Does TikTok drive efficient and effective ROI in Central Europe?
(Spoiler alert: the answer's yes!)
The dynamic growth of TikTok is evident not only from the perspective of its increasing user base and the time they spend on the platform but also in terms of the number of campaigns and the questions advertisers have about the effectiveness of this channel. Based on data from Western European and US markets, we see that TikTok has significant potential in terms of efficiency. However, until now, there has been a lack of evidence on how TikTok performs in the Central European region.
Situation
As a Marketing Mix Modeling (MMM) provider, Business Science Warsaw, the analytics arm of EssenceMediacom Poland, have a broad overview of advertisers from five continents and multiple categories. They see TikTok becoming a part of the media mix in increasingly many cases. With TikTok appearing more and more frequently in their MMM Return on Investment (ROI) results database, and with the increasing volume of questions from clients who are curious how their TikTok results compare to benchmarks, they decided to conduct a study themselves.
MMM is the gold standard of ROI measurement and media-mix optimisation. It originated from FMCG/CPG and omnichannel Retail categories but is now broadly adopted across multiple categories and businesses.While running 50+ MMM projects in their Business Science hub in Warsaw, they found there to be a relatively high density of TikTok results in Western Europe, US and Asia.
Challenge
The evidence for TikTok sales performance in CPG and Retail seemed scarce for Central Europe. In their own client portfolio, the MMM for Central Europe constitutes less than 10% of all MMMs run in 2023 and not all their CPG and Retail clients had significant enough investment for an MMM to pick up its effect on sales.
With limited number of cases there’s also a risk of different Return on Investment drivers interfering. Based on their own internal research, and research published by other research agencies, they found creative quality might significantly impact the cascading choices of media channels in terms of ROI, if executed particularly well or wrong for any given media channel.
Study Background
With these caveats in mind EssenceMediacom decided to review the TikTok sales results case by case and present one CPG and one Retail case in Central Europe, while making sure they include representative ones that aren’t biased in any way or are not outliers in any way, particularly in terms of TikTok’s scale and share in investment, as well as efficiency and effectiveness results.
Key Learnings and Insights
1. TikTok in our FMCG case in Poland is 58% more efficient than average media.
TikTok is more efficient than other media channel groups, meaning it has the highest Return on Investment of the groups. For this study, we grouped channels as: TikTok, Other Social, Other Digital and Offline.
2. TikTok in our Retail case in Poland is 48% more efficient than average media.
TikTok is more efficient than any other group of media channels. It’s 48% more efficient than the average for all media. It’s followed by other Social media channels that are 31% more efficient than the average.
3. EssenceMediacom confidently recommends experimenting with a +50% weekly investment intensity vs the maximum weekly spend during the modelled period.
...it would be recommended that FMCG and Retail advertisers increase investment to learn how the diminishing return effects kick-in for TikTok compared to other media
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