Tiktok’s revenue is expected to reach $12billion in 2022, exceeding the sum of Twitter and snap From eMarketer

The following is the Tiktok’s revenue is expected to reach $12billion in 2022, exceeding the sum of Twitter and snap From eMarketer recommended by recordtrend.com. And this article belongs to the classification: Short video, network marketing.

Recently, it was reported that Tiktok, an overseas version of tiktok, was popular all over the world, which worried Mark Zuckerberg, the founder of Facebook, a social networking leader. What made him more upset was that tiktok began to cash in and share the advertising revenue of Facebook and Google.

Zhang Yiming

Tiktok’s revenue generating potential may be seen from the transformation of an ordinary user. Alyssa McKay used to work part-time in a frozen yogurt store in Portland, Oregon, and paid her college tuition on the minimum wage. The 22-year-old now earns more than $100000 a year on tiktok. In order to reach her 9million fans, fashion brand coach, streaming video giant Netflix and Amazon Prime video and other brands are willing to invest heavily. Mackay’s fans are mostly teenagers or girls close to puberty, and they don’t want to go on Facebook at all.

“Tiktok has definitely changed my life.” Mackay said that she recently moved into her first apartment with her dog.

Mackay is now a tiktok celebrity

As the most downloaded application in 2021, tiktok has more than 1billion users worldwide. Its algorithm pushes short videos that users may be interested in all the time. Although the platform has long helped creators like Mackay enter the center of the “attention economy”, the company is only now beginning to make money from this popularity.

Annual income will triple

According to the data of emarketer, a market research company, tiktok earned nearly $4billion in revenue in 2021, most of which came from advertising. But this year, tiktok’s revenue is expected to triple to $12billion, more than twitter and snap combined. Only three years ago, tiktok began to accept advertisements on this platform.

“This definitely threatens Google and Facebook,” said Peter Jan de Kroon, CEO of online advertising company entravision mediadonuts. “Tiktok began to occupy a proportion in the media budget that is more in line with its audience size.”

At present, Google and meta, the parent company of Facebook, are the two giants in the field of online advertising, and have formed a duopoly competition pattern. Their monopoly position is so strong that they have been hit by antitrust lawsuits in the United States, Britain and the European Union. Over the past two decades, these two companies have continuously consolidated their dominance in the advertising market, but tiktok and its parent company ByteDance are gradually becoming the most serious threat to this unified governance.

Tiktok is the most addictive social application in the United States

Although it has 1 billion active users for a month, the scale of tiktok is still smaller than that of meta’s two major social platforms Facebook (2.9 billion) and instagram (2 billion). But the content of tiktok has proved particularly attractive. Mobile Research Institute data AI data shows that the average American user currently spends about 29 hours a month on tiktok, more than Facebook (16 hours) and instagram (8 hours) combined. Scott Galloway, a professor at New York University’s Stern School of business, compared people’s addiction to tiktok to “Opium”.

Learn from Tiktok business model

Tiktok’s success is traceable. Since Zhang Yiming founded ByteDance a decade ago, the company has been developing algorithm driven applications to recommend appropriate video clips or news stories to users. ByteDance has launched its sister application Tiktok in China, with more than 600million users, and its business model has also been tested for a long time. ByteDance’s revenue last year is expected to reach $58billion, growing faster than any other major social network.

Tiktok began to show its profit potential in the United States and other countries. A document shows that tiktok currently charges as much as $2.6 million a day for Topview’s first super ad, about four times as much as a year ago. Topview advertisement is the first advertisement that pops up in the information flow when the user opens the application. A 30 second super bowl advertisement costs about $6.5 million, but tiktok can charge this kind of advertisement every day.

