TikTok – Undervalued or Overhyped?

TikTok

You’ve probably heard of TikTok, and you might even be sick of hearing about it. The thing is, while many people are more than willing to say that they’re sure that it’s the next big thing and that it’s “the new Snapchat” and so on, very few can explain what it is, how it works, and what it’s appeal is. 

So that’s going to be the goal of this quick article. We’ll make a quick introduction of the app, why it’s different, and whether or not it is the next big thing in mobile digital advertising.

In a rush? Skip to the tl;dr here!

Contents
What is TikTok
What makes it different
Who uses it 
Some Statistics
Is it profitable
Advertising on TikTok
It’s not just the West
Conclusion 

What is TikTok

So what exactly is TikTok? First released in September 2017 in China, TikTok is a social media app that attempted, successfully, to bring the “short form” social media format pioneered by Twitter to video. 

Where Twitter purposefully limited the number of characters that one could use in a post (originally 90 now 180), TikTok limits the length of videos that one can make. For TikTok, this limit is 15 seconds. 

The reasoning behind this decision is the same as it was for Twitter. By limiting the length of the posts, one can consume a large, very diverse amount of content in a very short period of time. This keeps the user engaged even if his attention span is short. 

Which it is. Not only is it short, but it’s getting shorter with every passing year. This isn’t some unsupported hypothesis; research shows that it is a fact. Read all about it here.

Many businesses have tried to create the twitter of video (though with a higher profit margin), but in the end, TikTok came out on top. And it made a huge splash. 

After an initial launch in China, it was then launched abroad and shortly after became an international hit.

At one point in 2018, it was the most downloaded app on the iOS App Store, perhaps the most significant indicator of success for a mobile App. 

But what gives?

What makes it different

So what exactly makes TikTok such a success? What makes it stand out from the thousands of other short video apps that attempted to do the exact same thing?

Well, TikTok managed to find a winning formula in terms of video length, interface, and, most importantly, content production. 

Rather than just giving the user access to a few filters, it allows him instead to speed videos up, slow them down, and easily perform a number of other editing tasks. All of which combine to make a unique video experience, rather than just the same video experience but shorter. 

One of TikTok’s main selling points and, indeed, what the app has become known for, is the lip-syncing feature that allows users to make unique lip-syncing videos. Many of which have gone viral. 

Of course, as the app has become more popular, features have been continuously added, giving users new ways to stay engaged with and create content.

And it’s precisely this user-generated content that has been key to the app’s popularity. 

Who uses it 

When it comes to marketing, the most important and sought-after demographic tends to be the young – especially the 18-24 segment. Advertising even to teenagers is often a primary goal for many advertisers. 

This is largely because consumer habits formed in one’s childhood and teenage years often continue into adulthood. 

One can see this trend in any given market. Look at Star Wars and Pokémon, for example. The people that were swept up in the initial hype and culture of these franchises have often remained avid consumers of the content far into the future. 

They are a captured audience, in a way.

Those that grew up with Pokémon Silver, Gold, and Crystal in the early 2000s could be found almost 20 years later playing Pokémon Go on they’re smartphones. 

Further, there is also the “Kidult” group of consumers that simply don’t grow up, so to speak. Their interests and consuming patterns that form in childhood continue with minimal changes into adulthood. 

Lastly, userbases often age with the platform. While Facebook was once the domain of the young, today it’s not only losing users, but those that continue using it are increasingly old. (check out Facebook user age statistics at Statistica).

In order to keep reaching young users, they have to keep jumping to the latest and most excellent apps. From Facebook to Tumblr to Twitter to Snapchat.

Right now, it is TikTok that has enchanted the youngest generations of smartphone users. From India to China to the United States, TikTok has become ubiquitous. 

Some Statistics

According to Influencer Marketing Hub, they have 800 Million installs as of December 2019. And according to Oberlo’s excellent article on TikTok statistics, the app has around 500 million active users (2019). That is an enormous number of engaged customers making, sharing, and consuming content. 

Now, remember that TikTok is owned by a Chinese company (ByteDance). And while many are calling TikTok China’s first international “Unicorn,” it is essential to remember that the company is, well, based in China. 

