For the uninitiated TikTok (formerly known as musical.ly) allows users to share 5-60 second long videos.
Launched in November 2017, it was the most downloaded app in January 2020 and is now the sixth-largest social media network in the world by monthly active users.
What are people doing on TikTok?
Over half of the active users on TikTok are 13-24 years old who spend an astounding 46 minutes per day on the app. Far more than Instagram or Facebook.
TikTok gives you many reasons to stay on the platform including live streaming, video edition, lipsync, duets and much more.
Because it has so many younger active users, TikTok recently added Safety Mode and Screen Time Management to help parents keep their teens safe on the app.
ByteDance, the company that owns TikTok, describe their app as a mobile-first product that is powered by machine learning.
Nothing new there, right? But the app’s enviable engagement has more to do with its algorithm than anything else.
What’s so special about TikTok’s algorithm?
Every social media network has its own flavour of machine learning algorithms designed to make us stick around as long as possible. TikTok is particularly good at it.
So good, in fact, that Facebook has created a rival clone app called Lasso that’s being tested in markets where TikTok isn’t big yet.
When you log into TikTok for the first time, your video feed starts playing the second you open the app. There’s no need for you to even set preferences to start using the app.
The algorithm does that and more for you by learning your preferences and delivering recommendations based on your behaviour.
How do TikTok and its content creators make money?
TikTok has already started several viral trends and launched the careers of many content creators. As an app, TikTok has a commercial model that’s built on rewarding creators in real-world currency by using an elaborate in-game system of Coins and Diamonds.
Users can purchase Coins that can be used for buying virtual goods. Diamonds are earned by content creators and can be redeemed for cash.
TikTok’s revenue from in-app purchases grew to $50 million in Q4 2019. That’s pocket change as far as social media apps go, but at 310% YoY increase in revenue, TikTok is set to top the $100 million mark in 2020.
What you need to know as an advertiser
Let me tell you, as an elder millennial I can’t stand TikTok. But as a marketer, I feel that we need to keep a close eye on this one.
TikTok has the highest number of users in China, followed by India and Brazil. It’s relatively new in the US and UK but has a rapidly growing user base. TikTok even recently launched a TV ad in the UK.
Advertising on TikTok is very similar to Facebook and Instagram. The app offers 4 different types of ads including:
- Brand Takeover
- In-feed Native Video
- Hashtag challenge
- Branded lense
The average CPM on TikTok is $10 with a minimum ad-spend of $500, which doesn’t necessarily make it an attractive channel for smaller, more frugal businesses.
That’s not to say that TikTok can’t be an effective channel for the right kind of brand and the right kind of advertising.
TikTok’s users aren’t just familiar with the brands’ advertising, they’re actually more willing to purchase from brands that are supported by the community around them.