Inside TikTok's battle for brands and why some agencies feel left out

Brands want to “make TikToks, not ads,” as the saying goes, but how they do that has created a territorial dispute among TikTok, marketing partners and major ad agencies. Some top ad agency execs said they are frustrated with TikTok’s sales strategy, because the company is talking directly to brands in ways that invade agencies’ turf. TikTok is also farming out ad deals to preferred partners, firms such as Influential, Whalar and Mavrck, which specialize in producing TikToks, leaving more traditional agencies out of the loop.

“It’s creating difficult competition,” said one advertising executive at a top global ad agency. TikTok funnels business to the preferred marketing partners, the ad executive said, speaking on condition of anonymity, and the price tag for the services undercuts what the agency charges. TikTok recently set new terms for its creative solutions offered through marketing partners, costing between $50,000 to $150,000 to hire creators to produce the videos, the executive said.

“They put together these packages for advertisers that are inclusive, outsourcing work to those vendors,” the social media ad executive said. “We’re not thrilled about it on our side because we have a TikTok practice. The work we do, we think is stronger and better for our clients.”

The prices of the packages are suspiciously low, the ad executive said, adding that they wouldn't really make economic sense unless TikTok was subsidizing them. TikTok has told agencies it does not shoulder the costs of this particular program. What could be happening, is that nimbler, creator-focused agencies have just gotten efficient at streamlining TikTok production. 

TikTok’s internal ad liaisons do sometimes talk directly with brands to “upsell” them on ad campaigns, said another executive at a digital ad agency, which specializes in e-commerce. “There have been a couple of examples of TikTok having conversations without our account teams and trying to upsell our clients on different things,” the executive said, also speaking on condition of anonymity.

TikTok declined to comment for this story.

The company has become one of the most powerful platforms in advertising and entertainment. TikTok, owned by Chinese-based ByteDance, has more than 1 billion users, with 102 million in the U.S. TikTok is set to hit $14.15 billion in ad revenue this year, up from $9.9 billion in 2022, according to Insider Intelligence. Media holding companies and their ad agencies are ramping up spend, and they closely guard their relationships with brands. Meanwhile, brands are being meticulous about saving money and accounting for every marketing dollar while the economy is in a period of distress.

Related: 5 TikTok trends for brands to follow

Creator complexity

TikTok has multiple layers of services for large brands and small businesses, like how Meta developed its ad business. There are self-serve tools for smaller ad buyers to automate campaigns, and there is white glove treatment for top spenders. TikTok has a program for “managed service providers,” which pairs brands with select marketing partners that are proficient at using the TikTok Creator Marketplace. There also is a TikTok Creative Exchange, which is an even more automated way to tap creative services and creators. Taco Bell UK used the TikTok Creator Exchange to get “instant access” to talent on the site, according to a case study on the TikTok for Business site.

Brands such as PepsiCo, DiGiorno Pizza, King’s Hawaiian, Ray Ban, ASOS and others are visible on the “TikTok for Business” website. There are case studies from recent campaigns that demonstrate how the brands used various marketing partners to run campaigns.

Related: Inside Hilton's 10-minute TikTok

“Basically, TikTok is going directly to brands,” said another exec from a major ad agency. “They are encouraging brands to get on board because they have an improved self-serve ad manager.”

This agency executive sees another potential motive for TikTok’s urgency to get closer to brands: TikTok wants to insulate itself from the whims of major holding companies, which advise brands on where to spend money. “Frankly, I feel the bigger push is to drive agencies out,” the ad executive said.

TikTok is in the middle of a contentious fight with governments around the world, and its CEO Shou Zi Chew, is set to testify in front of the U.S. Congress next week. U.S. lawmakers are considering restricting access to TikTok on national security grounds. The agency executive noted that major agencies often advise brands about when to turn off spending on platforms if they become too controversial or infringe on safety. For instance, ad agencies were the first to caution brands about spending on Twitter last year, after Elon Musk bought the company. The advice led to a brand drain from Twitter that persists to this day. TikTok has reasons to ensure it has a direct line to brands in the event of any backlash against the company.

Tapping the talent pool

TikTok’s job site gives a sense of its pursuit for talent and its internal ad strategy. There is an opening for a new head of global accounts. The global account team “plays a critical role in establishing and leading strategic partnerships between TikTok and key global brands. This team is consultative in nature and will lead the long-term growth of each global account,” the job posting said. Another job post is for head of global brand partnerships, related to TikTok commerce. “We are looking for a Head of Global Brand Partnership to join our newly formed Global Key Accounts team,” the listing said. “The team will play a critical role in establishing and leading strategic commerce partnerships between TikTok and the world's top-tier brands or agencies.”

TikTok is developing ad products that make it easier to discover creators and find videos that are relevant to brands. The advertisers need this help because they can’t simply run repurposed TV ads on TikTok. The audience is not receptive to overt commercial messaging, which explains TikTok’s motto—“Make TikToks Not Ads.” Not only is TikTok unlike TV, it’s unlike traditional social media. Brands have difficulty simply posting their own content on TikTok and building organic followings as they do on Instagram and Twitter.

Brands are still trying to figure out how to use TikTok, and the independent agencies in TikTok’s marketing partner program have that creative expertise. Agencies need an innate understanding of how TikTok works, which helps explain why traditional ad firms could feel left out.

“Agencies don’t know what they’re doing,” said an executive who is among TikTok’s closest marketing partners.