This fact is reflected in its user statistics. The app itself has over 150 million active users in China, making up a significant plurality of its userbase. 

For advertisers, this gives them a leg up when it comes to advertising to the youth of the rising global economic superpower that it China. 

What’s even more critical, however, is the age distribution of TikTok’s users. 

As discussed above, today’s advertisers are always targeting youth. Whereas in the past, they were content to target adults and working people because it was, indeed, this demographic that spent the most money and had the most to spend, nowadays advertisers want to target people who will have money. 

They want their shot at forming a lifelong consumer. 

And the youth can be found at TikTok 

According to Oberlo, 41% of TikTok users are between the ages of 16 and 24. That is millions and millions of users in the world’s most sought after advertising demographic. 

It’s TikTok’s ability to reach the consumers of tomorrow that makes it so valuable today. 

In Q1 2019, TikTok enjoyed over 33 million downloads. 2019 has been a major year of growth for TikTok, and its parent corporation and 2020 is shaping up well as well. 

That said, TikTok will need to convert its momentum into some kind of staying power. Otherwise, it will be just another flash-in-the-pan app. 

But that leads to the big question:

Is it making money?

How is ByteDance, TikTok’s parent company, doing financially? Is this another Twitter, where the service itself is useful and ubiquitous but seemingly unable to turn a profit? 

The short answer is that it doesn’t look that way. According to CNBC, the company racked up revenues of 7 to 8.4 billion USD in the first half of 2019. 

That’s a lot of money, and it represents a significant breakthrough for a Chinese startup. Generally, Chinese companies do well domestically, but they struggle to compete with western services in the West. 

Not only is the company posting billions in revenue, but according to CNBC, they also turned a profit in June. This immediately differentiates the company from the likes of Twitter et al. who have been consistently losing money for years. 

But where is this giant source of revenue originating? Well, if you’re reading this blog, the answer should be obvious.

Advertising. 

Advertising on TikTok

Advertising on TikTok provides a wealth of opportunity for the modern digital advertiser. Namely, he can reach all of the demographics that we discussed earlier. 

TikTok gives one access to young consumers in the two of the world’s wealthiest and most important markets: The United States and China. 

There simply aren’t many unified channels for advertising to such a large swath of both American and Chinese youth. 

This is TikTok’s moat. This is its strategic advantage. 

So what do TikTok ads look like? 

Check out some examples of TikTok ads here. One thing you’ll notice is that the ads are pretty specific to the app and its audience. This is not somewhere that you’re going to just be able to reuse old copy and ads – except perhaps short YouTube content. 

It’s not just the West

While TikTok has won over the hyper-connected youth of the wealthy West, it has also grown by leaps and bounds not only in China, but also in up-and-coming India. While India might not have lived up to the “Superpower by 2020” hype, it does have two important things: a lot of young people and steadily increasing prosperity. 

It also has a TON of TikTok users – literally hundreds of millions. 300 million to be exact.

Its massive Indian userbase, plus its domination in China and its huge presence in the United States, makes TikTok one of the most important digital advertising platforms in the world. By far.

Conclusion 

TikTok has a lot of potential and, right now, seems to have a lot of momentum behind it. However, like its predecessors, it could burn bright and quick. Few social apps have been able to demonstrate real and sustainable staying power. But some have, and TikTok could be one of them.

At any rate, TikTok is currently on top of the world and dominating several demographics that are crucial to advertisers – that is to say, young people in wealthy parts of the world. 

So at least for the time being, advertising on TikTok could be a very profitable and worthwhile enterprise for businesses that are working on getting their ads in front of a younger, more connected audience.

tl;dr

TikTok is a mobile video app available on Apple’s App Store and Google’s Play Store. The app allows users to record, edit, and share 15-second videos. Since its launch in 2017, it has become one of the most downloaded and used mobile apps on the market.

Its userbase consists largely of young people in China, India, the United States, and elsewhere in the West. This diverse, but young audience makes the app an ideal way of reaching the young consumers of tomorrow.


Mobinner is a High-Performance Demand-Side Platform and Ad Network. Since 2017, we have been helping clients build brands, acquire users, and drive conversions. See how Mobinner can help you reach your goal!



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