Short-video app TikTok earned $200 million-to-$300 million in global advertising in 2019 and hopes to generate $500 million this year in the U.S. alone, according to The Information.
Parent company ByteDance, valued at $75 billion, already has a major presence in Asia, so the U.S. sales goal indicates “absolutely monster growth for the still-nascent social platform.”
A Chinese-owned social app, TikTok is following Silicon Valley in its monetization plan, with a self-serve ad platform launched in 2020, integration with ad tech vendors and a new site-tracking pixel, Ad Exchanger reported.
In the first quarter of 2020, TikTok broke a record for the most downloads ever of any app in a single quarter.
“ByteDance’s rolodex of social platforms are wildly popular, but they’ve seen even greater growth this year as people stay home more and practice social distancing,” Business Insider reported.
ByteDance generated $5.6 billion in revenue for the first quarter of 2020, Reuters reported — a 130-percent revenue growth year-over-year for the company which is now reportedly worth $100 billion-plus.
TikTok’s new mobile video experience has left YouTube and Facebook scrambling to keep up, according to The Information. Its plans to attract more ad dollars are expanding access to a self-service platform for ad buyers in the U.S. that would make it easier for marketers to buy ads and tailor campaigns to specific groups on TikTok, as they can do on Facebook and Snap.
TikTok now has 50 million daily active users in the U.S. — about five times more than last year, according to a person familiar with the matter. That compares with 88 million for Snapchat, 33 million for Twitter and 195 million for Facebook as of March 31. Those companies make TikTok’s ad revenue look small, The Information reported. Instagram reportedly generated about $20 billion in revenue in 2019, Twitter had $2.5 billion and Snap had $1.7 billion.
Building up its U.S. business team, TikTok hired heavily from tech and social media companies in 2019 including Facebook, Spotify and Snap. Its new CEO is former Disney executive Kevin Mayer. It hired 12-year Facebook veteran Blake Chandlee in 2019 as vice president of global business strategy.
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In the U.S., one potential challenge for TikTok in building its ad business is that much of its audience is younger than 25, including teenagers too young to interest most advertisers. Snapchat, which claims it reaches 90-percent of all 13- to 24-year-olds in the U.S., had a similar problem in its early years.
TikTok is preparing for an ad war, Anthony Svirskis reported for Forbes.
So far, TikTok’s ad prices are lower than Facebook’s, at least in India, where TikTok is pushing hard in advertising. The founder of a social network app in India said it costs him about a third of the price to download his app on TikTok than through an ad on Facebook. If TikTok’s cost remains low, the founder said his company would increase the TikTok ad budget to 20 percent.
