TikTok, a short video sharing platform in China, has grown to the extent that it threatens Facebook and YouTube in the online advertising market, Bloomberg News reported on the 23rd (local time).
Bloomberg evaluated that TikTok is emerging as a strong player in the online advertising market based on its popularity, such as being selected as the most downloaded app last year.
Google and Facebook, the parent companies of YouTube, enjoyed an immovable position in the online advertising market enough to receive antitrust investigations from the United States, the United Kingdom, and the European Union (EU), but now they have to deal with a strong competitor called TikTok.
According to eMarketer, a market research firm, TikTok’s sales this year are expected to reach $12 billion (about 15.6 trillion won), nearly three times that of last year’s sales, which was close to $4 billion (about 5.2 trillion won).
This year’s sales forecast is higher than the combined sales of Twitter and Snap, and considering that TikTok has only been advertising on the platform for three years, it is a remarkable growth, according to Bloomberg.
TikTok’s monthly active users (MAU) is about 1 billion, which is less than Facebook (2.9 billion) or Instagram (2 billion), but it has an overwhelming advantage in terms of usage time.
According to data.ai., a mobile market research company, the average monthly usage time per TikTok user in the United States reached 28.7 hours, which was longer than Facebook (15.5 hours) and Instagram (7.8 hours) combined.
Professor Scott Galloway of New York University’s Stern School of Management even compared TikTok to being addictive like a drug.
This is because ByteDance, the parent company of TikTok, developed an optimal algorithm that recommends videos or news suitable for users and applied it to TikTok.
According to Bloomberg, this approach is particularly well-received by Generation Z (born in the mid-1990s to early 2000s).
According to Bloomberg, the daily top-view ad spend for the first time on the TikTok app amounted to $2.6 million (about 3.38 billion won), about four times that of a year ago.
Peter Jan de Kroon, chief executive officer of online advertising firm Entrvision Media Donuts, said TikTok is starting to eat away at some of the media budget and is now clearly a threat to Google and Facebook.
Following online advertising, TikTok is also pursuing revenue diversification through music services, games, and e-commerce.
The App allows external companies to open online stores on the TikTok platform in countries such as the UK, Indonesia and Thailand, allowing users to purchase items while using the app.
It is reported that TikTok plans to increase its e-commerce transaction volume from $2 billion (about 2.6 trillion won) this year to $23 billion (about 29.9 trillion won) next year.