Tiktok: How a short video app from China owns its unshakable position globally within 2 years

"Tiktok" by REUTERS, CC BY-SA 4.0
"Tiktok" by REUTERS, CC BY-SA 4.0

Introduction

TikTok is a social media app which belongs to a Chinese company called ByteDance. Within just two years, it has become an influencial social media platform globally. The main function of this app is to edit and post short videos and the aim is for people to find mind-liked groups and share the contents of real life. It especially impetused the progress of web influencers and live stream in recent years which further underlined the ecommerce of social media. In terms of cultural and political, people feel unrestrained to share their ideas and willing to create new contents.

Historical development of Tiktok

Tiktok was first launched in 2016 in China and its Chinses version name is “Douyin” which means shaking music (Tidy & Smith Galer, 2020). In 2017, Tiktok attracted 100 million users from Asian areas like China, Japan and Thailand.

At the meantime, another short video app “Musical.ly” has taken the main market in US. Since ByteDance saw the commercial potential of this app from the global site, it decided to buy “Musical.ly” and combined its profiles and data with Tiktok in 2018 in order to expand its users’ group with a wider range (Leskin, 2020).

From the beginning, Tiktok put the main effort in the product and service itself rather than the advertising and broadcasting. Based on the sufficient market research, it figured out its own algorithm to recommend precisely what users may like when they are using the app.

After it has attracted a number of target users, it started to do the marketing and expanded the range of users. In July 2019, Tiktok has been downloaded one billion times worldwide and the active users occupied 500 million (Tidy & Smith Galer, 2020). One year later, the downloads number doubled, and the number of active users has reached to 800 million.

One thing I considered to be the reason why it transformed and expanded so efficiently is that the user mode is unique and humanized. Unlike other online entertainments such as games and video websites, Tiktok took really short time to engage the users because each video is just a few seconds so the customers will assume the time cost of using Tiktok is lower than the others.

Another thing is that Tiktok really encouraged the creators to post videos since the rule is that any video could be recommended to “For you” Page as long as the content is interesting and positive even if the creator has no fan or videos before. And the compelling music tracks also allow some of the production become well-known in one night.

Undeniably, the customer compactness and creativity make this application success in such a short time but with a sustainable development.

Viewers, creators and advertisers

As we have already known, Tiktok is owned by a Chinese internet technology company called ByteDance. The CEO of Tiktok, as well as the founder of ByteDance, is called Yiming Zhang. By 2020, ByteDance was valued 100 billion dollars by the private market and profited 3 billion dollars (Cuofano, 2020). Many people feel shocked about this fact because it just came out within a few years.

According to the following video, Tiktok divided its customers into three groups: viewers, creators and advertisers.

Business Disruptors “TikTok Business Model – What Makes It So Popular”
Source: Business Disruptors (standard YouTube license)

From the site of viewers, the background of ByteDance allowed Tiktok to have a powerful algorithm to quickly estimate what the viewers may like and the longer time you watch, the more contents you are interested in will be recommended.

Like many other entertainment app did, Tiktok also allows the users to choose their interests in the range of field and the function of finding the friends from address list extracts further information. If they didn’t like any video, they can just choose to reduce the similar type of videos by clicking the button “not interested”.

From the aspect of creators, the organic discovery intrigued more and more people to post videos on the app. For instance, creators on YouTube or Instagram are really hard to build audiences and may cost months or years to establish a well-known account.

On Tiktok, it is virtually guaranteed that the video you post will be seen by other viewers. Due to the powerful video editor in Tiktok, it is also easy for people to create or re-shoot others’ videos which lead to a low barrier for creators and creativity. Furthermore, creators can spend money on Tiktok for the promotion of their videos which can raise the exposure of the videos. In China, it will be 15 dollars for exposure to about 5000 viewers.

The revenue model of Tiktok is basically the advertising among the videos people watched. In most of the cases, advertisements are native, and people are not aware of the ads until they see the button of “download” or “buy now”.

Interestingly, you will find out the advertisements you received are different from your friends. This further shows the power of the algorithm in Tiktok that can make it so humanized and precise in detail.

There are also some clear advertisements on Tiktok on the opening page when you first open the app. With the explosion of users, Tiktok has cooperated with many famous brands like Estee Launder in China.

Partners

In China area, I would say the biggest partner with Tiktok is Taobao as they have cooperated for three years since 2018. Undeniably, Taobao is the biggest online shopping platform in China which belongs to Alibaba company.

From Dao Insights (2020), Tiktok has signed a new partnership agreement with Taobao in terms of the supply of goods and services for both sides. Many retailers gradually smell the commercial opportunities in Tiktok since people are spending more time on these short video apps especially in 2020 due to covid-19.

E-commerce has become the mainstream. “As of August 20, Douyin started charging a 20% service fee to live streamers who offer a shopping link to third party platforms” (Dao Insights, 2020).

Tiktok also took part in the double eleven activity, which refers to a Chinese version of the Black Friday. Tiktok longer the length of the shopping festival from 25 October to 11 November and encourage the web influencers to share goods by short videos or live streaming. “The event generated a total sales (GMV) of 15.2bn yuan (USD $2.30bn)” (Acolink, 2020).

“2020 11.11 GLOBAL SHOPPING FESTIVAL” by ALIZILA, CC BY-NC-SA 2.0

I will consume web influencers and celebrities as another big partners of Tiktok. Tiktok has invited many famous celebrities from different fields to join in such as and this brings a great amount of flow. For instance, in China, it is hard to say a celebrity’s name who has not a Tiktok account. For the celebrities, they can raise the awareness and share their lives more vividly on Tiktok.

