• With 315 million downloads in the first three months of 2020, TikTok set a new record for the most installs by any app in a single quarter, according to the app analytics firm Sensor Tower.
  • The short-form video app has entered mainstream culture in a big way in recent weeks, attracting new users outside of its core Gen-Z audience.
  • Business Insider spoke to industry experts to learn more about whether TikTok’s recent success is a short-term fad or a sign the app will become the next money-making behemoth like Instagram or YouTube.
  • Click here for more BI Prime stories.

TikTok is having a moment.

The short-form video app is a relative newcomer to the social-media landscape. It arrived in the US just two years ago after merging with Musical.ly, a lip-syncing app popular among Generation Z. But it’s since broken into mainstream culture.

TikTok trends are spilling over onto Instagram, YouTube, and TV shows like Saturday Night Live. Its stars are appearing in Super Bowl ads and late-night talk shows. And songs that become popular on TikTok are topping Billboard charts — the music artist Drake recently used TikTok to release his latest single, “Toosie Slide.”

TikTok’s user base has spiked in recent weeks, drawing in older fans who are searching for a distraction from coronavirus news. The app recently set a record for the most downloads of any app in a single quarter, driving 315 million installs across Apple’s App Store and Android’s Google Play in the first three months of 2020, according to the analytics firm Sensor Tower.

“Obviously everyone’s home and they have more time, so engagement is through the roof,” said Paul Marobella, chairman and CEO of Havas Creative North America, the creative division of one of the world’s largest agency holding companies. “TikTok has surged at the moment and gone up in age because people are tuning out news sources. Everybody’s looking for an outlet of joy and optimism.”

While TikTok’s user base is growing quickly and brands are finding creative ways to get involved with the platform during the coronavirus pandemic, the company has yet to fully capitalize on its newfound popularity by releasing (out of beta) scalable advertising solutions for brands and creators who use the platform to generate an income. And industry experts are still trying to determine whether TikTok’s recent success is a short-term fad or a sign it will become the next powerhouse media app.

“There are so many platforms that come and go within our lives, and we’ve seen countless different ones try to get our attention,” said Jacob Chang, director of insights at the Gen-Z consulting firm JUV Consulting. “One of the biggest examples of this that comes to my mind is HQ Trivia, which was crazy popular maybe a year ago but now has faded into complete irrelevance.”

With more than a billion downloads globally and a cash-flush parent company in ByteDance, TikTok is unlikely to follow in the footsteps of HQ Trivia, which briefly shut down after losing funding in February (it has since returned after being acquired by an unnamed private investor). But the more pressing question is whether TikTok will be able to transform its recent wave of popularity into a mature and profitable business.

The company could end up developing an advertising program in line with Google’s YouTube or Facebook’s Instagram, which have proven to be consistent revenue drivers. It could also follow the shakier monetization path of social-media apps like the still-unprofitable Snapchat or Twitter, which only recently ended its streak of annual losses.

Is TikTok here to stay? 

TikTok’s long-term cultural relevance may hinge on the app’s ability to keep creators posting on its platform versus moving over to competitors like YouTube or Instagram. TikTok has attempted to woo influencers in recent months by sending them gifts, assigning designated employees to serve as matchmakers for sponsored content opportunities, and investing in splashy displays at creator events like Playlist Live.

“In a creator sense, TikTok really succeeds in getting them to stick on and create and build more videos and content,” Chang said. “At the same time, the people who don’t really create TikToks but watch them — they have less of a reason to stay.”

TikTok recently launched a creator marketplace tool designed to help its stars score influencer marketing deals with brands. As with almost all TikTok advertising products released to-date, the product is only available to select users in a closed invite-only beta. TikTok’s other recently released monetization product, its self-serve biddable ad platform, is also only currently available to a select group of beta users. 

TikTok’s decision to release advertising products slowly is limiting its ability to win big budgets from global brands

TikTok’s decision to release its ad tools incrementally to beta testers is meant to ensure that its ad experience doesn’t become overwhelming for users, according to a person familiar with the company’s product strategy. But it’s also preventing TikTok from winning larger budgets from global brands who spend heavily on competitors like YouTube and Instagram. 

“We don’t have a lot of brands on the platform at the moment,” Havas’ Marobella said. “I think that’s also indicative of the willingness of marketing folks at big global brands to want to be a part of a platform that they have questions about.”

“I put Snapchat and TikTok almost into the same bucket,” he added. “To get real investment from a brand like Coca-Cola, you have to provide metrics and analytics. They’re not going to invest deeply in the platform unless they understand what’s happening with their content.”

TikTok’s ad products, which include promoted hashtags; full-screen takeovers; in-feed ads with call-to-action buttons; and branded “shareable stickers, filters, and special effects,” often require making reserved buys through what is essentially an insertion order with the company — an antiquated process when compared to automated solutions from competitors like YouTube and Facebook (though TikTok has recently been testing a programmatic buying option in certain markets). 

The company’s ability to grow revenue off its recent surge in app downloads will also be hindered by an industry-wide slowdown in ad spend that competitors are also experiencing due to economic fallout from the coronavirus pandemic. Major holding companies like Publicis and Omnicom are planning furloughs and layoffs in preparation for big drops in ad spend.

Because TikTok is newer and has fewer ad products in market, its ability to win marketing budgets in the coming months could take a hit as brands pause experimental spending and lean into tried-and-true social-media marketing platforms.

“Brands can’t possibly do it all,” Marobella said. “They just can’t possibly be on every platform because of time and money and resources. The platforms that continue to show return on investment, continue to be transparent on analytics, continue to be strong in their privacy policies, will be the ones that live long-term.”

As more users join TikTok, the platform is aging up (and becoming more crowded)

While TikTok has yet to convince some global brands to invest in its platform beyond allocating “innovation” and research and development budgets, adoption among tech startups, influencer marketers, and digital creators has been strong in recent weeks. 

About one in four (23.6%) of influencers who previously weren’t on TikTok before the coronavirus outbreak have created accounts on the app during the pandemic, according to a recent survey of 1,054 digital creators conducted by the influencer-marketing agency Obviously. Many of the app’s newcomers are non-Gen-Z users.

“TikTok was labeled as a very young user base, young generation platform,” said Pierre-Loïc Assayag, CEO of the influencer-marketing analytics firm Traackr. “What’s happened lately is that it’s really become a cross-generational platform. We’ve actually seen a lot of millennial influencers that will get on TikTok and do a mea culpa on Instagram saying, ‘Yes, I know what I said, but I’ve changed my mind, and here I am.'”

An influx of new users on TikTok is leading some creators to question whether it could become overcrowded and more difficult to get discovered on the app’s content recommendation page, the all-important “For You Page.”

“I do believe that TikTok is now starting to become saturated,” said Alex Stemplewski, a photographer and TikTok creator who’s accumulated 7.4 million followers on the app since joining in October 2019. “There’s actually more people who are consuming content now, but there’s also more people creating. It hasn’t gotten to the point yet where there’s too many creators and getting seen is impossible, but I think we’re slowly getting there.”

For more stories on how advertisers and marketers are engaging with TikTok, check out these other Business Insider Prime posts:

Read More

(Visited 1 times, 1 visits today)
Join Our Newsletter.
We'll send you the best news and informed analysis on what matters the most to you.

Leave a Reply

Your email address will not be published. Required fields are marked *