Tik-Tok and Other Profitable Opportunities at the Bleeding Edge

David Azar is Founder and CEO of Outsmart Labs, a digital marketing agency focused on riding new trends and platforms to drive more traffic, more visibility, and more online conversions. His agency works with clients to build a 360 strategy to drive those conversions in sales, traffic, and newsletter signups. David says, "Digital marketing changes so fast that it's about whoever adapts faster and whoever finds the opportunities in the market."

The agency provides traditional digital marketing services -- Google strategies, Facebook, traditional social media strategies – but likes the advantage of being an "early adopter" of the newest trends.

Where to be now, according to David? TikTok – the place where kids dance. Or not.

In this interview, David describes the phenomenal growth of TikTok. The number of U.S. users grew from 27 million in July 2019 to 40 million in January 2020, and then to 65 million at the beginning of April, with 85 million users by mid-June. About 1 in 4 people in this country use TikTok, many of whom are "very involved," to wit, 34% of TikTok users actively produce content.

David explains that TikTok's paid ads platform can cost over $50,000 a month. On the self-serve side, the budget can start as low as $1. TikTok has specific rules about content, posting, and addressing the audience, along with a powerful editing app. Videos created for Instagram won't work on TikTok.

David says now is the time for smaller brands to gain TikTok followers and community. The cost on TikTok is one-tenth that of Instagram. Big brand demand for influencers is low, so the spend on these initiators will produce a better ROI than an equivalent spend on TikTok ads. This cost is only going to go up, David warns. Today's users will only pay a fraction of what they will have to pay in a year to "get the same audience and the same followers." The current TikTok algorithm promotes good content and makes it extremely easy to go viral. That, David says, will probably change.

TikTok usually starts with a challenge. Someone responds to that challenge. The greater the number of people who respond, the better the chance that challenge will reach the "For You page "where everyone's going to see it and participate in that challenge." Outsmart Labs partners with initiators who have up to a million followers to create concepts for its client brands. It then develops a first activation, one that will attract a lot of followers and eventually take the brand to the For You Page and "very large exposure." Outsmart Lab clients have seen great ROIs on TikTok activation campaigns over the past year.

Other areas of opportunity David discusses in this interview are local SEO and programmatic advertising. In regards to local SEO, David has found that close to 96% of retail establishments don't do anything to develop local SEO. Yet, many customers will look for a company offering a specific product or service in their community. Unfortunately, Covid-19 has impacted this "local market opportunity" for many businesses. But the situation also presents an opportunity for companies to rethink their websites and their business models. Programmatic advertising tracks customers from their cell phone locations and pushes strategic advertisements to these phones based on their location. Covid-19 presents an opportunity for companies to rethink their websites and their business models.

David can be reached at his company's website at https://outsmartlabs.com/.

Transcript Follows:

ROB: Welcome to the Marketing Agency Leadership Podcast. I'm your host, Rob Kischuk, and I'm excited to be joined today by David Azar, Founder and CEO at Outsmart Labs based in Miami, Florida. Welcome to the podcast, David.

DAVID: Hey, Rob. Thanks for having me.

ROB: It's excellent to have you here. Why don't you tell us about Outsmart Labs? Many firms have a superpower, so what is yours?

DAVID: That's a great question, great way to put it. I think our superpower is definitely our team. I think the team that we have together is what makes all of our campaigns very successful. At Outsmart Labs, we focus very highly on new trends and new platforms.

First, to introduce what Outsmart Labs is, we help clients with having more traffic, more visibility, and more conversions online, and we really build a 360 strategy in order to drive those conversions, whether those are sales, whether that's traffic, newsletter signups. I think the team we have is a team that's very hungry. We are at the forefront of trends. We were actually one of Google's top agencies, rising agencies, which really allowed us to have access to a lot of data.

We're not scared of trying new platforms. For example, right now, what we've been doing over the last year, which we've been seeing really great ROIs on, is TikTok. TikTok activation campaigns. I think what clients like is the mix of finding traditional marketing, whether it is Google strategies, Facebook, traditional social media strategies, and also inputting some newer platforms.

