The TikTok Business model’s primary idea was fast content, with 15 seconds of homemade videos, with dancing, lip-sync, and make-up challenges. This new concept of video made Tik Tok a popular influence that in a few years, became a 50-billion-worth-startup.
A brief history of TikTok
TikTok was launched by ByteDance, a company founded by Zhang Yiming, a former software engineer in 2016.
The popularity of this social media increased in 2018, when another app of ByteDance, Musical.ly merged with TikTok.
Today, it’s available in 150 countries worldwide and 75 languages and it has reached the mark of 1 billion users around the world and 2 billion downloads, which places the application in fourth place with the highest number of users in the world.
TikTok mission statement
“Our mission is to inspire creativity and bring joy.
How TikTok makes money
Like any potential social media, TikTok business model has started with advertising to make money but increased two more revenues: app purchases (TikTok Coins) and e-commerce offerings. Let’s take a deeper look at these avenues below.
The largest source of income in social media, TikTok has personalized advertising for each user, like Facebook. There’s also TikTok Brands: Takeover, Hashtag, Effects. The TikTok Branded Takeover is a type of advertising that takes over the screen when the user opens the app. Similar to it, there’s TikTok View Ads, where the advertising doesn’t cover the screen, but in the feed. The TikTok Branded Hashtag Ads appear on the discovery page on a video exposing or using the product, challenging the users to engage the hashtag making a video. The TikTok Branded Effects Ads are very common and very popular. It’s a filter to take photos with frames or stickers with the brand for 10 days.
When a TikToker (a user of TikTok that creates content) reaches 1,000 followers, it’s possible to receive gifts with TikTok Coins, from users in their live videos. To receive these coins, the TikTokers have to exchange them for real money through the app – and then TikTok charges a commission.
Considered new and recent, TikTok is working on ways to integrate e-commerce in its platform, with selling tools that make available shopping events or even ways to display products during a live stream. In each sale, TikTok profits a commission.
Tik Tok Business Model Canvas
TikTok customer segments
- Users: mostly people at the age of 34 that share their content
- Celebrity: public figures that want to share their every day, upcoming projects, gain new followers.
- Brands: companies that want to approximate their employers and products to the users, projects, engage with new followers.
TikTok value proposition
- Users: see shorts and funny videos.
- Celebrities: share their daily life, create contents that increase the number of followers, make publish posts.
- Brands: expose and popularize their products.
TikTok customer relationships
To users, TikTok provides a customer help center, toon provides the best experience to the user. To the advertisers, TikTok provides the metrics to publish their products.
TikTok revenue streams
- TikTok coin commissions
- Tiktok Ads
- E-commerce commissions
TikTok key partners
- Content developers, like Youtubers, are migrating to TikTok
- Digital Influencers and celebrities
- E-commerce business, like PRESTAShop.
- Companies and brands that want to sell or advertise on social media.
TikTok key activities
The most important activity is the development and updating of TikTok, to prevent bugs and attacks and increase user satisfaction.
TikTok key resources
Without a shadow of a doubt, the platform is the most profitable key resource to TikTok, but millionaires’ partnership contracts are also a source of income.
TikTok cost structure
The TikTok’s data centers, employers and developers paychecks, marketing, investments in infrastructure and administrative offices bills.
- Snapchat: With 500 million users, the app was launched in 2011 and it was a revolution on fast and disappearing photos.
- Twitter: Founded in 2006, it’s a space for micro-posts – 280 characters per post, but recently the stories’ resources, like WhatsApp, Instagram, and Facebook was added to the social media, that included Twitter to one of the top rivals of TikTok.
- YouTube: One the biggest and oldest rival and the oldest, Youtube has 1 billion hours of content watched every day. But still, the website has been feeling the impact of TikTok. The result of it, it’s the Youtube shorts, a new tool to see random and short videos, just like TikTok
- Facebook: The biggest social media nowadays, with 1.84 billion active users every day. Still, TikTok will exceed Facebook in 2020 in-app downloads.
- Instagram: The other bigger rival of TikTok is Instagram, with 1.2 billion users. It’s a platform where you can share temporary photos, or post them in your account. It’s another social media that have been trying to stop TikTok’s increase, adding the tool ‘Reels’, where you can share short videos with sound, pretty similar to TikTok
- Kawaii: Unlike the other social media companies that are Americans, Kawaii is TikTok’s countryman – was also founded in China. With 45.4 million monthly active users, it’s a platform to beat the TikTok success, where you can share 15 to 60 seconds videos, just like the rival app.
TikTok’s swot analysis
The most important strength of TikTok that distinguishes it from any other social media, it’s the algorithm. Different from Facebook, for example, which studies the user’s preferences, family, and friends, TikTok doesn’t care about it – it cares about the time you spend using the app. While Facebook chooses videos based in your likes, TikTok’s algorithm chooses millions and millions of videos and filters them if you scroll to the next one too quickly – like a sign you don’t like this kind of content.
Another strength is the market share because TikTok is available in more than 150 countries and it’s for free, another plus.
TikTok, like many social media sites, has problems with inappropriate content. Some audios, profiles, songs escape from the terms and conditions filter, which ends up exposing children and teenagers to this.
Another weakness is addiction. A good point to the platform but a bad thing to users. Studies show that the youngster’s users – children to teenagers spend 80 minutes on the app.
TikTok is absolutely a great place for marketing and promotion. With millions of active users every day, many brands, companies, and digital influencers publish their products every day. Some use the tools – like the hashtag to engage users to use their products.
It’s also a place to connect with worldwide people, sharing daily life, tips, thoughts, studies, accomplishments.
Foreign boycotts are the most commented threat about TikTok. Donald Trump tried to forbid the use of TikTok in the United States. Indian and Pakistan blocked the use of some Chinese apps because of immoral and vulgarity.
Also, the data collection is a point of concern. TikTok updated its privacy this year to collect ‘faceprints and voiceprints’.
Even with all the recent controversy, Tik Tok is getting bigger. Although many people still believe that this social media will never reach Facebook or Instagram’s status, Tik Tok provides a different algorithm, with a new way of using and producing content that can disturb the rivals.