics, and assurances about brand safety, but they see the promise of the app. 
Source: Chipotle

In April, Marc Anthony True Professional started to notice some out-of-the-norm sales data from stores like Walmart and Target.

Sales of a certain product in its line of "Strictly Curls" products, which promises to define curls and help with shine and humidity control, were seeing a "pretty dramatic increase," said Kimberly Konstant, vice president of marketing and innovation for Ontario, Canada-based MAV Beauty Brands, the umbrella company that includes Marc Anthony. The brand started doing some detective work, she said.

Seemingly overnight in mid-April, the brand's curl defining lotion had become a meme of sorts on TikTok, the popular social app that lets you share short videos that play on loop. Users, primarily young women, would show themselves buying the product, showing off the yellow bottle like they were starring in a shampoo commercial and applying it to show off the "after" results. They captioned the videos with messages like "beachy waves for $6!! I think yes" or "Y'all this stuff works miracles."

By early June, there were more than four million video views with the hashtag "#strictlycurls." MAV says it saw a 60% increase on Marc Anthony True Professional's "Strictly Curls Curl Defining Lotion" and says it saw "significant increases" on other Strictly Curls products.

It's the kind of lightning in a bottle virality that marketers dream of. And the company whose products were catapulted to beauty fame insists it didn't have anything to do with it.

"This is 100% organic, and it's a really nice, pleasant surprise," Konstant said.

It also speaks to the promise of TikTok, which is becoming the app du jour for Gen-Z, and, therefore, everyone who wants to market to them. It was the third-most downloaded app in the U.S. in the first quarter of this year, behind Facebook Messenger and a game called "Color Bump 3D."

Users speak of the delightfulness and addictiveness of using TikTok, and brands who learn how to speak that language have a chance of being swept up in the attention of a demographic that hates advertising more than anyone else.

But it's still early days for TikTok. The app's advertising business in the U.S. is still nascent, partly because it can't yet give marketers the same kind of precision and tools they get with some of the more mature social apps like YouTube and Instagram.

There's also the point of brand safety. The app has had issues with users posting pornography and harassment in other parts of the world, which has caused hesitation with some advertisers. (TikTok says it has policies and protective measures in place to reduce misuse and enforce its community guidelines, but says it's a "complex, industry-wide challenge" and that it's always refining its protective measures.)

The company plans to court advertisers and brands later this month at the Cannes International Festival of Creativity for the first time. TikTok will have a mainstage presentation at the festival with two of its top creators and will be leading other roundtable discussions, signaling to the industry that it's ready to step into the big leagues.

In the meantime, cases like those from Marc Anthony and Chipotle, which tried out a sponsored hashtag challenge earlier this year, show there may be value for brands who can weigh in on TikTok in a natural-feeling way.

A TikTok spokeswoman said the company's current priority is creating a "great app experience" for its users, while always exploring opportunities to create value for "both our community and our brand partners."

"Brands see TikTok as platform to reach and engage with a broader audience," she said. "At its core, TikTok is a platform for creative, fun, and positive experiences -- the brands we see having the most success are those that embrace the creativity and authenticity of the TikTok community."

In MAV Beauty Brands' case, Konstant said the discovery of its product on TikTok has prompted discussions of how the brand might work on the platform in the future.

"You try to strategize and create, dare I say manufacture, something viral," she said. Then, sometimes things like this just land in your lap.

Chipotle experiments

Chipotle says almost half its business is comprised of millennials and members of Gen-Z, so TikTok was on the restaurant chain's radar. The company said it was in contact with TikTok for several months as it considered what it would do.

Then it just needed an idea.

"We wanted to make sure we had the right way to go in," said Chief Marketing Officer Chris Brandt. "We don't want to be lame."

It wanted to feel "endemic" to the platform and its form of visually addictive videos. Inspiration struck in the form of an employee from Frederick, Md. who had gone viral in January for his own lid-flipping post.

Then Chipotle had a conversation with David Dobrik, a major influencer on YouTube and Instagram who didn't yet have much of a TikTok presence, to get him to kick off the "challenge."

The campaign launched for a six-day run in early May, garnering 110,000 video submissions with the hashtag and resulting in 104 million video starts, Chipotle says. Since the challenge pages can live on even after the paid promotion, it has continued to draw attention: By June 6, the #ChipotleLidFlip hashtag had more than 230 million views.

Brandt said the company doesn't disclose how much it pays for campaigns.

So what about the return on investment?

"I think there's a time for selling and there's a time for brand engagement," Brandt says. "This was definitely … building the brand for the future versus driving sales overnight."

What agencies think

Mae Karwowski, founder and CEO of influencer marketing agency Obviously, said TikTok brings humor and a "fun, different energy than Instagram." Users on the platform take different memes or video types and copy them or put their own spin on it. For instance, users might copy a type or dance or even a challenge where users put a Croc shoe on their pet's head. (If this makes no sense, just watch this video).

"The ability to start riffing on what other people are doing, it takes the idea of a hashtag to a whole different place," Karwowski said.

She said it's best suited for brands that know Gen-Z is their audience, and makes sense for beauty and fashion brands. Advertisers at this point range from large-scale brands sponsoring their own hashtags or challenges, like the new "Men in Black" movie or Burberry to smaller brands that are also getting in and doing influencer campaigns. TikTok said that creators who work directly with brands to promote a product or service use the tag #ad.

Other campaigns include "brand takeovers," which one agency exec said can run roughly in the double-digit thousands of dollars per day. Those include an ad right when someone opens the app.

Meghan Myszkowski, VP of Social Activation in North America for media agency Essence said the agency has approached it cautiously with an eye for brand safety. "Obviously, there have been a few hiccups," she said. "Until those are resolved, that's why a lot of the big advertisers will remain underinvested on the platform."

There's also the point that with TikTok's primary presence in China, it can be tougher to get campaigns off the ground at this point. She said a more built-out office in Los Angeles will help overcome that, as well as a self-service platform that will let advertisers buy ads directly.

"It will be really interesting to see where they go, and how it starts to compete with things like Instagram stories and Snap for that Gen-Z attention," she said.

The platform also offers a different kind of engagement than something like Instagram. While scrolling through TikTok, users are immediately immersed into a video, which makes a user more immediately dialed-in, rather than a more mindless scrolling.

Lisa Tristano Martin, associate director of PR and social engagement at ad agency MARC USA, said users may not be spending as much time as users are on Instagram thus far but they are "really engaged."

"That's where I see the biggest opportunity for brands," she said. "People are scrolling through their Instagram and may not be really as immersed in it. When people are on TikTok, these young people are really engaged."

The irony might be what happens when brands do start to cash in on that attention.

"Once the advertising comes, are they going to be as engaged?" she said. "You don't want advertisers to come in and muck it up when it really seems to be working. That's why the biggest opportunity is with influencers."

One agency exec said prices can vary widely, but said TikTok can be a deal compared to more mature platforms. Influencers with around 200,000 followers on TikTok might make a few hundred dollars per post right now, whereas on Instagram they would be making ten times that much.

"I think this has such huge potential to reach such a large demographic, and really be able to get their attention," Martin said.

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