Tiktok’s advertising revenue will catch up with YouTube in 2024

ByteDance also applies its business model to areas other than advertising. At present, tiktok is expanding its subscription business to music distribution, game distribution and similar live broadcast platform twitch, and gradually enters the field of e-commerce, blurring the boundary between social media and online shopping, which may pose a challenge to Amazon. Tiktok now allows businesses to open digital stores in the UK, Indonesia, Thailand and other countries, allowing millions of users to buy products directly in applications without the participation of any traditional e-commerce.

“Tiktok is the TV of generation Z,” said Jo Cronk, President of whalar, a marketing company. “If you want your brand, products and services to get the attention of generation Z, go to tiktok directly, and there is no room for negotiation now.”

Zuckerberg’s malicious attack

Zuckerberg began to worry a little. He first attacked tiktok’s censorship system in 2019, and then told the U.S. Congress that blocking American innovation would only help Chinese companies like tiktok. He may have said this to weaken the antitrust scrutiny Facebook faced at that time.

In February this year, meta released a disastrous financial report, resulting in a market capitalization of $230billion. In the subsequent conference call, Zuckerberg mentioned tiktok’s name at least five times. He said that the first task to restore the company’s performance is to invest more resources in the short video application reels. Reels is basically a fake version of tiktok.

“This is very illustrative. Zuckerberg pointed to a competitor many times in the conference call for the first time,” said avi Ben ZVI, vice president of tinuiti, an advertising company. “The competition from tiktok has become the number one challenge he faces.”

Mark Zuckerberg

Meta is stepping up its counterattack. The company allegedly hired political advisers to carry out a campaign against tiktok in the United States, including publishing columns and letters against tiktok in regional news agencies. For example, the company that meta paid to hire spread the rumor that tiktok initiated a “teacher challenge” to the local media, although such a thing does not actually exist.

Meta executives are now trying to quickly learn from the success of tiktok and use it to revive their growth, especially among young users. Facebook and instagram are actively promoting users’ use of reels and vigorously promoting videos in the information flow, even if people do not click on the relevant content.

The road of commercialization begins with trump

Tiktok’s road to commercialization really began during the trump administration. The 45th president of the United States threatened to ban tiktok, saying it posed a security risk. At the height of the conflict in 2020, ByteDance agreed to sell a majority stake in tiktok to Oracle and Wal Mart, and promised to create 25000 jobs in the United States.

In the end, tiktok won the battle with trump and canceled the low-cost sale. With ByteDance retaining 100% ownership, tiktok’s business model began to make real progress. The leader of this work is Blake Chandlee, President of tiktok global business solutions in Texas.

Trump wanted to ban tiktok

Chandler worked at Facebook for 10 years and switched to tiktok in 2019. He believes that traditional advertising is dying out. If enterprises continue to invest in the same old TV programs or social networks, they will die.

“When people think of brands, they still think of TV. I think this is wrong,” CHANDLEY said in an interview at the Cannes International Creative Festival, which is a five-day Advertising Festival. “We should consciously subvert TV.”

CHANDLEY’s team includes engineers, data analysts and sales representatives from thousands of cities from Shanghai, Austin to Warsaw. They work with brands and online celebrities like Mackay to create challenges of crazy online communication, funny camera effects and immersive full screen videos. “Don’t advertise, do tiktok video.” This is their motto.

Advertisers are now making tiktok a necessary part of their media strategy and budget. “Two years ago, before the political wind changed, they were really in the test mode,” said Ryan Detert, CEO of the well-known marketing company influence. “Now they have stepped out of the test stage, and what we need to decide is how much money we should invest in this platform.”

Richard Henne, co-founder of ivory Ella, a clothing store, said that his company used tiktok to attract high school and generation Z girls, which was a key target customer they could not obtain from old-fashioned social networks. Although the company has invested a quarter of its social marketing budget in Facebook and instagram, he is now trying to “reduce this number as soon as possible, because they (referring to Facebook) are obviously losing control of the market”.

