What Happened with GameStop Stock is Happening to Brands on TikTok

This past week will go down in history, for the way the little guy took on the biggest hedge funds on wall street. As I’m sure everyone knows a group on Reddit, Wallstreet Bets created a short squeeze on hedge funds who had been playing the same game of shorting stocks for years. This group of retail investors turned everything on its head through buying up the supply of liquid shares which drove up the price per share. Similarly, brands have had it easy in years past because their large budgets in advertising dollars have been able to carry them across the finish line when it comes to staying at the top of the mind of consumers without having to take any chances with creative. While smaller brands are taking the time to make native content which is buying up the market in terms of attention leaving other brands holding the bag. 

What we are seeing now is that large brands are starting to notice emerging platforms like TikTok but are not investing the time and resources to understand what it takes to win on that platform. Just posting creative that worked in the past on other platforms is almost like short selling their old creative as its relevance decreases. We have seen lots of repurposed broadcast ads and sadly it’s not going to cut it anymore. 

Here is what large brands have to do if they want a chance at survival.

Start Now

As platforms grow, they also become harder to grow on. Once they can see that a platform is gaining enough momentum that it could one day benefit their brand, they should jump on it. While there have been a few failures (RIP Google+ and Vine), most platforms like Instagram and Twitter started as niche platforms only to then become giants of the social media landscape.

The sooner they start on a new platform, the higher ROI they will receive in the long term. The reason this is true is due to the naturally occurring uneven distribution of all resources called the Zipfian Distribution. This makes it easier for people who are already doing well on a platform to continue to succeed. The earlier a brand starts on a new platform, the less competition they’ll find themselves up against and the easier it will be to succeed.

Adapting To TikTok

It’s easy to think that your social media strategy can be uniform across all platforms. The reality is that not creating native content will drastically decrease your chances of success. 

The reasons why are mathematical. The Pareto principle, commonly known as the 80/20 rule, states that 20% of any work will receive 80% of the results. In terms of social media, this means that 20% of all posts are receiving 80% of the engagement, leads, and connections. The other 80% of posts will have to bite, scratch, and claw each other just to get the last 20% of the scraps. So, if a brand’s creative isn't getting at least a B in math it’s not gonna pass the class. The truth is when everyone else is creating content specifically for that platform, brands have to step up their game to stay relevant. 

These are the 3 changes we will see in brands who will win on TikTok or any platform for that matter.

Posting More Content

The easiest factor for brands to control will be the volume of content they post. The more posts they make, the better their odds are that something they make will be seen as great. This not only gives them more data points on what works and doesn't work on a platform but helps any platform’s algorithm, case in point, TikTok learns more about who the brand’s audience is or isn’t.

Promoting Content

Brands can create all the posts they like, but if no one is seeing them they’re a waste of time. By taking out ads on TikTok or paying for influencers to shout out their account they increase the odds that more of their target audience will see it. The long-term play of this is that it will help them stay in the top 20 percent due to their artificially large followings. This also increases the chances that their content can catch fire and spread within their niche. 

Collaborations

Brands are going to realize that upper management can not be dictating creative as strongly and micromanaging social teams. The process has to move quickly. This is going to force brands to seek out experts that they feel confident delegating the creation of social assets to. This will come in the form of working with production companies and partnering with influencers to fill their content calendars.

In conclusion, just like how retail investors are changing the rules of the stocks game, small social media brands are changing things for big brands on social media. Brands have a chance, but they are going to have to hold on because we are going to the moon!