Most Small Businesses Say TikTok Ads Drive Profits Within 6 Months

As TikTok continues to surge in popularity across the world -- becoming a one-stop search engine, social media platform and emerging ecommerce destination -- more small businesses are starting to pay attention to the hype. 

According to a new marketing survey by software review platform Capterra, 78% of small businesses that run ads on TikTok have already realized a positive ROI -- the majority within six months.

With the unbridled attention of Gen Z, an entire generation of consumers is turning to TikTok search over Google to find their next local boutique or restaurant, and is therefore becoming more advantageous for small and mid-sized businesses.

As Google and Meta's advertising dominance continues to fade, one in ten surveyed businesses went viral on TikTok organically, potentially indicating a level playing field that's not dominated by large name brands.

One of the aspects of TikTok that proves most alluring to consumers is its ability to help mitigate choice "paralysis" by giving users immersive, vertical videos which take them inside a business instantly, rather than sifting through text-heavy review sites found on Google or Yelp.

Over half (52%) of TikTok marketers surveyed by Capterra said they plan to spend more money on the platform in 2023. However, 18% of businesses that are not currently using TikTok said they have concerns over its data practices.

TikTok, which is owned by Chinese-owned ByteDance, has faced criticism and scrutiny by the U.S. government over its potential relationship with the Chinese Communist Party and its possible use as a surveillance tool. Just days ago, the U.S. government passed a spending bill banning the use of TikTok on all government official mobile devices.

“In response to Gen Z's preference for TikTok as a search engine over Google Maps, Google plans to launch augmented search functions to rival TikTok reviews’ immersive, authentic qualities,” said Molly Burke, senior retail analyst at Capterra. “Users like TikTok because its seemingly endless content feels authentic and unfussy — videos made by real people, for real people. Creating ads that capture the candid nature of organic TikTok content helps businesses blend in and profit.”

The study also found that over three-quarters of businesses that use TikTok post organic content, while less than two-thirds run ads on the platform, with some using TikTok to simply discover trends or keeping an eye on their competitors.

Among businesses that post both organic and sponsored content, 72% say organic TikTok content is extremely valuable to their company’s overall marketing performance, while 55% say the same for ads.

“While other platforms' content suggestion algorithms can feel like an oligarchy dominated by legacy brands and Hollywood celebrities, TikTok's ‘For You’ page has been characterized as a meritocracy where small businesses can reap rewards from both paid and organic content,” added Burke.

2 comments about "Most Small Businesses Say TikTok Ads Drive Profits Within 6 Months".
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  1. Ed Papazian from Media Dynamics Inc, January 6, 2023 at 9:26 a.m.

    Of course just a the same small business owners would credit radio or newspapers or spot cable or out-of-home or digital display ads with generating sales---if they used them. The real question---naturally unanswered--if there is an answer---is whether an ad dollar spent on this venue is---or is not ---better spent elsewhere.

  2. John Grono from GAP Research, January 6, 2023 at 4:57 p.m.

    Thanks Ed.   Frees up some of my time.

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