- Unless you've been living under a rock
for the past several years,
you've probably heard about TikTok.
There's a high chance that most of you watching this video
have the app downloaded and still running on your phone.
TikTok is at the time of filming this video,
the most downloaded app of 2021.
With YouTube, Disney Plus and Tinder
making up the following spots,
TikTok has seen a 67% increase in revenue this year
up to $2 billion.
But how did a little Chinese video sharing app
get so popular?
How does it succeed where others have failed?
This is "Business Unlocked".
The beginning.
Before we can talk about TikTok,
we have to talk about its parent company ByteDance.
ByteDance started its days in a small apartment
in Zhongguancun, the Silicon Valley of China.
It's founder, Zhang Yiming,
had initially started the company
as a real estate search engine
but quickly pivoted to becoming a technology company
focused on data collection and algorithmic classification.
This focus on technology and data
would pave the way for all of ByteDance's future endeavors.
Launching their first app in 2012,
a video sharing app called Neihan Duanzi
ByteDance saw almost immediate success
with the app topping out at over 200 million users.
This was quickly followed by Toutiao,
a news app that used the same data centric approach
to showing users content based on data
that had been aggregated by their time on app,
sound familiar?
Toutiao also saw instant success
with the app receiving 1 million daily users
just four months after it launched.
This success has only continued,
and today Toutiao has an average
of 1.3 billion articles read
and 1 billion videos watched every day.
But with the success of ByteDance at home
it came time for the company to set its sites abroad.
The rise of TikTok.
Riding on the success of Neihan Duanzi and Toutiao,
ByteDance began it's expansion
into the western market to compete with apps
such as Vine and Snapchat.
Known for their short videos and viral content,
ByteDance saw a great opportunity to inject itself
into the global market.
In an interview with 36kr.com,
Zhang Yiming said, "China is home to only one-fifth
of internet users globally.
If we don't expand on a global scale,
we are bound to lose to peers eyeing the four-fifths.
So going global is a must."
Launching in 2016, Douyin,
a Chinese-only version of TikTok
saw a user base of over 100 million users
in just under a year,
and with those users viewing
over 1 billion videos every day.
When launched in 2017,
TikTok saw an almost immediate merger
with the app Musical.ly,
which at this point consisted mainly of 13 to 18 year olds
lip syncing and dancing the popular songs,
to the tune of almost $1 billion.
This expanded TikTok's user base
by almost 200 million accounts
infusing the new app with a wealth
of active and interested users.
Since then TikTok's user base has only continued to grow
with over 1 billion daily active users,
with Douyin having almost 600 million daily active users.
This makes TikTok and Douyin
the fourth largest social media app by numbers of users.
A feed meant for you.
Many social media apps advertise the idea
of a feed catered to their users.
However, none have come close
to TikTok's almost-addictive For You page.
TikTok's artificial intelligence
uses location, hashtags,
accounts you follow, videos you watch,
and more to cater to each user's specific wants.
However, TikTok's feed layout is what makes it possible
for users to sink more than 68 billion hours, as of 2020,
into watching content.
For example, other popular streaming services, like Netflix,
creates a page of suggestions
based on video watching habits.
TikTok, ironically, removes the aspect of choice
from their equation.
TikTok's For You page endlessly scrolls
from one short video to the next.
Without the choice of what to watch,
users sink more hours into TikTok than Netflix,
simply because they don't have to commit on what to watch,
they can simply scroll to the next thing.
All this happens while feeding the algorithm
more and more data about what you want to watch.
While companies like Netflix do use algorithms and AI
to help predict what a user might want to watch,
the sheer volume of data
that TikTok has access to from 15 second videos
allows them to be more and more accurate,
and therefore hold more and more watch time.
More users equals more money.
Everyone uses TikTok
from young grade schoolers to teens,
to parents, to well-known celebrities, to brands.
And while for some,
their success on the platform has been fleeting,
a viral video here, a short lived series of videos there,
TikTok has produced a number of TikTokers.
Like Viners and YouTubers before,
its own self made celebrities.
These include the likes of Charli and Dixie D'Amelio,
Addison Rae, Khaby Lame, and Bella Poarch.
These TikTokers have been able to transition
from online celebrity to offline celebrity
easier than previous generations of internet influencers,
with the D'Amelio's having a TV show,
Bella Poarch having a Billboard top 200 song,
and Addison Rae starring in the Netflix movie,
"He's All That".
TikTok is part of the internet culture now.
With a massive generation spanning audience,
brands have a high chance of getting access
to a wide market of people.
58% of users say that they feel more connected to a brand
that uses the app.
62% say that they're more willing to learn about the brand
if they see them on TikTok.
58% say they are more likely
to share and talk about that brand.
This willingness to interact with brands and products
have led to huge fads and trends
where an item or items will sell out seemingly overnight
creating huge profits for a company
with essentially zero advertising budget.
That being said,
TikTok also has become an advertiser's gold mine
with an ad buy on TikTok costing anywhere
from 50,000 to $120,000 per ad,
TikTok has been able to capitalize
where other platforms have failed.
Anything from the audience,
age, format industry, and more is available to target
and determines the cost of ad buy.
And while strong profits are good in the short term,
the question is if TikTok has the ability to persevere
in the long term.
TikTok's future.
TikTok is still a very young company.
It has climbed to the top of the chart since 2017
and, as of late, has kept a solid grip on its crown.
More and more apps are attempting to mimic TikTok's model
to attempt to gain some of its audience share,
but none have experienced the same growth or popularity.
TikTok's business model
rests on becoming a source of endless entertainment.
The endless scroll function,
the ability of anyone to make content,
and a personal feed catered to the individual,
all combine to make a platform
that can capture an audience better
than almost any other platform that exists today.
Add to that advertisements that integrate so seamlessly
that they just seem to a disappear into the feed
and keep users engaged.
Others will attempt to recreate, rebrand,
and redo TikTok's platform,
but none have gotten close to the same success.
It might be a few more years
before someone finds a way to loosen TikTok's grasp,
but until then,
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and we'll see you in the next video.