TikTok has reportedly shaved US$2 billion off its ad revenue target for the year amidst a turbulent time for Big Tech companies. During a meeting with a handful of employees recently, CEO Shou Zi Chew said its ad forecast has been slashed to US$10 billion. The revised number did not include smaller business segments such as eCommerce.
According to the Financial Times, initial revenue for the year was projected to be between US$12 billion and US$14.5 billion. Employees were reportedly "blamed for not driving enough sales" in advertising and eCommerce. However, TikTok was also said to have overspent in other aspects including salaries and social events, FT said.
In addition to slashing its ad revenue target, TikTok also reportedly restructured its US operations, laying off "hundreds of staff" over the past three months, FT said. A similar plan was carried out in Europe earlier in 2022.
At the same time, ByteDance's Hong Kong IPO is also unlikely to happen this year. Earlier in 2022, ByteDance told employees an IPO was delayed and it offered share buybacks. According to FT, it was at that point when several employees "decided to jump ship". TikTok declined to comment on MARKETING-INTERACTIVE's queries.
TikTok joins other social media rivals who have also been struggling thus far. Meta recently cut 11,000 jobs and CEO Mark Zuckerberg also took responsibility, explaining that not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused Meta's revenue to be much lower than he had expected. "I got this wrong," he said.
Meanwhile YouTube and Snap also posted slower revenue growth. Twitter also saw layoffs recently following its acquisition by Tesla founder Elon Musk while Salesforce also cut over 2,500 individuals. Job cuts are plaguing the tech industry and Forrester's VP, principal analyst J.P. Gownder recently said it is unlikely that the end is near. In fact, he said it's a good bet that tech companies that haven't yet laid off employees are carefully considering whether or not to do so.
“It wouldn't be surprising to see more layoffs in the next few months, particularly among firms whose fiscal year ends on 31 December,” said Gownder. According to him, companies are now setting up finances for success in 2023. Widespread economic concerns, some prompted by rising interest rates, others by the war in Ukraine, high fuel costs, and supply chain issues, are prompting these moves in anticipation of lower demand.
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