At the end of the day, digital marketing changes so fast that it's about whoever adapts faster and whoever finds the opportunities in the market. I think our clients like that in us, understanding that some of the things might not work, some might work, but overall the strategy is going to be a very good strategy in order to scale.

ROB: Excellent. It sounds like from your first introduction, you are very results-focused. How do you align a channel like TikTok – what do good results look like on that channel? Are you looking primarily at brand impressions, or is there a deeper level you can go to with a campaign there?

DAVID: Great question. I think I mentioned what's really important now n digital marketing is not just doing one platform; it's really the 360 approach. Think of yourself whenever you're online and you're shopping for something. Most likely, if you see an ad for something you're interested in, you'll click it, but most likely you won't convert that first time. So over time, the more you're going to be seeing that ad, the more likely you'll say, "Okay, now I'll take the time to convert."

TikTok actually has a great opportunity at the moment. Even though it's been seeing humongous growth – and clients always tell me, whenever I offer them to go on TikTok and I go, "You guys should go on TikTok," they tell me, "But I don't understand. TikTok is just kids that dance. I don't understand why that's my market." This is when we tell them the growth of TikTok over the last year. They had 27 million users in July of last year, 40 million in January – and I'm talking in the U.S. – 65 million in the beginning of April, and on June 15th they had 85 million users.

So, 85 million users means that now 1 person out of 4, almost, in the U.S. has a TikTok account, so pretty much anyone. It's all about finding the right way of – the way you're going to be marketing your product. It's not about just doing dance. It's about finding your core values and creating it in a creative way.

At the moment, that we're at right now, it's a huge opportunity because the TikTok algorithm works a certain way where it's actually very "easy" to go viral on TikTok, and the algorithm really promotes good content. To answer your question of what a good ROI on TikTok looks like, it depends on what the client is. Depends on the number of activations they're going to be doing on TikTok. But I think that right now, what brands should really focus on is gaining followers and gaining a community on TikTok.

As you know with Facebook, Instagram, and other different platforms, the organic reach goes lower and lower as time goes by and as more users are using the platform. We are at a time with TikTok where they haven't changed their algorithm yet, and so far, if you do a good video and you make it to the For You page, pretty much anyone with the right center of interest is going to see your video.

The way we look at it is not only do we do organic content for clients, where we're going to be creating videos for the clients, but in order to have quicker results, it's about doing activations with influencers – what we call initiators for TikTok. I don't know how familiar you are with TikTok. I don't know if you wanted me to talk to you about how the trend works to get to the For You page. But usually you want to have a challenge, and then someone's going to do the challenge, and the more people do the challenge, the more likely your challenge will get to the For You page where everyone's going to see it and participate in that challenge.

In order to ensure that the challenge is going to make it to the For You page where everyone is going to see your challenge and you're going to have a huge amount of exposure, we actually partner with large initiators and we come up with the concept of whatever the client wants. They tell me, for example, if it's a cosmetic company, "We want to promote our skincare line. We want to showcase it to as many people as possible." So, we're going to come up with a creative concept.

For example, there's a trend that works really well, which you've probably seen, which is people have all these cosmetic products and they act as if they're DJing, and the lights go on and off and you're pretending you're DJing with cosmetic products. Everyone was redoing it, and you can get a lot of followers and people exposed to your brand by doing that.

So, we actually partner with initiators that have a million or up followers, and then we work with them in creating the concepts. We have a general idea, we work with them and say, "This is the hashtag challenge that we want to create." They help us do it, and then they launch the activation with us. Because they have such a large following – and 34% of people on TikTok are active content creators, meaning people do actually want to create content on TikTok because it's kind of the whole goal of TikTok. So once those large initiators create this first activation, then as you see it, you want to participate, and little by little we ensure that brands go to the For You page and get a very large exposure.

It's really a tenth of the price of Instagram. Budgets are significant for a small business, but for larger businesses, it's not that much – especially when you're looking at the reach you can have. A TikTok campaign right now, activation ranges between $10,000 and $20,000 for an activation, but you're going to be reaching around – depending on how well the campaign performs – 10 million to maybe 30 million views, people watching your content. This is incomparable to any other metrics.

