TikTok, a popular social networking app, allows users to record, watch, and share 15-second videos. So How Does TikTok Make Money? There are addictive short videos with background music, sound effects, filters, and unique stickers in the app. Split-screen video duets with users in separate places are also possible. TikTok, created in 2016 by the world’s most valuable company, ByteDance, has since then joined social media giants like Facebook, Instagram, and Snapchat. Over 315 million installations were made through Google Play and the App Store according to Sensor Tower, in the first quarter of 2020. TikTok is now in 150 countries and 75 languages.
Like any other social media app, TikTok has been growing in popularity over the last few years. In addition to short films, it is one of the fastest-growing social networking networks. Since the app is more focused on user interaction, many are unsure how the platform earns money. Let’s investigate this mysterious software that millions of youngsters can’t get enough of.
How does TikTok make money?
TikTok earns money by presenting ads. Businesses can use the platform to market their products and services. TikTok launched TikTok for Business in June 2020, allowing firms to advertise within the popular video-sharing app. Advertisements on TikTok include In-Feed advertising, Brand Takeovers, and Branded Hashtag Challenges. In-Feed ads appear between videos while users navigate through their pages, similar to ads in Instagram Stories. Create your own hashtag challenge and pay to have it show in people’s Discover feeds. To advertise on TikTok, a business must pay a charge.
TikTok makes a lot of money now that it has a well-established ad business. However, TikTok makes money through a number of additional techniques. Let’s talk about how TikTok makes money.
One of TikTok’s business streams is virtual coins, which TikTokers can buy to gift their favorite influencers. TikTokers with 1,000+ followers can earn virtual presents by broadcasting live videos. People on TikTok can be tipped with virtual goods, which they can buy with real money via the app. Then users can send these coins to their favorite content creators. These coins cost $0.99 per 100 and $99.99 for 10,000, and the virtual gifts range from 5 to 5,000 coins in value. Consumers prefer the 100 coin pack, followed by the 500 coin pack. Tiktokers can exchange gifts for $0.5 diamonds.
TikTok users can withdraw money after $100 and are limited to $1,000 per day. TikTok began testing shoppable advertisements in November 2019, allowing creators to embed social commerce links in their postings, allowing viewers to buy without leaving the app. However, this option is currently in beta and no date has been set for its wider release.
Commission from Content Creators
After a user buys coins and delivers them digitally via the app to a content creator, the content creator will then have the option to withdraw all of the tips given to them in exchange for actual money, TikTok gets 50 percent of every dollar that has been withdrawn from the app when users withdraw the money. Ultimately, 4,233 percent of revenue growth for coins means an increase in withdrawal of 4,233 percent, as coins do not serve any other purpose other than to buy and withdraw once.
TikTok For Business is a revenue stream for TikTok, introduced in June 2020. Like YouTube, TikTok allows sponsored brand advertising to promote its products and services. Brands may utilize TikTok for Business to improve marketing solutions through features including input videos, brand takeovers, hashtags, and branded effects. Take a look at the features below as well as a few others:
In-feed video ads: In-feed ads are short-form videos appearing on the For You page, between feeds of individuals. These ads are often the same as in Instagram stories.
Brand takeover ads: If you ever opened TikTok and receive an ad straight away, that is a brand takeover ad. This form of ad can be used by brands to send their target audience a message immediately.
Top-view ads: Unlike brand takeover ads that flash up directly when the application is opened by a user, top view ads are available once the user already uses the app and can last up to 60 seconds.
Branded hashtag challenges: Brands establish their own hashtag challenge and pay TikTok for its tag to show up on other people’s discovery sites. TikTok users can participate and submit a specific hashtag on the challenge. While it’s fun and interesting, it also brings attention to the brand.
Branded effects: TikTok also offers users stickers, lenses, and augmented reality filters that they may use to add to their films. Each branded impact may last up to 10 days and are sufficient to allow users to interact with a brand.
TikTok’s Biggest Investors
SoftBank Group Corp. in 2018, led a funding round with firms like KKR & Co. and General Atlantic that sealed a $3 billion fund for TikTok. ByteDance’s assessment rose to $75 billion during the investment round. Tiger Global Management is the latest company to invest in TikTok’s stocks back in March 2020. In a secondary market round, the stake building took place but the investment amount has not yet been announced. After ByteDance sold its shares to the aftermarket, Financial Times claimed that its worth currently implies between 90 billion dollars and 100 billion dollars.
TikTok’s Business Model Explained
Tik Tok promotes itself as a place that encourages and celebrates creativity. It protects the world’s creativity, memories, and knowledge. It does all of this with a simple mobile phone application. Anyone can create content on Tik Tok. They allow you to quickly and easily turn your ideas and passions into entertaining videos. It is also a place for fun. And we expect it to be the next application to dominate social media marketing.
Indeed it is only natural to wonder how the world of social media is enhanced by such a simple video creation and sharing tool. You may be wondering how a seemingly unremarkable smartphone app could attract established firms like Facebook. And that is actually the case. Tik Tok forced a bigger population to discuss it.
The app does exactly what it claims, which is to keep users entertained. Although the app may have only started in China, it has achieved this degree of popularity worldwide and can now assist the users to earn money from the app, which also allows TikTok to make money. A win-win situation. The platform has not only become a social media app but a location for digital enterprises to be established. So as TikTok is at its forefront, consider how you may seize the chance to promote your company to the TikTok community.