TikTok Revenue Model | How TikTok Makes Money
How Does TikTok Work and What Is It?
TikTok is a popular social networking app that allows users to make, watch, and share 15-second films from their cell phones. The app is noted for its high levels of engagement, which include anything from addictive short movies paired to background music to sound effects, filters, and personalised stickers. It's also possible to have split-screen video duets with other people in various locations.
To begin with, TikTok has the distinction of being the world's fastest-growing social media network. The app garnered over 3 billion downloads in less than four years after its inception in 2016 and accounted for one-third of all social media users. To put TikTok's quick growth into context, it took Facebook and Instagram nearly a decade to reach the same level of popularity.
Finally, TikTok's virality compelled Instagram to introduce Reels and YouTube to launch Short in order to keep up with the short video frenzy. Facebook, the world's most popular social media platform, even developed its own short-video app, Lasso, in November 2018 to compete with TikTok, but it was quickly shut down after failing to match TikTok's success.
In this blog, we'll go over TikTok's early days, how it rose through the ranks to write an extraordinary growth story, and tie it up by talking about how TikTok generates money at the end.
The Story of TikTok's Inception and Expansion
Today, we all know TikTok as a short-video app popular among teenagers all over the world, but it didn't start out that way. It all started with the term Douyin, which was introduced to the Chinese market by Beijing-based startup ByteDance in 2016.
ByteDance, a Chinese firm that owns numerous other popular networking apps, was created in 2012 by CEO Zhang Yiming, a former Microsoft engineer and serial entrepreneur, and is similar to Facebook.
Douyin reached 100 million members just a year after its inception, and in 2017, it launched iOS and Android versions in international countries under the new name TikTok.
What is the revenue model of TikTok?
You've probably heard of TikTok, a popular video-sharing app. With millions of people watching short-form videos for entertainment, it is one of the fastest-growing social media networks.
Because the software is primarily focused on generating an interactive experience for consumers, many individuals are uncertain how the platform earns money. Let's take a closer look at this enigmatic programme that millions of millennials adore.
TikTok's Business Model
If you're curious about how TikTok makes money while being a free app, here are a few methods.
Ads on TikTok
TikTok For Business, which debuted in June 2020, is a revenue stream for TikTok. TikTok, like YouTube, allows brands to pay to promote their products and services through paid commercials.In-feed videos, brand takeovers, hashtag challenges, and branded effects are just a few of the features TikTok For Business has to offer to assist businesses boost their marketing strategy. Here are some examples of these and other features:
Short-form videos that display in between consumers' feeds as they browse through the For You page are known as in-feed video advertising. These adverts are similar to the ones that display in Instagram Stories.
Brand takeover ads: If you've ever opened TikTok and been greeted with an ad right away, you've experienced a brand takeover ad. Advertisers can utilise this form of ad to get a message to their target audience immediately away.
Top-view advertisements: Unlike brand takeover ads, which display when a user first opens the app, top-view ads appear after the user has already started using it and can last up to 60 seconds.
Branded hashtag challenges: Brands build their own hashtag challenge and pay TikTok to have their tag appear on people's discovery pages in a branded hashtag challenge. Users on TikTok can take part in the challenge by posting with a specified hashtag. It's entertaining, but it also raises brand awareness.
Purchases made within the app
TikTok, like many other social media networks, makes money from in-app purchases. The software offers virtual coins ranging in value from 99 cents to $99.99, with prices ranging from 99 cents to $99.99.
TikTok coins are an in-app currency that may be purchased by anyone who is at least 18 years old. Users can use the coins to buy virtual presents for other users as a way of expressing gratitude for their work.
Advertise on TikTok.
Like Facebook, TikTok has tailored advertising for each user, making it the most profitable social media platform. Takeover, Hashtag, and Effects are examples of TikTok Brands. When a user launches the TikTok app, branded takeover advertising appears on the screen. TikTok View Ads, which are similar to it, are ads that appear in the feed rather than on the screen. The TikTok Branded Hashtag Ads show on the discovery page on a video introducing or demonstrating the product, challenging people to utilise the hashtag in a video. TikTok Branded Effects Ads are quite popular and widely used. It's a 10-day filter that allows you to shoot images with brand frames or stickers.
TikTok Coins are a type of currency used on TikTok.
When a TikToker (a TikTok user who creates content) obtains 1,000 followers, they can receive TikTok Coins as presents from people in their live broadcasts. To receive these coins, TikTokers must first exchange them for actual money via the app, after which TikTok will deduct a commission.
E-Commerce Providers
TikTok is focusing on ways to integrate e-commerce into its platform, with selling tools that make available shopping events or even ways to display products within a live stream, which is considered new and fresh. TikTok earns a percentage on each sale.
