The news: TikTok has launched an AI-powered tool dubbed Smart+ that helps advertisers make decisions at every stage of the funnel, from generating creative material to buying ad space.
- The company is pitching Smart+ as a way to lower the barrier of entry and energy required for advertising on TikTok: Advertisers can input targeting goals, budgets, and assets, and Smart+ will “put the best ad in front of the right customer at the right time.”
- TikTok’s AI ad tool follows the launch of similar products from other digital ad leaders. Meta has the AI-powered Advantage+, while Google’s Performance Max also offers AI-powered features. Other advertising players like Apple are also testing AI ad buying tools.
AI demand: Marketers are increasingly seeking AI tools that automate advertising processes, and leading ad platforms are looking to meet their requests. Aside from reducing the amount of time needed for performance marketing, AI tools also open up valuable pools of spending from smaller brands that need easy entry points into advertising.
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65% of US marketers say their company is currently using or experimenting with generative AI, per an August Adobe survey, reflecting significant ad industry adoption of the tech. But the US significantly trails behind other markets: 92% of marketers in India said they use the tech, followed by 79% in Australia and 78% in Germany.
The gamble: While advertisers are eager for more AI-powered features, similar offerings from competitors have drawn critiques. And TikTok’s uncertain legal status also looms large over advertising changes.
- Meta’s Advantage+ received heavy criticism in April, with some advertisers saying it inflated costs by as much as 10 times. Advertisers felt burned by its promise of reduced effort and costs, instead finding that it tore through daily budgets and delivered little ROS.
- The Advantage+ shortcomings could signal that AI products are being rolled out before they’re fully baked, and advertisers should approach them with some caution. However, TikTok says that its testing found that advertisers were able to drive significant conversions with Smart+.
- TikTok’s uncertain legal fate in the US also dampens the launch of Smart+. TikTok and ByteDance are currently in court to argue against the Biden administration’s proposed ban of the app, which would go into effect early next year. The presidential election is also approaching, further throwing the app’s future into uncertainty—though neither administration is likely to look extremely favorably upon TikTok.
Our take: TikTok’s Smart+ launch shows that it is trying to project an air of business as usual even as it stares down an existential threat. Advertisers are already beginning to test other short-form video platforms, but TikTok’s easy tools could get them to continue spending while they still can.
Uncertainty around other AI ad product launches could hamper the Smart+ rollout, and TikTok needs to prove to marketers that it didn’t launch a half-baked tool too early.