Unlike other platforms such as Weibo, Tiktok is much more realistic and easier to reduce the distance with the audiences. From the perspective of web influencers, Tiktok created a great condition for them to create new topics and build fans. Li Jiaqi, known as the king of lipsticks in China, has over 45 million fans on TikTok. As a makeup blogger, he became popular due to his great attractiveness that makes women want to buy the goods. And his famous saying that you will hear from each of his video is “Oh my god, buy it!”. He made the record of selling 15000 lipsticks in five minutes in 2018 during the double 11 period (Chen, 2020).

The Competitors

As a pacemaker among the short video apps, Tiktok has an unshakable position in this industry. Even if it is comparing with the necessary social media platforms like twitter, Tiktok still shows a good performance just like the chart below.

“DIGITAL 2020: 3.8 BILLION PEOPLE USE SOCIAL MEDIA” By Simon Kemp, CC BY-NC-SA 2.0

It is clear to see that the popularity of Tiktok is much higher than the competitors in the similar field like Snapchat and Kuaishou though it still has a distance from the communication tools like WeChat that are more focused on the function and practicability.

As in Chinese market, the two main competitors known by the people are Kuaishou and Bilibili.

Kuaishou is a totally same type of app like Tiktok but the content quality is always been looked down. However, the development of Kuaishou is rapid as well. The revenue of Kuaishou has been raised from 17.1 billion RMB in 2019 to 25.3 billion RMB in 2020 (Cheng, 2020).

Pretty much like an imitator, Kuaishou also invited many celebrities to join in and the main business model in Kuaishou is livestream as well. However, when we look at the data of daily active users, we will find out the most significant app is Bilibili which is a video sharing app focused on the genre of animation and games. Interstingly, it combines the live streaming from Tiktok and the authorized episodes as other video apps.

“Chinese video-sharing app Kuaishou files for IPO as new leaders emerge in the industry” By Evelyn Cheng, CC BY-NC-SA 2.0

How has it influenced the political thoughts of audiences?

According to Herrman (2020), “TikTok has become a prominent venue for ideological formation, political activism and trolling”. Although Tiktok is not allowed for political ads, the popularity among teenagers and its traits of easily gathering people up with what happened right now still draw attention from some political campaigns.

In terms of the political expression in younger generation, Tiktok is a comprehensive platform that we can see different forms of expression through the political issues. The algorithm and tags allow the like-minded audiences to find the group easily.

It is surprising that the politics-related speech on Tiktok is quite personal that it directly reflects the identity of the creator. However, the teenagers are still passionate for posting their ideas on the Tiktok and look for the consensus.

For instance, you can find out plenty of general and neutral contents under the “BlackLivesMatter” tags. Nonetheless, if you search for “WhiteLivesMatter”, it will be more likely to see some sarcastic or even extreme contents.

Summary

As part of the progress in internet transformation, Tiktok has gradually affected the way we think, communicate and entertain. It provides the updated social information in an efficient way and people can freely make the comments. From the aspect of economics, the brands found a new way to advertise and the cost is comparatively lower than the other platforms. Hopefully Tiktok can do better on the privacy issue so that my personal Tiktok account won’t be figured out by the parents.

 


References

Chen, Y. (2020). Trending in China: ‘Lipstick King’ Li Jiaqi Settles in Shanghai, Prompting a Rethink of ‘Talent’ – Caixin Global. Retrieved 19 November 2020, from https://www.caixinglobal.com/2020-07-06/trending-in-china-lipstick-king-li-jiaqi-settles-in-shanghai-prompting-a-rethink-of-talent-101576178.html

Cheng, E. (2020). Chinese video-sharing app Kuaishou files for IPO as new leaders emerge in the industry. Retrieved 19 November 2020, from https://www.cnbc.com/2020/11/06/new-leaders-emerge-in-chinas-video-apps-kuaishou-files-for-ipo.html

Cuofano, G. (2020). TikTok Business Model: The Rise Of Creative Social Media Powered By AI – FourWeekMBA. Retrieved 19 November 2020, from https://fourweekmba.com/tiktok-business-model/

Double-11 shopping event (Part 2): Douyin — beyond Tmall & JD.COM and why it matters to brands. (2020). Retrieved 19 November 2020, from https://acolink.com/news/2020/china-double-eleven-shopping-event-2020-douyin

Douyin & Taobao Renew Advertising Cooperation | Dao Insights. (2020). Retrieved 19 November 2020, from https://daoinsights.com/news/douyin-chinese-tiktok-and-taobao-renew-advertising-cooperation/

Herrman, J. (2020). TikTok Is Shaping Politics. But How?. Retrieved 19 November 2020, from https://www.nytimes.com/2020/06/28/style/tiktok-teen-politics-gen-z.html

Kemp, S. (2020). Digital 2020: 3.8 billion people use social media – We Are Social. Retrieved 19 November 2020, from https://wearesocial.com/blog/2020/01/digital-2020-3-8-billion-people-use-social-media

Leskin, P. (2020). Inside the rise of TikTok, the viral video-sharing app wildly popular with teens and loathed by the Trump administration. Retrieved 14 November 2020, from https://www.businessinsider.com/tiktok-app-online-website-video-sharing-2019-7

Tidy, J., & Smith Galer, S. (2020). TikTok: The story of a social media giant. Retrieved 14 November 2020, from https://www.bbc.com/news/technology-53640724