The reason I was saying – you were asking what the superpower of Outsmart Labs is; it's really seeing those opportunities in the moments they're there, because in 6 months from now, the algorithm is going to change. In 6 months, maybe 3 months, 4 months, we don't know when they're going to change it, but that opportunity, as great as TikTok is still going to be, it's probably not going to be as great as it is now.

TikTok is going to have to change the algorithm, just like Facebook did before, just like Instagram did before, because they have to make sure the content they're showing is quality content. Because obviously, they make money by showcasing a large number of pages, and the more pages users watch, the more the platform makes money. So, they want to make sure people stay on the platform. That algorithm is for sure going to change. There hasn't been an announcement by TikTok; it's just knowing how digital works. But I think right now is really the time where brands need to go on TikTok.

Also, a lot of large brands at the moment – we have a variety of clients, some very large international groups, and every time we pitch TikTok to them – it's changing now in the last month, but originally for the last year, it's always been, "We really like TikTok. We see what's going on on TikTok, but on a global level, we haven't decided how we feel about TikTok." This is where I think a lot of smaller brands have such a big opportunity, because at the moment, TikTok isn't really crowded by the biggest brands. Except if you're the NBA or brands that are more talking to a Gen Z audience, which already got onto the trend. The other bigger ones haven't. So, if you're a smaller brand, it's really the time for you to take it upon yourself to go on the campaign.

I actually have another example of showing how important it is to get on the platform early. We have this client – I can't name it, but it's a large high-end fashion brand. Family business. Not one of the largest ones you can think of, but fairly known in the world of fashion. I was talking to them, pitching them TikTok, and the person in charge of marketing is about 32 years old. I was telling him why he should get on TikTok now, before everyone gets on it, and he told me, "You're right, David. I definitely see that because as a brand, I was lucky that I was in the U.S. when Instagram launched, and I told our founder to create an Instagram account for our brand, and within one year we gained 500,000 followers."

In the last 10 years, they only gained 75,000 followers because the algorithm changed. At the beginning of Instagram, it was much easier to push your organic content. Same thing with TikTok. Whoever's going to be able to take advantage of TikTok now, they're going to pay a fraction of the cost they'll pay in a year to get the same audience and the same followers.

I don't want to make the whole talk about TikTok and bore you with just TikTok, but it's definitely a fascinating platform. Digital is so fascinating anyway. Every month or two or three, there's something different where there are opportunities to be seen. It's just about finding a way to adapt your brand values and your message to that audience.

ROB: Definitely. Even though it's been very focused on TikTok for a moment, I think it underpins even the name of the brand, Outsmart Labs. It seems like we're in this moment of this TikTok channel that you mentioned. Instagram's been through it, Facebook's been through it. Even Google, from a search engine optimization perspective, has been through it. I think two things were true.

One is that the algorithm was at a point where there were true legitimate tips and tricks that work and help you rank that you can actually know and, to an extent, master or be very good at. The other one – I'm not entirely sure, but I think you may have implied – essentially, this is a really good organic marketing channel, whereas – I don't even know; are you doing paid on TikTok? Or is the opportunity on the organic side so immense that it's worth going deeper there?

DAVID: It really depends what kind of brand you are. The TikTok paid ads platform is fairly expensive. Usually it's over $50,000 a month in spend, so it's not accessible to everyone. They opened the self-serve on TikTok, which you can start at $1 or whatever budget you want to put in, so we do use that as well.

The thing is, usually clients want to have fast results. Because influencers right now are not as in demand by all the big brands and haven't had those large contracts, at the moment, spending $1,000 on TikTok ads versus $1,000 on getting more initiators, I think at the moment it's better to go with the initiators. But I think in 3 months it's going to be something different, and most likely you're going to see a big rise – and that's also why I'm sure the algorithm is going to change, because they can't let that happen because that's how they monetize and make a dollar on an initiator doing something on TikTok.

