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24 October 2022
TikTok's radical approach to experimentation
Devices & appsSocial media planning & buying
TikTok has soared from new kid on the block to a massive social media platform with global reach and an addictive product – its experimental success and its struggle to export successful features from China to other markets offer lessons.
Why it matters
It’s powerful stuff. Built into TikTok are messages encouraging users to give the app a break. It’s this stickiness that has driven the big growth in the company's ad revenues.
WARC Media forecasts that TikTok will earn $9.3bn in ad revenue in 2022, rising to $13.1bn (+41.5%) in 2023.
Meanwhile, Douyin, ByteDance’s leading product in China, is forecast to replace Facebook as the world’s third-largest digital platform in 2023, with ad revenue reaching $55.5bn.
This doesn't come without problems. First, the growth effort has cost it – or at least parent company ByteDance – dearly. The company spent the most money any advertiser has ever spent on advertising in 2021, according to Nielsen figures. Much of it appears to have been spent in direct competiton with platforms such as Meta, from which it effectively bought its online audience.
Second, its use of personal data harvesting is not only alarmingly intrusive, but it has thrown up some very serious allegations about its practices and the security concerns that could stem from them.
Ease: Where it differs from competitors is that it has been able to present users with content at the boundary of their interests and then suggest videos experimentally, with no need for the kind of likes that have been a feature of Meta or Alphabet.
Accessibility: Creators don’t necessarily need a large group of followers to get a load of views. That's partly because videos go to new users in testing batches that can grow very large very quickly.
Information volume: The other point is that the videos are incredibly short. This renders huge amounts more information to power the app but also high view counts. A million views of a six-second video is not the same as a million views of a 20-minute video on YouTube.
Elsewhere, Rui Ma, an analyst specialising in Chinese tech, has explored some of the livestream commerce features that have become significant revenue streams for TikTok’s Chinese version, Douyin.
Effectively, it is a totally "closed loop" system in which advertising, promotion, and logistics are run for sellers. It has also moved away from selling through influencers, another aspect that has made it cheaper, less risky, and easier to use.