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TikTok: Everything marketers need to know
Short-form video app TikTok seems to have taken the world by storm.
Suddenly, the app’s neon logo and 15-second, looping videos replete with memes, inside jokes, sped-up music and young people lip-syncing or dancing seem to be everywhere, and publications from Bloomberg to The Hindu are discussing its viral success.
But how did TikTok, the overseas counterpart to a Chinese app, Douyin, achieve such huge popularity – to the extent of becoming, at one point, the most-downloaded app in the US, with downloads surpassing Facebook, YouTube, and Snapchat?
How does it differ from its Chinese counterpart, and how did its parent company, Bytedance, manage to launch the app so successfully in the West? And can TikTok keep up its spectacular success, or is it destined to go the same way as other once-popular short-form video apps like Vine and Dubsmash?
What is TikTok?
TikTok is a short-form video app in which users can create, edit and upload looping videos of between three and 60 seconds in length (although the app is best known for its 15-second format). These videos are often set to music from TikTok’s library of licensed music clips, but don’t need to be. They can and do consist of anything from dancing to stunts, artwork, pranks, lip-syncing, cooking, pets, make-up tutorials and much more besides.
One of the big draws of TikTok is its editing functionality. Unlike some short-form video apps that only allow users to record video, TikTok provides the ability to speed up and slow down videos, add soundtracks, trim video clips, add filters and stickers – two features that have prompted comparisons to Snapchat – and a number of other effects, some of them highly sophisticated.
For example, one popular effect allows the user to “control” rain in a video by holding out their hand towards the camera, which employs advanced image recognition technology to identify the right body part and detect its movement.
TikTok users can also upload a video that they’ve created using their phone’s native video functionality, or another video recording app, and use TikTok to edit it, as long as it fits within the app’s time limitations.
Other unique features include the React function, which allows users to record themselves reacting to another TikTok video, and the Duet feature, which displays two videos side-by-side (the original and the duet) as one person joins in with the other’s song, dance, stunt, etc. Dueting has given rise to a number of TikTok’s viral crazes, as celebrities and popular TikTok users challenge others to join in with them.
What about the metrics? At the time of writing, TikTok has more than 500 million monthly active users across more than 150 countries and regions, a milestone that it sailed past in June 2018. In February, it passed one billion app installs worldwide on the App Store and Google Play, according to SensorTower. Roughly 663 million of these installs took place in 2018, which goes to show how rapidly TikTok’s user base is growing.
These numbers are even more impressive considering that TikTok’s Chinese equivalent, Douyin, was only launched in 2016, with TikTok entering the overseas market the following year. Thanks to this ‘overnight’ success, TikTok has often been referred to as “the biggest app you’ve never heard of”.
A brief history of Douyin and TikTok
Short-form video app Douyin, which has a name that literally means “vibrating sound” (Dǒuyīn 抖音), was launched by Chinese internet technology company ByteDance in September 2016, originally under the name ‘A.me’. It was rechristened and rebranded as Douyin three months later.
The app, reportedly developed in just 200 days, was not the first short-form video app from ByteDance: it had launched its first, Toutiao Video (later renamed Xigua Video) six months prior. Other video apps in ByteDance’s portfolio include BuzzVideo (originally known as TopBuzz) and Huoshan (known as Vigo Video overseas). However, none of them has enjoyed the unbridled success of Douyin, which reached the 100 million user mark in under a year.
Douyin had stiff competition for Chinese netizens’ attention in 2016: the market was (and still is) crowded with short-form, long-form and live-streaming video platforms, including Tencent-backed Kuaishou; Miaopai, owned by Weibo (China’s answer to Twitter); Alibaba-owned Youku; and Baidu-owned iQiyi. However, the app has a few tricks that helped to secure its success (and that have led to popularity overseas).
Super apps: How the rest of the world is following in China’s footsteps
One is its swipe-to-view format; unlike most video apps that require the user to select a video to play it, videos on Douyin auto-play, and navigating to the next one is simply a matter of swiping upwards. Once a video finishes playing – or if the user gets bored – they can swipe to the next, and the next, and the next, creating an endless stream of quick, funny, creative, and musical videos. This swipe-to-view navigation is identical, in fact, to the popular short video app Musical.ly, which ByteDance would later acquire.
Another feature is TikTok’s personalised feed. Like other successful entertainment platforms, Douyin has an algorithm that learns what types of content users are interested in viewing more of based on their interactions with the app, and presents it to them in a tab labelled ‘For You’. This leads to a more satisfying experience for the user than the methods used by rivals like Kuaishou, which present users with videos with the highest number of playbacks. These can often be sensational or horrifying, and aren’t always to everyone’s taste.
