Kiichiro Sato / AP / Shutterstock / Kiichiro Sato / AP / Shutterstock
You’ve probably heard of the popular TikTok video sharing app. It is one of the fastest growing social media platforms, bringing entertainment to millions of users in short form videos.
With the app more focused on creating an interactive experience for users, it is largely unclear to many how the platform makes money. Let’s take a look at what exactly this mysterious app is that millions among the younger generations seem to be unable to get enough of.
What is TikTok?
One of the world’s most popular social media apps, TikTok, allows users to create, view, and share 15-second videos using a smartphone. The app has a high level of engagement, from addicting short videos to background music, to sound effects, filters, and custom stickers. Users can also create split screen video duets with other users in different locations.
TikTok was launched in 2016 by the world’s most valuable startup ByteDance and has been one of the social media giants such as Facebook, Instagram and Snapchat ever since. According to Sensor Tower, over 315 million Chinese-owned social apps were installed on Google Play and the App Store in the first quarter of 2020. TikTok is currently available in 150 markets and 75 languages.
How TikTok makes money
If you’re wondering how TikTok is generating revenue despite its free app, here are some ways the video sharing app is making money.
TikTok ads
TikTok For Business, launched in June 2020, is a TikTok revenue opportunity. Like YouTube, TikTok offers paid advertising for brands to promote their products and services. Brands can use TikTok For Business to enhance their marketing solutions through features like in-feed videos, brand takeovers, hashtag challenges, and brand effects. Here’s a look at these and other features:
- In-feed video ads: In-feed ads are short videos that appear between users’ feeds as they scroll through the For You page. These ads are usually the same as those in Instagram Stories.
- Branding Adoption Ads: If you’ve ever opened TikTok and immediately received an ad, it is a Branded Adoption Ad. Brands can use this type of ad to get a message across to their target audience instantly.
- Top view ads: In contrast to brand takeover ads, which are displayed when a user opens the app, top view ads are displayed as soon as the user is already using the app and can be displayed for up to 60 seconds.
- Branded Hashtag Challenges: In a branded hashtag challenge, brands create their own hashtag challenge and pay TikTok so their tag appears on users’ discovery pages. TikTok users can take part in the challenge and then post with a specific hashtag. It’s fun, but it also creates brand awareness.
- Branded Effects: TikTok also offers users custom branded stickers, augmented reality filters, and lenses to add to their videos. Each brand effect can go live for up to 10 days. This is enough for users to be able to interact with a brand.
When brands buy these ads to reach their global audience, TikTok makes money.
In-app purchases
Like many other social media platforms, TikTok generates revenue through in-app purchases. The app offers 100 to 10,000 virtual coins in the price range from 99 cents to $ 99.99.
TikTok coins are an in-app currency that people can buy as long as they are at least 18 years old. Users can use the coins to buy virtual gifts for other users to show appreciation for their content.
TikTok’s earnings
With TikTok still in its infancy, the company didn’t reveal much about its monetization strategy. However, TikTok is already generating revenue through in-app purchases and TikTok For Business, which brands use to engage and engage with audiences around the world.
Good to know
According to a report from Sensor Tower, TikTok recorded more than $ 110 million in user spend between February 2020 and February 2021. The report also found that around 79% of TikTok’s revenue came from Douyin, China, while 8% came from the US and 3% from Turkey.
Zhang Yiming, the founder and CEO of ByteDance, has net worth of $ 35.7 billion as of April 23, according to Forbes.
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About the author
Lydia Kibet has been writing professionally since 2017. Her passion for helping brands in all aspects of content marketing is reflected in the industry coverage she offers – personal finance, investments, and healthcare. Her work has been featured in The Motley Fool, Investor Junkie, Green Market Report, and Medical News Today. When she’s not writing, she’s either reading, playing the guitar, or catching up with nature. Follow her on Twitter.
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