How TikTok Makes Money? TikTok Business Model

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how tiktok makes money?

We are going to talk about one of the most popular mobile app of today, called TikTok, it’s business model and how TikTok earns money.

What is TikTok?

TikTok (formally known as Musical.ly) is a video-sharing app that lets you share 15 seconds long video. You can record videos, lip-sync on a sound, or even upload the sound by yourself. TikTok was launched back in 2017 is owned by Bytedance. The company has previously launched Douyin for the Chinese market in September 2016. In September 2019, TikTok became the number 1 App in terms of download number followed by Facebook, Instagram and, Likee. TikTok has global offices in Los Angeles, New York, London, Paris, Berlin, Dubai, Mumbai, Singapore, Jakarta, Seoul, and Tokyo.

ByteDance launched Douyin – video-sharing app for the Chinese market in 2016. Musical.ly, on the other hand, was a popular Chinese app with exponential growth among teenage users. Because the concept of Douyin and Musical.ly was the same, ByteDance decided to buy Musical.ly for $1 Billion in November 2017. In August 2018, Musical.ly merged into TikTok.

TikTok Download as of December 2019

Sensor Tower reported that TikTok has been downloaded 500M+ times as of December 2019. This number is actually growing with its huge popularity. According to the report, the major country to download and the active userbase in India. This is why the company is planning to expand its business in India.

TikTok’s Parent Company

ByteDance is a technology company based in China that has been operating a wide range of products. Its top products include TikTok, Helo, Vigo Video, Douyin, and Huoshan. All of these products are used for information, education, entertainment and inspiration across different regions in 75 different languages.

How TikTok Makes Money? TikTok Busines Model

Popular Apps like Facebook, Instagram are some of the huge App that has a clear business model. Mainly they generate money from display advertisements. Companies or even an individual can pay to these apps for advertising the business. Thus, we see “Sponsored” ads on the timeline.

But TikTok does not have these paid features now. Meaning you can not pay to TokTok to promote your business.

However, TikTok offers in-app purchases of coins, starting at 100 coins for $0.99 and leveling up to 10,000 for $99.99. Tiktok users can give coins to their favorite creators, who can, in turn, exchange them for digital gifts. According to the Sensor Tower report, TikTok users worldwide spent $3.5 million on in-app purchases in the month of October 2018. That number is four times what they did in October 2017. TikTok receives a certain percentage of this amount.

Another monetization option for TikTok is brand advertising. Agencies started advertising on TikTok as it is going forward given its explosive popularity. The Chinese version of TikTok, Douyin, offers splash ads that can cost up to 1 million Renminbi (about $150,000) for one day and newsfeed ads for 30 Renminbi (about $4) per click, Brands like Pizza Hut have done such campaigns.

TikTok’s major user base is located in India, so the App is used for branding and advertising for agencies, movies, and other business houses. Although this app does not have any seen business model, the company soon may come up with some monetization features in the new future.