TikTok generated $11 billion in revenue in 2022, compared to $4.6 billion in 2021. An almost 140% increase in revenue in 2022 compared to 2021.
These days, TikTok has been threatened with various bans in the US due to political issues. If we look at TikTok from a product perspective alone, a few elements made it successful, so much so to become a key player in the digital advertising space.
TikTok is a real social app, which was an AI-first company, in the discovery paradigm.
While TikTok has become famous through its native short-form videos, in reality, two elements contributed to its incredible success.
Video editing at scale
TikTok transformed everyone into a video editor through its CapCut app.
This is a critical point to understand.
TikTok brought user-generated content to the next level by enabling millions of users to easily recombine existing content on TikTok and make it into an exponential content machine.
Indeed, CapCut is among the most popular apps.
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AI discovery feed, no more the social graph
The critical turning point for TikTok was the move from the social graph to an AI-based feed.
Where the experiences of users wouldn’t be tied – anymore – to who were your friends, but rather what was sticky, based on your interaction.
In short, you could get a short-form video of a person in the other part of the world, with which you don’t have any connection, doing strange dances, only because this has proved sticky for hundreds of millions of users.
TikTok showed the world the new paradigm of AI-based discovery at scale.
All significant companies (from Instagram to YouTube) adapted and transitioned.
Today TikTok is rising to become a key player in terms of user growth and digital advertising revenue growth.
Indeed, by 2022, TikTok will have grown into an $11 billion-a-year player.
However, as political tensions between US and China keep growing, TikTok is risking being banned in the US.
If that happens, that might boost existing social media platforms in the US, like YouTube, Facebook, Instagram, and Snapchat, due to limited competition in the market.
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