After hitting 500m users, TikTok plots its monetisation strategy
As its user numbers continue to soar, thoughts at TikTok now turn to how it actually starts making serious money.
TikTok was the most downloaded app on App Store in the third quarter of this year (beating Facebook and Instagram) with downloads growing from 92 million in the previous quarter to 185 million. It marked the third consecutive quarter the app has taken the top spot, and in September, it was the most downloaded app in the US, across App Store and Google Play.
The next step is monetisation as it looks to get on the radar of brand marketers and position itself as the place to engage the elusive Gen-Z demographic it has amassed.
To hear about its future plans, The Drum caught up with TikTok’s head of global marketing Stefan Heinrich who talked up the benefits of user-generated content and revealed some of its monetisation intentions.
TikTok emerged in 2016 when Bytedance, now the world’s largest internet start-up valued at $75bn, launched Douyin which was later rebranded as TikTok for international markets. After acquiring musical.ly for $1bn in 2017, Bytedance consolidated the two to create the global TikTok brand people know today.
TikTok allows its ‘creators’ to make short skits to share with their friends and wider following. Although it has kept musical.ly’s essential elements - music and lip-syncing – Heinrich said that though people “loved” the name it wasn’t “a good representation anymore, because the whole community had already moved on to another stage.”
“Yes, the connecting factor is music and sound to express creativity, it's not just that essential element anymore. It’s whatever you make of it. We decided we needed a name that was more open,” he said.
In its hay day, musical.ly, which rose to prominence between 2014 and 2017, amassed around 200 million users.
On why Tik-Tok is succeeding in the competitive UGC app space, Heinrich said: “We’re living in a time where we’ve seen a shift in media behaviour; times when people say attention spans of millennials are around 10 seconds. We’re living in a time where we see there is more and more demand for content that is real and not staged.”
But with similar apps like Snapchat facing pressure, Heinrich said keeping people engaged in the future “goes back to innovation in general” and be led by the user, not by product development teams.
“Always be on your toes. You should find a way to talk to users, it’s super important to understand. They’ve been using our tools in different ways, in more ways than we could have imagined. That gives us, and the product development team ideas, and helps us gauge where we’re heading.”
Since the platform was established in 2016, the app is now available in 15 countries in 75 languages. After an intensive marketing campaign in 2017, the app - which blew up originally in China - spread across the globe, particularly in the US market.
TikTok views the UK as a strategic market, launching a Christmas campaign this year, that covers digital and paid social, alongside a large-scale out-of-home (OHH) effort.
The app has begun attracting attention from brands drawn towards its active, global network, mostly from Gen Z. Also, due to China's extensive internet censorship, it is a potential entry point for brands to communicate with the Chinese public.
When asked about TikTok's plans to generate money, Heinrich said: “At the moment we’re heavily focused on giving the best user experience to our users.” He lives by the principle to “invest heavily in the user experience, and then the monetisation part of the app going forward.”
However, it has begun experimenting. Luke Bristow, partner and director at The Honey Partnership, a social media agency that works with TikTok confirmed: “TikTok has been successfully running ads in its Asian market for a while now, with ad formats such as brand takeovers, in-feed native videos and sponsored hashtag challenges.”
In terms of the UK and European market, Bristow said to “expect some of these rolling out in early 2019 – particularly the brand takeovers and in-feed native video ads.”
Though Tik-Tok’s own offering to advertisers is limited, the app already has a number of its 'creators' working with brands. Since joining the app, influencer and body painter Vicky Banham has amassed 1.3 million 'fans' who follow her content and teenage following has attracted brands like the FA and Chupa Chups to work with her.
For this year’s MTV EMA awards, TikTok entered into a global partnership with the company. As the live streaming partner, TikTok had its creator's interview people on the red carpet in addition to the activation of a ‘TikTok Challenge’ which was run in France, Germany and the UK to promote the EMAs ‘Best Look’ award.
Russell Samuel, vice president, creative and integrated marketing for Viacom International Media Networks – owner of the MTV platform – said it was the first time it had done a partnership of this kind.
“There is a huge fit between the two brands, demo-wise, purpose wise as well. We're both about celebrating and enabling creativity - I think the success around the EMA's will be a basis to work ongoing,” Samuel continued.
"It's another new platform - a new way we can reach our audience. The value we can provide them is in terms of exposure and reach. It's really about using the power of our entertainment, our media brands and our RP to help brands be part of that conversation and we believe that entertainment is the social currency of choice. People talk about what they do, what they see and what they've heard. We've got the `assets and the expertise to help brands really be part of that cultural conversation."
However, the app is yet to provide statistics and analytics meaning brands currently face the same walled garden issues as with Facebook and Google.
Although TikTok has grossed over 800 million downloads thus far, this rapid growth doesn’t destine it for long-term commercial success. There is a long list of apps that have succumbed to the hold that social media top dogs have on the market. Although TikTok has rapidly accumulated the attention, it’s now taking the time to build a viable long-term model for monetisation that won’t turn off users and keep brands interested.
Stats sourced for this article came from a presentation issued by The Honey Partnership on 5 December at a TikTok event.