So, it's a mix of both, but when you talk organic, you definitely should. Especially if you're a brand that's a little popular where you have a market that knows you. People are just looking for people on TikTok. I think the DJ Khaled example is a great example with what he did with Snapchat. I don't know if he was still very popular at the time – I don't know if you know what happened. He got lost on his jet ski in Miami and started saying, "I'm lost in Miami" on Snapchat when Snapchat just started. Everyone picked up on it and helped him to find his way. Then over the course of the year, he became the most popular person on Snapchat and now has the success and popularity that we know he has.

So, it's about taking it at the moment and finding the right video. The organic does work really well, and people are looking for those brands. If you look at a lot of the brands that don't create any content at the moment, but they're a little famous, they have followers already on their account even though no one's really posting anything.

So, I think doing some organic content is definitely great just because the algorithm works so well. If you do a good video – the thing is, you have to spend time in creating videos specifically for TikTok. Whatever you share on Instagram is just not going to make it to TikTok. TikTok has its rules, has its way of posting, its way of addressing the audience. The editing app is quite incredible in TikTok. So, you need to utilize all of that to make it work.

It's a mix of everything. In order to have quick results, definitely activation with influencers is number one because you definitely see a switch right away. But obviously if you're going to be investing in the platform, you definitely want to think of also organic content and what you're going to be producing.

A great tip I give clients that are scared and saying, "I don't know what I'm going to be posting if I do organic content" – first of all, that's what we do, so usually we take care of it. But other than that, the whole concept of TikTok is they suggest challenges and trends that they want people to do. Sometimes when you're a big brand or you're a little famous, if you just find a creative way to participate in a challenge, it gives you a chance of going viral. There's not that much creativity that goes into it because you know the trend and the kind of video that you need to create.

ROB: Wow. It's very clear you are, as best I can tell, completely up-to-date on the now. Let's rewind a little bit, though, to the very beginning. What is the origin story of Outsmart Labs? What got you started in this business?

DAVID: Actually, it started very early. I was 16 years old. Before even Outsmart Labs, just digital marketing and my love for digital marketing and the possibilities that it offers. When I was 16 years old, I was put on a project. We created the first professional sports team affiliate marketing website. It was for the team – I'm French; I'm from Paris, so it was the team of Paris. We had sponsors like Nike, a kayak company of France, large car companies.

We went to the sponsors, they wanted more exposure, and we told them, "Why don't you give us discounts, and whenever a fan goes through our website and goes through to your page from our website, they'll get discounts from Nike, or on kayaks." During that whole project, I was in love with how, as long as you think it, you can reproduce it.

Then I fell in love with digital marketing, went to school at University of Miami, got very lucky that it was the beginning of Facebook and Twitter, so I got to see that grow. I started an event company when I was in school. All of our promotion was done through Facebook, and we had about 800 students come to our events every time, so I saw the power that Facebook had. Basically, a free tool was giving me the strength that a paid tool would give me.

I always thought that was super interesting. If you think smartly, you technically don't necessarily need to spend a lot to get a lot. Doesn't mean you don't spend a lot of time, but in terms of actual dollars spent, it doesn't have to be that much.

Then as time grew, I worked for a large firm called Amadeus, which is the reservation system of every plane ticket that you book. They didn't have a social media presence at the time or Facebook, so I did it for them. It was a fascinating project. I was like, "You know what? I'm doing this for all those different clients; why don't I just create my own agency and take it from there? I know there's a lot of people that don't know how even Facebook works or are new to the trends, so why don't I help them?"

We started Outsmart Labs 9 years ago now, and it's been growing ever since. We have clients in a lot of different industries. What I really love – I personally love innovation. I personally love thinking big picture, thinking how to beat the system in ways like you were mentioning before, the secrets that are not really told, but that you guess from Google, but also applying the rules and putting it all together and making it work.

