What TikTok’s Move To Subsidize Black Friday Discounts Means For E-Commerce Brands This Season

E-commerce brands preparing for Black Friday and Cyber Monday this year could be in for a treat. TikTok has announced that it will begin subsidizing discounts for its sellers who use its newly-launched TikTok Shop — hoping to gain a strong foothold right out of the gate with US shoppers during the holiday season, Bloomberg reported.

Brands, like Amazon, Walmart, Facebook and Instagram, may need to prepare themselves for some stark competition.

With plans to subsidize discounts as high as a whopping 50%, a spokesperson for TikTok has confirmed to Bloomberg that official deals will start at 8pm on November 23rd and deals for Cyber Monday will run from November 28th to November 30th.

This doesn’t merely ring in a price war, as many analysts suggest.

This may also usher in a battle for the brands between the paid social ads platforms in particular, this coming sale season.

Steeper discounts to consumers often translates to higher conversion rates for e-commerce brands selling products. This bodes well for greater cost-efficiency and stronger front-end profitability on advertising for e-commerce brands selling products online.

In other words, e-commerce companies gearing up for the holidays may consider last-minute shifts in how they allocate ad spend across paid social platforms and other channels, in TikTok’s favor.

With competition between brands growing ever more stark in light of economic uncertainty, consumers’ inflation woes, a surge of e-commerce brands coming to market, and performance volatility on paid social platforms like Facebook and Instagram remaining persistent for a number of brands over the last two years, e-commerce companies must seek any competitive advantage they can get to pocket as much of their consumers’ shopping budgets as possible this quarter.

And the stakes are high. Last year, US shoppers spent more than $20 billion online during Black Friday and Cyber Monday. With TikTok reporting more than 150 million active users in the US, the popular app is hoping that this subsidy will drive TikTok Shop sales and help it get a sizable piece of that pie.

This could be precisely the incentive e-commerce sellers need to participate heavily in TikTok’s Black Friday program this year, opening up a unique opportunity for brands to offer steeper discounts than usual and drive lower-cost purchases, particularly smaller brands for whom cashflow has tightened and spend efficiency has become paramount.

In light of this news, here are a couple stepse-commerce brands should take if they want to be best positioned to take full advantage of these subsidized discounts from TikTok:

Prepare a strong, compelling library of video content.

Video campaigns on TikTok have been proven to move the needle on conversion rates on other channels where brands sell, like Amazon, Target and Walmart, and given TikTok’s aim to capture upwards of a reported $20 billion in product sales globally this year, it is likely the platform’s algorithm will favor content that drives traffic to its TikTok Shop pages.

Nonetheless, content principles will still apply if brands are seeking to reach peak efficiency with their spend. That means:

• Ensuring strong, creative unboxing experiences that enable audiences to visualize what they can expect from the brand and product and that push positive emotional buttons to drive the conversion,
• Using organic social or influencer marketing in advance of the holiday season and sales to test messaging angles, hooks, and variations of creative concepts to improve chances of success out of the gate during such a short sale window,
• Developing punchy hooks and open loops that surprise, delight, or inspire burning curiosity or sparks of humor remain effective at grabbing and maintaining attention,
• Ensuring you have a healthy mix of unboxing experiences, benefit-driven creative, and plenty of user generated content that instills trust, drive home your products’ unique qualities, and crushes objections that will make taking your brand up on your holiday offer a no-brainer, and
• Taking care to make the promotion or discount offer crystal clear as soon as is possible without coming off overtly sales-focused or conversion-driven, which can sometimes become a turnoff for audiences, particularly on the tail end of holiday promotions.

Monitor closely, test, and be prepared to adjust or reallocate spend wherever the data tells you it makes sense.

Fluidity has always been the key to success for e-commerce brands during the holiday sale season, and this year is no exception.

Many emerging brands take a set-in-stone approach to running traffic during short-term sales that can prove catastrophic the channels they bet on underperform for one reason or another.

Be prepared to adjust ad spend to or from other channels or even other paid social platforms as performance data comes pouring in.

Optimization on the fly requires keen attention to and visibility into click-through rates, AOV, conversion rates, cost per adds to cart, and general front-end profitability, on a per traffic source basis, in real time. A multi-touch attribution platform can help make this process easier, but whatever the method, be sure your marketing decision-makers are well-positioned to optimize across the breadth of your marketing and advertising mix, not just within each channel in a silo.

Pulling this off and achieving greater efficiency in kind will usually require a concerted effort across the teams that own each channel’s performance. Make your marketing manager, director of growth, or CMO aware well in advance that intra-promotion reallocation of spend to whichever platform is yielding the strongest front-end performance (TikTok or otherwise) may be expected, and ensure that teams are readily communicating with and sharing data with one another prior to, during, and even after promotional campaigns.

Consider a disappearing discount strategy for those planning promotions that go beyond TikTok’s subsidy window.

Some brands plan for promotional periods that seep into December and may wonder whether it makes sense to take advantage of TikTok’s subsidy at all if it ends November 30th. However, these brands may still be able to capitalize on this and still keep their promotional calendars intact.

Marketing teams who have not yet finalized the pricing of their offers may want to take the opportunity to run a disappearing offer where the magnitude of the discounts decrease as the days go by. This could offer the right incentive for consumers to buy on the first couple of days of the sale rather than holding back to shop around and see which brands present the best deals.

In seeking to take TikTok Shop to new heights in the US market, the app is providing brands with a unique opportunity to fully maximize holiday sales with its audiences next quarter. For e-commerce companies and decision-makers that are well-prepared, this could mean a highly-profitable and cost-efficient holiday season, one that might have otherwise been just out of reach for emerging or challenger brands feeling the pinch.