Apple help

With the help of apple, tiktok consolidated its advantage over meta. Last year, apple updated its iPhone operating system. When users use other software on the iPhone, they must choose whether to let apps such as Facebook track their activities. Most users will choose not to let apps track them. Zuckerberg accused this adjustment of causing the company to get into financial trouble, just like the financial performance in February.

In contrast, tiktok does not rely much on this data tracking. Its AI algorithm mainly identifies users’ preferences through activities on the platform, such as how long you have watched cat videos, skateboard videos or lip synching dances. Tiktok’s algorithm can not only match users with content, but also match them with advertisements.

Take oanh Nguyen, 31, in Los Angeles, for example. Since COVID-19 closed her hair salon, she has built a 13million fan base on tiktok and produced short comedy videos on her account “moontellthat”. In a video sponsored by her, she hurriedly washed her hair and dressed up for a large family party, only to find that her boyfriend was playing tricks on her. According to her, P & G paid them $20000 to show Pantene shampoo in a 30 second video, which was played 5million times.

Apple’s privacy adjustment makes Facebook unable to track users

This is a product placement advertisement for generation Z, which has existed for decades, such as Nike sneakers in the movie back to the future and FedEx in the desert island. Tiktok set up a $200million fund in 2020 to provide financial support to xinwanghong, and promised to expand the U.S. capital pool to $1billion in the next three years.

YouTube, instagram and snapchat followed suit. These large social networks are now experimenting with short videos on their main platforms, driving competition to white hot. At meta, engineers are rewriting Facebook and instagram algorithms to surprise and delight people with videos they don’t know they want to watch, which is the core attraction of tiktok.

These measures taken by meta are risky, but they are considered necessary. Facebook, the most profitable platform under meta, is suffering from the aging of users, and the demand of advertisers is also lower than expected. Meta believes that the lower than expected demand of advertisers is due to pressure factors such as inflation, tight supply and the war in Ukraine, but this does not seem to have much impact on tiktok, because it has just opened the money making machine. In order to fund Zuckerberg’s metauniverse, meta needs to continue to maintain strong revenue growth. Zuckerberg said this was an effort that would lose “a lot” of money in the short term.

More advertising sharing attempts

For creators like Maria Luisa van zwieten, this fierce competition is an opportunity to make a lot of money. The 29 year old Dutch role player makes tiktok videos for the brand. When business is good, he can make 10000 dollars a month. Now, she can post the same video on reels and make the same amount of money.

“My workload has decreased, but my income has doubled, so I think everything is fine.” Zwitten said.

CHANDLEY and his team continued to experiment. In May this year, tiktok began to allow top creators to receive revenue sharing from advertisements between their video content, a move that mimicked the long-term sharing project between youtube and video bloggers. Tiktok also began to sell Topview ads through clicks and impressions, instead of using just one-day bundling. The move is to provide customers who have adapted to similar advertising options on Facebook with more targeting and budget options.

Marketers and advertising agencies said that meta still provides better products in media shopping, and this excellent and old advertising implantation can be directly transformed into purchase or application installation. Fabian ouwehand, the founder of “many creators” in Munich, said that many companies simply did not accept the idea of using tiktok instead of advertising.

“I’m still communicating with big companies in this regard, and they say, ‘yes, but we want to create something similar to TV ads.’ then the tiktok team is always frustrated,” ovihand said, “because many people still don’t understand how to make tiktok videos.” After the German home shopping network HSE acquired his company, he is now the head of the company’s social e-commerce department.

The next major breakthrough: E-commerce

Zhang Yiming has said that the integration of entertainment and shopping is his “next major breakthrough”. In 2020, in the first year Tiktok provided shopping services, it completed $26billion of e-commerce transactions. In the past 12 months, the scale of this business has tripled. The idea of Tiktok is to take care of as many purchase steps as possible through the application of internal store, customer support and built-in payment function.