So that's what we've been doing. We've been working with clients in hospitality, in travel, in luxury, even in mental health. I really love thinking about a lot of different industries. A lot of clients ask us, "But you've never worked in that industry. Is that a problem? I'd rather have an expert in whatever space," and I tell them all the time, honestly, if someone is knowledgeable about digital marketing, there are so many tools out there that allow you to analyze all the competitors, analyze what they're buying, what they're doing, what kind of ads, what wording they're using, so it's almost not even that important. It's even almost better to use an agency that maybe doesn't have as much experience in the specific industry because in order to get to that level, they're going to have to do so much more research. Because it's changing so fast, that research is going to pay off into a smarter strategy than whoever did it a year from today.

That's basically how Outsmart started and the logic and what I love personally about digital marketing, and I think everyone on the team is similar to that.

ROB: That's really excellent. If you look out a little bit even beyond now – TikTok rose, it's working; there's probably some other platforms you've worked on – Instagram, there's probably some stuff you can do even on Facebook. But what are the next potential frontiers that you see coming? Are there maybe two or three new opportunities you see emerging that maybe it's just experimental budget for your clients now, or maybe it's already humming for a very select subset of them, but we might be thinking a little bit more about in 6-12 months?

DAVID: One opportunity that I see that's a really big opportunity – unfortunately, because of the current situation of COVID and physical retail not being as open as it was prior, it might not be as big of an opportunity as it should be, but in a world where there's no COVID or in places where it's less affected by COVID and stores are open, local SEO is something that I see overperforming. It's something that not a lot of people put a lot of effort in.

If you want a little definition of what local SEO is, it's how you get your retail business, your physical business, to show up on Google whenever someone makes a search query under which your business should show up. It's showing the closer local retails, whether retail or hospitals or mental health institutions or insurance companies or cosmetic stores or whatever that is.

Local SEO is not necessarily very difficult to do in terms of what needs to be done; it's just very time-consuming. Because Google and all of those platforms create data, people tend to assume that because they're finding their business on Google or when they google their name, automatically they're registered within all the local directories within Google, within Facebook, within all of those platforms, which is actually not true. It's just a crawler doing it.

So, actually spending a bit of time on local SEO – and about 96% of retail don't do anything on local SEO. I'm talking even the largest brands that we work with. Some of them tell me, "Everyone knows my brand. There's no point in me working on local SEO." Sometimes if someone types in "cosmetic store near me," you want that store to show up first versus a competitor. So, I think that's definitely a trend that I've been seeing. It's not necessarily a trend that's just now. It's been two years where no one's getting on that, and I really think it's working really well.

Another thing that I would say – real-time bidding, programmatic advertising, definitely something we see also. Very efficient. Being able to target people based on their location, historical location or actual location, allows you to target and trigger a message very customized to each audience. Not necessarily something very new, and not necessarily something everyone's doing. It's also a little more expensive to do, so that's why maybe a lot of smaller businesses don't do it.

But doing it smartly and using the tool for another purpose – which we do a lot for some of the clients that can't afford those budgets – you can really leverage programmatic advertising to your benefit to create a new audience, to track foot traffic in a location, to drive more foot traffic, to drive brand awareness. All of those are great things with programmatic.

In terms of other opportunities, I think just being active in general. But that's not really an opportunity; that's just a truth. Those are the three that we're working on the most. Influencer marketing with TikTok mostly. We do YouTube, we do Instagram, but where we see the biggest growth is TikTok in that sense.

ROB: For someone who's never dabbled in programmatic or real-time bidding or hasn't done so in a while, how has that ad inventory changed – the ad units, where they get displayed, how they're bought? I think it may not be what people used to think it was in terms of where the ads actually show up. Have they caught up to Facebook a good bit in terms of targeting?

DAVID: What's interesting about programmatic is, first of all, not a lot of people know that this even exists. I think if more people knew how it worked, I don't think people would accept to share their location on their apps as often.

Just to explain quickly how programmatic works, every time you download an app and you agree to share your location with the app, your device ID goes onto a stock market that anyone can buy. Along with that device ID, it gives your browser data saying you're using Chrome, Safari, your phone is in English, French, Spanish, and you were at this exact location. On average, someone shares their location between 25 to 40 times a day.

