How Does TikTok Make Money?

TikTok makes money through advertising. It is estimated that ByteDance, its owner, made $51 billion in 2021 in revenues. TikTok instead generated $4.6 billion in advertising revenues, 3.3 billion downloads, and 1.2 billion monthly active users, in 2021. TikTok, therefore, is a multi-billion company, worth anywhere between $100 and-150 billion and among the most valuable social media platforms on earth.

TikTok Business Model Explained

TikTok is the fastest-growing attention merchant.

It went to 1.2 billion active monthly users in a few years. A meteoric rise, that we have never seen before.

The company monetized this attention through an advertising platform, miming the advertising model of Instagram:

TikTok is the Chinese creative social media platform primarily driven by short-form video content. It launches challenges of various types to tap into the creativity of its users and generate engaging (if not addicting content) accessible via an infinite feed. TikTok primarily makes money through advertising, thus making it an attention-based business model.

How does TikTok compare to other digital advertising players?

The digital advertising industry has become a multi-billion industry dominated by a few key tech players. The industry’s advertising dollars are also fragmented across several small players and publishers across the web. Most of it is consolidated within brands like Google, YouTube, Facebook, Instagram, Amazon, Bing, Twitter, TikTok, which is growing very quickly, and Pinterest.

While TikTok is a relatively small player, in terms of revenues. It growth has been so quick, that we can imagine it becoming a key player (together with Google, and Facebook) in the digital advertising space.

Read also: TikTok Business Model, Who Owns TikTok, TikTok Marketing Strategy.

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