TikTok has been in the news this week, after the Indian government banned the Chinese app, along with many others, over data security concerns. While it is a setback for the company, it shows their global ambitions and the reach they have built by now—a reach that marketers may still want to pay attention to.
Few tech start-ups have skyrocketed into the mainstream global marketplace as quickly as ByteDance, the Beijing-based creator of TikTok. The popular video app has been downloaded over 2 billion times by users in over 150 countries. With people stuck at home amid the global pandemic, they have increasingly turned to TikTok as a means of distraction and entertainment. In fact, the app was downloaded some 315 million times in the first quarter of 2020.
Global brands have taken notice of TikTok’s rising popularity and have sought additional marketing opportunities through the platform. In 2020, TikTok will earn an estimated $500 million from the US market alone—indicating the interest of foreign markets in their platform. In response, TikTok has continued to expand its advertising offerings to give brands more choices for how they reach their customers. Most recently, the company introduced TikTok for Business, a platform that will streamline all current and future brand marketing solutions.
Before we dive into how important TikTok is in the global marketplace, let’s look at its origins.
TikTok: a brief history
ByteDance was founded in China in 2012 by Zhang Yiming. In 2016, it launched Douyin for the Chinese market. Douyin is like TikTok but operates on a different server and has content restrictions to comply with Chinese censorship regulations. Within a year of its launch, Douyin had 100 million users and 1 billion video views each day.
In 2017, TikTok was launched for both iOS and Android in most markets outside of China. The app was not available in the US, however, until 2018, following ByteDance’s acquisition of Musical.ly for some $1 billion. Musical.ly was a social media video platform where users could create short music and comedy videos. The company was based out of Shanghai but had an office in California. Acquiring the platform allowed TikTok to leverage Musical.ly’s US user base. Following the merger, all existing user accounts were consolidated into the new TikTok app.
In May of 2020, Disney’s top streaming executive, Kevin Mayer, became the CEO of TikTok. Mayer also serves as the Chief Operating Officer of ByteDance, while Zhang Yiming continues to serve as its CEO. Mayer worked at Disney for over 20 years and played an instrumental part in the acquisitions of Pixar, Marvel, Lucasfilm and 20th Century Fox. Most recently, he oversaw the launch of Disney Plus, the streaming service that CEO Bob Iger has described as the “most important product the company has launched in my tenure.”
Therefore, it’s likely that Mayer’s substantial experience can further improve TikTok’s presence among the top entertainment platforms. Moreover, his aggressive leadership style implies that TikTok will quickly add to its content offerings.
ByteDance’s valuation has risen to over $100 billion, making it one of the most valuable privately held companies in the world.
Global outlook and growth
ByteDance has a large presence in the Chinese market, with Douyin and TikTok in other global markets. Yet, much of TikTok’s revenue comes from just a handful of countries. These include India, Brazil, Germany and the United States. In fact, according to some estimates, TikTok’s revenue stream from the United States accounts for approximately 42% of its total revenue, while India led the way with the largest number of users (prior to being banned in late June 2020).
Developing a strong presence in other markets will be key to TikTok’s future growth. The platform faces stiff competition from the likes of YouTube, Instagram, Facebook and Google, among others. To compare:
- YouTube has over 2 billion active monthly users, has localized to 91 countries and is accessible in over 80 different languages. Its top markets are the US, India, Japan, Russia and China.
- Instagram is also available throughout much of the world. Its largest markets other than the US and India are Brazil, Indonesia, Russia, Turkey, Japan, Mexico and the United Kingdom.
- Facebook is available in over 100 languages. US and Canadian users account for just 10% of Facebook’s total user base; Asian, European and African countries make up a significant portion of the remaining 90%.
One key market for TikTok is Africa. According to Quartz Africa, TikTok is making a major push into Kenya, Nigeria and South Africa, snapping up content creators from YouTube and Instagram in advance of its full Africa rollout. Latin American countries, like Mexico, will also be key markets. In fact, Facebook has sought to challenge TikTok’s growth in Mexico by launching an app called Lasso. TikTok will also benefit from continued growth in Asian countries outside of China, as well as some important European markets.
TikTok for Business and TikTok ad formats
On June 25th, TikTok announced the launch of TikTok for Business, a new streamlined portal for ad management. In the past, brands would have to communicate with a representative and sign an insertion order to run ads. The lack of a self-service platform left brands without any clear direction as to what targeting and creative ad types were available. With TikTok for Business, brands can now manage all their ads through a single interface.
The new platform incorporates all five types of TikTok ads:
- TopView ads, which are displayed for between 3 and 60 seconds when the app is opened.
- Brand Takeovers, 3-to-5-second video or image ads that work by replacing the user post that is displayed when the app is opened.
- In-Feed Videos, full-screen ads that appear in the “For You” section of the app and run for up to 60 seconds.
- Hashtag Challenges, in which brands create a hashtag to promote a product or cause, and users can create and post videos in response. A feature called Hashtag Plus adds shopping features.
- Branded Effects ads, allowing brands to insert themselves directly into content through 2D, 3D or AR. The AR effect is called “Brand Scan.”
TikTok also launched a new e-learning centre alongside the release of TikTok for Business. This tool will help educate marketers about TikTok and its ad features, as well as assist them with launching successful ad campaigns.
And lastly, TikTok announced that it is testing its new Creator Marketplace platform in several markets. This platform has been under development since last year and will allow brands to search for and collaborate with top content creators on paid brand campaigns.
Lottie Moor, a key member of the TikTok Creator Partnership team, recently appeared on LIVE with TikTok and gave an informative overview of TikTok’s collaboration with content creators. You can view that episode here.
With the launch of TikTok for Business, the ongoing development of the Creator Marketplace and the rollout of multiple ad formats, TikTok is quickly becoming a major marketing platform.
TikTok’s explosion in popularity is changing the ways that users interact with and view content. It has also created a new and increasingly important channel that brands can use to connect with users on a global scale. While the app is available in over 150 markets and more than 75 languages, the majority of TikTok’s revenue comes from just a handful of countries. TikTok’s ability to expand in additional markets will be something to keep an eye on by brands looking to increase their global presence through social media.