With programmatic advertising, the great thing is we have a really great understanding of who every person is because it's not just what you search, it's not what you pretend to be on social media; it's actually who you are by where you live, what time you leave for work, what time you get to work, what time you leave from work, what type of restaurants you go to, do you run, do you not run, do you bike, do you not bike, and all those different things.

Then how it works and where it's displayed – think of yourself whenever you play Candy Crush, whenever you read the New York Times or whenever you read CNN. There are ads on those platforms. Those ads are ad placements that can be bought by anyone and it can input your ad into that. This is how programmatic works.

The beauty of programmatic from an advertiser standpoint is that as long as you can think it, you can do it. You can initially drive traffic – so you could have two competitors. Let's pick an example at random and say McDonald's and Burger King. That's actually a campaign we ran with one other restaurant. What we could do is geolocate every single Burger King, if you're McDonald's, for example, and say everyone that's waiting in line at a Burger King, I want to send an ad that says "Claim this $1 menu at McDonald's." You see that ad on your phone, you can click "Add to your wallet." It looks like the exact same thing as a plane ticket when you add it to your wallet, and then automatically it's claimed.

Then you can trigger that alert once it's on the phone any way you want. You can say I want to look at the 10 closest McDonald's to this Burger King where the person redeemed this coupon, and any time the person comes within 100 feet of my McDonald's, I want a notification on his phone saying "Don't forget to claim your $1 menu at McDonald's." Or you can say, people tend to go eat at 12:00; at 11:30, I want to send a notification to all those phones saying "Hey, don't forget to come eat your McDonald's."

And you can go back 90 days, so technically you can geofence every single one of your competitors' stores, go back 90 days, take all of the global data from all of those stores, and target those customers. The possibilities are endless with programmatic.

ROB: There's absolutely a lot going on there. David, as we wrap up this conversation, what are some other things that we should know about either the journey of Outsmart Labs or what's next for you and the firm?

DAVID: Two things we're excited about. The first thing is digital marketing has always been huge. Obviously, a lot of brands spend a lot of money on digital marketing. No one's really questioning the efficiency of digital marketing anymore. But still, for brands that are not ecommerce only, digital marketing came second to the retail business or their traditional marketing, and I think this whole situation of coronavirus has repurposed or made people reconsider the positioning of digital within their mix of marketing assets.

A lot of companies have noticed that once they got all their stores closed, all they had left was their website. A lot of companies haven't even thought about where their in-store POS was not synced with the website POS, so all of a sudden they were left with nothing. So I think this whole coronavirus has gotten brands to rethink how to consider their digital strategies and understanding they should be relying a lot more on it because the chances of this going down is lower and people are shopping more online.

To me, whenever I pitch a client, there's a lot of indication in terms of saying why it's necessary for them. I think the last 3-4 months in that way, we skipped through that. Now they know, "It's necessary, we need it; how do we do it?" I look very much forward to this because of the positioning of Outsmart. We tend to also pitch things that are not so traditional. As much as we do traditional, we always try to test things. You always need to pick your clients because not every client is willing to test things – and it makes sense; it's their money, and they want to maybe spend money just where they know the return on investment they're going to get.

So that's what I'm really excited for. I think we're going to talk to a lot more clients. A lot more clients are going to be willing to be even more out of the box in terms of what they're going to try to do to differentiate themselves and basically have more real estate online.

ROB: David Azar of Outsmart Labs, thank you so much for joining us today. I think you've given us a clinic on a bunch of very targeted and effective tactics in marketing. Congratulations to you and the firm on everything.

DAVID: Thank you so much for having me. It was a pleasure to talk for the 30 minutes.

ROB: All right, David. Be well.

DAVID: Thank you. You too. Bye.

ROB: Bye.

Thank you for listening. The Marketing Agency Leadership Podcast is presented by Converge. Converge helps digital marketing agencies and brands automate their reporting so they can be more profitable, accurate, and responsive. To learn more about how Converge can automate your marketing reporting, email info@convergehq.com, or visit us on the web at convergehq.com.