Tiktok has cooperated with Shopify, a Canadian e-commerce platform, to allow businesses to embed their online stores into the videos on the platform. These transactions are handled by third-party websites, similar to Facebook stores. But recently, tiktok has further imitated Tiktok. Since mid-2021, it has launched in app stores in the UK, Indonesia, Singapore, Thailand and other countries to provide a smoother shopping experience.

“The shopping process is very, very simple, just like one click.” Said fauza istighfareva, the Jakarta based manager of leverate media, a digital agency.

According to people familiar with the matter, tiktok plans to increase its total e-commerce commodity trading volume to $2billion this year and to $23billion by 2023. Among them, Indonesia is one of the most populous markets and will account for a large part of this goal.

“In terms of commercialization, Tiktok is usually two to three years ahead of tiktok, including in the field of e-commerce,” said Zheng Yi, a partner of China Venture Capital Corporation in the field of investment technology. He added that tiktok’s entry into e-commerce “may be a major game changer”.

All of these make ByteDance expected to complete a sensational initial public offering (IPO) transaction, which has been maintained until about a year ago. ByteDance was valued at more than $350billion in private transactions last year, surpassing SpaceX and stripe to become the world’s most valuable start-up company. However, this bright future has been hit hard by the sharp decline in global technology stocks and regulatory measures.

Us risk

Politics is still a huge risk in the United States. Although the Biden administration gave up its efforts to ban tiktok, it still regarded it as a potential security threat to the Chinese hawks. Buzzfeed, a news aggregation website, reported that employees of ByteDance Chinese company also visited the non-public data of tiktok users in the United States many times in January this year. On the same day that this report was published, tiktok announced that “all U.S. user traffic” had been transferred to Oracle servers in Texas.

ByteDance has now shifted more attention to tiktok. Last year, ByteDance recruited Zhou Shouzi from Xiaomi group and promoted him to CEO of tiktok. In addition, other key executives who transferred from ByteDance to tiktok include Zhu Wenjia, the coding wizard behind the Tiktok algorithm, and Kang Zeyu, the head of Tiktok live business. Some twitter said that ByteDance might consider stripping tiktok and building it into a non Chinese enterprise, despite the huge political risks.

The netizens on tiktok basically don’t care about this. Creators like McKay are more worried about making a suitable short video popular than who gives orders in Beijing or Washington. After graduating this summer, she began to try acting and starred in a film called cake (town), which is “Romeo and Juliet in the modern rust belt”.

“I will continue to make short videos, even if my acting career starts to take off,” Mackay said. “I just like to share my life, so I will do it anyway.”

More reading: apptopia: in Q4 2019, the revenue of tiktok’s in app purchase increased by more than 300%. Sensor tower: in November 2020, Tiktok and tiktok ranked first in the global popular mobile application revenue list. Sensor tower: in August 2020, the global revenue of Tiktok and tiktok exceeded US $88.1 million, 6.3 times that of last August. Sensor tower: in 2019, the revenue of Tiktok’s overseas version tiktok reached US $177 million. Sensor tower: in August 2020, the global mobile application revenue ranked first. Tiktok’s revenue ranked first. Emarketer : from October 2017 to October 2018, tiktok users’ consumption expenditure increased by 275% emarketer: it is estimated that tiktok users in the United States will reach 45.4 million in 2020, with a year-on-year increase of 21.9% tiktok Spanish market from 2021 to 2022 tiktok: 104million videos were deleted in the first half of 2020 transparency Report. Research shows that tiktok’s sex education information shows a gap with traditional education. Ofcom: about 16% of British children aged three or four watch tiktok content Tiktok’s advertising revenue will reach nearly $12billion in 2022 and is expected to catch up with YouTube qustodio in 2024: European and American children spend almost the same time in tiktok as YouTube truepoublic: most American users are unwilling to switch to tiktok’s competitor’s application sensor tower: in Q1 2022, tiktok’s downloads have exceeded 175million times, becoming the world’s highest downloaded application

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