According to a new report, the social media platform TikTok contributes more to New Zealand’s economy than our book publishing industry.
The figure of $1.2 billion came out last week in an Infometrics report – commissioned by TikTok. The report also found TikTok supported over 9700 jobs.
The numbers sparked scepticism from several quarters, including business journalists and a University of Auckland professor of statistics, who The Detail speaks to today.
Infometrics chief economist Brad Olsen says the economic contribution figure shouldn’t be conflated with a cost-benefit analysis.
“It’s not that – it was never designed to be that,” he says.
“It’s very difficult of course to understand the other costs outside of it. Some people have highlighted for example the likes of scams or misinformation – that’s not just for one platform like TikTok, that’s a wider challenge.”
The wording in the report was deliberate, says Olsen.
“We very deliberately said ‘contributed’ in terms of the GDP piece; we deliberately talked about ‘support’ [when it comes to job figures].”
He adds that the report also didn’t suggest that those nearly 10,000 jobs were created by TikTok and would never have happened without it.
“I think people are actually making up quite a lot of stuff when they’re reading into this more than is exactly what’s written down.”
Infometrics has been up front about the fact that the report was commissioned by TikTok, and Olsen says they asked that the research be done independently. Nielsen gathered the data from two surveys, one of 1000 TikTok users and a second of the marketing decision makers from 700 businesses, half of whom used TikTok in some way.
He says the $1.2b figure was sense checked, and Nielsen excluded outlier numbers where huge values were hard to reconcile with other macro-economic data.
“It looks like a large number – it is a large number. In context, it’s not like it’s completely outsized in terms of its contribution to the economy more generally. It’s below a percentage point of GDP, so it’s not like we’re claiming that TikTok is one fifth of the entire economy or anything like that. Clearly that would ring some sort of questions around ‘Is that legitimate?’
“Nowhere in the report does it claim that this is completely and utterly new spending that never would have happened ever.”
Professor Thomas Lumley is the chair in biostatistics at Auckland University’s Faculty of Science.
He says there are two issues with this report.
“One is the question of whether the numbers are actually right – are they measuring what they claim to measure – and also whether what they claim to measure is really what we’re interested in.”
He points out that if you were looking at the economic impact of TikTok in New Zealand, an important question would be how much tax the company contributes.
“The big issue is that this is counting a lot of money that isn’t new. Most of the $1.2b isn’t new money that wouldn’t have been spent if it wasn’t for TikTok. It’s the same money, it’s just that it’s passed near a TikTok video, so it’s counted as TikTok money.
“It’s a fairly common thing to do when people calculate, for example, the impact of a stadium. It really is misleading – it’s saying, whenever you spend money, the people you spend it with are going to have more money and they’ll spend it with someone else and it will ripple through the economy.
“And that’s great, that’s how the economy works. But it’s not … ‘special’; you wouldn’t normally count that when you’re talking about buying a coffee or something.
“And we probably shouldn’t count it here.”
Lumley says what this sort of survey can tell us is how people have changed their behaviour because of TikTok, and how much marketing space it occupies.
“It’s good to know if you’re a business, that TikTok is affecting where people spend their money.
“Whether this is making the economy better, whether it’s making people better off, is much, much harder to measure. And I think you really have to accept that this sort of survey isn’t going to tell you. What it’s going to tell you about is what sort of spending does TikTok influence.”
Lumley says because Infometrics, a respected firm, did the survey, you can rely on the numbers having been correctly estimated for what they are, but it’s not very useful for deciding what the impact of TikTok is on the New Zealand economy.
“It has value for narrower questions … it’s probably useful for people deciding whether or not to use TikTok.”
RNZ Mediawatch‘s Colin Peacock tells The Detail that when people in the news media get a release that has a top line with a startling number, and it’s about a consumer-friendly product, that’s automatically attractive.
He says a red flag when reading such releases is vagueness: a wide band in the figures; the counterfactual if the service wasn’t there; and whether it compares one brand with another.
In this case he says TikTok has been given leverage to push back on any political changes in the wind about, say, the level of tax that big-tech platforms should pay, a ban for under-16 year-olds, or a new digital services levy.
“What they’d be saying is not only is [TikTok] an economic tool, but it’s widely used.”
He says a marketing expert told him that TikTok could point to the fact that, for some people, it enables wealth, as well as creates it.
But Olsen takes issue with the doubt expressed over that headline number of $1.2b.
“If you take that sceptical point of view, what would be the right number? At what point are you not sceptical? Because if that’s the case then you’re going to come up with a number that’s just a thumb suck rather than any sort of analysis.
“We’ve pretty clearly laid out our methodology. No one has yet said, ‘You know what, that methodology is wrong’.”
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