Can American Express use TikTok to win small businesses?

American Express contends that merchants can easily reach more young shoppers on TikTok — as long as they have the right tools.

To this end, Amex has partnered with TikTok to launch #ShopSmall Accelerator ahead of the 2022 holiday shopping season. The program includes TikTok advertising credits and access to tools, resources and tutorials that enable small-business owners to create content on the platform. 

"It is simple to create content for Tik Tok," said Marianne Rausch, vice president of Small Business Saturday and Shop Small at Amex. "We're trying to demystify it and make it accessible for small businesses."

Amex follows payment companies such as Square and Stripe, and traditional financial institutions, which are collaborating with the content social video platform to make sure they aren't missing consumers who are active TikTok users. 

"Any financial institution or fintech that is able to seamlessly integrate their banking services into social media and other online platforms can reach a younger, more transaction-rich customer segment," said Richard Crone, a payments consultant. 

Amex's tools for small businesses include how to use TikTok as a search engine, and how to use sounds, trends, hashtags and communities. The program will include insight from Anna Sitar, a TikTok influencer with more than 11 million followers; Sofia Bella, a teacher who has 3 million global TikTok followers; and Brandon Blackwood, a small-business owner who sells designer bags and accessories. 

"Many of these small-business owners wear many hats and are time-strapped," Rausch said. "They think it may be hard for them to carve out the time to create the right content to market their business."

Amex research suggests TikTok is emerging as a social media advertising and shopping channel, particularly among younger consumers. That creates a potential opportunity for financial institutions and payment companies to use TikTok as part of merchant acquiring."TikTok is a newer platform for many small businesses," Rausch said. "They may have more experience with some of the older social platforms, but we want to make sure they know TikTok is an option." 

The timing may be right for merchants who were on the fence about TikTok to get on board — particularly if they used Twitter to reach customers. Following Elon Musk's purchase of Twitter, many advertisers have fled the platform, citing concerns about content moderation and rampant impersonation after Musk initiated massive layoffs. 

"Advertisers are going to go where the prospects are," Crone said. "If Twitter alienates advertisers it will make it easier for them to redistribute their advertising dollars to other emerging platforms."

Twenty-four percent of marketers said they consider TikTok effective as a marketing tool in 2022, up from 3% in 2021, according to Hootsuite, a social media management platform.  And 67% of TikTok users say the platform inspires them to shop, even when they logged into TikTok for purposes other than shopping. Additionally, 44% of TikTok users are between the ages of 18 and 24, according to Shopify. More than 70% of TikTok's users are under 40, according to Statista. And Hootsuite reports 59% of 18- to 34-year-olds view TikTok favorably. 

TikTok, which is a unit of China-based ByteDance, has more than 1 billion users globally, and more than 20% of social media shoppers say they buy things on TikTok "all the time," Shopify said. The largest brands on TikTok, based on number of followers, are mostly large businesses, creating a potential market for firms that can connect smaller merchants to the platform. Netflix is the largest brand on TikTok with about 23 million followers, according to Statista, followed by the NBA at 15 million, Nickelodeon at 12 million, Fortnite at 8 million, RedBull at 6.5 million and Duolingo at 4.2 million. 

Amex's research, conducted with TikTok, found that 63% of small-business owners want to improve their ability to reach Generation Z consumers, and Amex estimates that if every Generation Z and millennial shopper in the U.S. spent $10 at a small business on the Saturday after Thanksgiving (Small Business Saturday), based on broader trends it would produce about $2 billion in small-business revenue on that day. 

Amex sees TikTok as an addendum to an existing outreach to small businesses that use social media as a marketing tool, a trend that goes back more than decade. 

"Small businesses rely on social channels," said Rausch. "It's a major way to help them find new customers." 

Other payment companies to partner with TikTok recently include Stripe, which powers TikTok's Tips feature, which creators use to collect and manage earnings through a payment portal and dashboard. TikTok's Stripe partnership also supports TikTok's Creator Marketplace, which connects creators to other businesses. 

A product called Square x TikTok, created by a collaboration of the two brands, enables consumers to go directly from videos, ads or shopping tabs to merchants. Square's sellers can also use TikTok to set up a customized Square online store. Mastercard and Visa also have a presence on TikTok.

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Some banks, including First National Bank of Omaha and FNB Community Bank in Midwest City, Oklahoma, are using TikTok, with First National using it to produce marketing videos and FNB studying how the platform could fit into its messaging. And some credit unions, such as Carolina Trust Federal Credit Union, also use TikTok to aid marketing.  

While TikTok has faced regulatory and political pressure in the U.S., its user base can also provide a source of revenue and shopping and payments data. 

"TikTok offers a growth opportunity to expand reach beyond the bank's own proprietary channels and legacy advertising media, which tends to skew older," Crone said. "To be on TikTok and not support direct account opening, social and mobile wallets will frustrate and alienate the younger merchant they hope to attract because millennials, Gen Z and Gen Alpha are fully digital and don't transact in branches."