Since Facebook last reported their earnings, I have had a flood of investor calls related to my thoughts on their earnings and the potential impact TIkTok is having on Facebook, especially since that was mentioned on their earnings call.

Bypassing Facebook’s – I mean META’s stock commentary on the impact of Apple’s IOS changes and the impact it is having on their business, let’s dive into the impact TikTok is having on them.

As a business entity, I don’t believe TikTok is having any sort of direct financial impact on Facebook. Advertising on not shifting the dollars from one platform to another and TikTok has a long way to go before it could potentially match the media buying platform and tools let alone the performance that Facebook offers media buyers.

But, TikTok is having an impact on advertiser performance within Facebook at least indirectly. The profound shift in user engagement and time spent on TikTok which admittedly is highly addictive means less time spent on METAs platforms which in turn reduces the total amount of ad inventory which Facebook can monetize. Fewer ad impressions ultimately result in a higher CPM for advertisers as competition increases to reach the most targets. This is only compounded further by the decreased sources of data used by Facebook to target ads.

Higher CPMs on media inventory of course has the downstream outcome of higher customer acquisition costs which arguably has been Facebook’s greatest value proposition. Historically it provides performance which can in some situations rival paid search ads and certainly bests just about every other media channel out there.

TikTok has a long way to go before it is a true business threat as a media buying platform to Facebook with multiple hurdles to overcome from scale, targeting, adtech, pricing and even developing fit for purpose creative. But it is redirecting eyeballs at a time when Facebook and the advertisers that rely on META platform to promote their businesses can least afford for that to be happening.