Zheping Huang says on Bloomberg that TikTok Turns on the Money Machine.
He reports:
“The most downloaded app of 2021, TikTok has surged to a billion-plus global users, who consume an infinite feed of short clips delivered instantly by algorithm. While the platform has long helped creators… step to the center of the attention economy, the company is only now starting to cash in on all that popularity. TikTok raked in nearly $4 billion in revenue in 2021, mostly from advertising, and is projected to hit $12 billion this year, according to the research firm eMarketer. That would make it bigger than Twitter Inc. and Snap Inc. combined — three years after it started accepting ads on the platform.”
“With a billion monthly active users, TikTok is still smaller than Facebook (2.9 billion) and Instagram (2 billion), also part of Meta. Yet TikTok’s programming is proving unusually compelling: Its average user in the US now spends about 29 hours a month with the service, more than Facebook (16 hours) and Instagram (8 hours) put together, according to mobile researcher Data.ai. Scott Galloway, a professor at New York University Stern School of Business, has likened the service’s addictiveness to opium.”
“TikTok is starting to show the profit potential in countries like the US. The company is now charging as much as $2.6 million for a one-day run of a TopView ad — the first thing that pops up on users’ feed when they open the app — roughly four times what it charged a year ago, according to a document reviewed by Bloomberg News. A 30-second Super Bowl ad runs about $6.5 million — but TikTok can charge that rate every day.”
“TikTok set up a $200 million fund in 2020 to pay creators to get views, and pledged to grow the pool to $1 billion in the US over the next three years.”
My take: this fascinates me. Creators tell stories to audiences, almost always mediated by some platform. These platforms create the commercial market. Once upon a time it was Hollywood. Then it was network television. Then it was cable television. For a brief moment it was VHS and DVD. Then online and Netflix et al. Today, the online space has short-circuited these markets, allowing audiences and creators to interact with no friction. I’m amazed at how innovative it all is!