Douyin’s personalised feed, combined with its endless scrolling, make for such an addictive experience that its creators were forced to add a warning that pops up after 90 continuous minutes spent viewing videos (the equivalent of 360 15-second videos). After two hours, the app will lock itself, requiring a password to unlock.
Douyin initially gained traction with a young demographic: in July 2017, 51.9% of Douyin users were aged 24 and under, with 10.1% aged 25-30, and 18.1% aged 31-35, according to figures from Analysys and WalktheChat. However, this has evened out over time, and by February 2018, only 31.8% of users were aged 24 and under, with 23.4% aged 25-30, and the same percentage aged 31-35.
Douyin’s most prolific content creators are still young, however, with 50% of Douyin’s top female creators and 40.1% of their top male creators falling in the 21-25 age bracket, according to the Miaozhen Douyin Report 2018.
ByteDance launched Douyin’s international counterpart, TikTok, in May 2017; some of its earliest overseas markets included Indonesia, Japan, and Vietnam. But while TikTok was similarly quick to achieve success in neighbouring Southeast and East Asia, it saw little uptake in western markets like the United States, where another Chinese-owned short video app, Musical.ly, was already dominant.
The rise and fall of Musical.ly
In order to understand TikTok’s current phenomenal success in the west, it’s important to understand Musical.ly. While some analyses of TikTok treat the app as if it sprang out of nowhere, ByteDance’s savvy acquisition of Musical.ly vastly aided TikTok’s uptake overseas, giving it a ready-made userbase that was already accustomed to using a very similar app.
Musical.ly was launched in August 2014 by Alex Zhu and Luyu Yang. The company was headquartered in Shanghai with an office in California, and the app was initially launched in both China and the United States with the intention of catering to both markets. However, after Musical.ly saw considerably more uptake in the U.S., its founders decided to focus their attention there, and quickly grew a loyal user base.
Musical.ly’s app allowed its users (known colloquially as ‘Musers’) to create and upload 15- to 60-second-long videos and choose soundtracks to accompany them from a library of licensed music. The app boasted a number of editing features for videos including time lapse, slow-motion, sped-up, and ‘epic’, as well as filters and effects.
Musical.ly became famous for its lip sync videos, although initially they were not the main use of the app. Co-founder Alex Zhu told Forbes that in the early days while Musical.ly was struggling to gain traction, the team noticed a spike in searches for “lip sync” on the app store every Thursday night as the show Lip Sync Battle was airing in the United States. Musical.ly made some design changes to emphasise lip syncing as a primary use case for the app, and it rapidly took off.
By 1 July 2015, Musical.ly had climbed to number one in the App Store in the US and 18 other countries, and millions of users were joining the app. By October 2016, Musical.ly had more than 133 million users worldwide and an estimated $500m valuation, as reported in a profile published by Billboard.
Musical.ly proved to be a major boon for the music industry, which scrambled to use it to promote hits to an engaged audience of pop-loving teens. In May 2016, at the height of Musical.ly’s popularity, a promotion for Selena Gomez’s hit ‘Kill ‘Em With Kindness’ accrued 34.6 million likes on Musical.ly – versus just two million likes on YouTube. The following month, Coca-Cola used Musical.ly as a platform to launch its #ShareACoke campaign. In July, Musical.ly debuted a live-streaming platform, Live.ly.
Musical.ly also launched the careers of young influencers like Jacob Sartorius, one of the app’s most popular stars, whose first single Sweatshirt reached number 10 in the iTunes Store after he promoted it on Musical.ly; and Baby Ariel, who became Musical.ly’s top user at the age of 15, and subsequently landed numerous brand deals and launched a line of lipstick.
However, despite this marketable appeal, Musical.ly struggled to find a viable monetisation strategy. A November 2017 article by Digiday noted that because influencer marketing on Musical.ly was so new, “there is no standard on an individual’s ‘influence’, and the pricing can only be based off of the person’s past work because Musical.ly hasn’t yet opened its application programming interface to advertisers.”
Pricing per branded video, according to Joe Gagliese, co-founder and managing partner of talent agency Viral Nation, could range anywhere from $200 to $20,000 – a wildly varying range, and at the upper end, a major gamble for brands to take on a largely unproven platform. An earlier Digiday report noted that early price points for Musical.ly advertising had been even higher – around $300,000 per day, and for some ad packages, upwards of $2.5m.
Not every new social platform is expected to find its feet right away, of course. But the failure to gain traction with its advertising offering cast a shadow over Musical.ly, whose star was waning slightly by late 2017. It likely didn’t help that the short video space was already notorious for producing short-lived sensations like Vine, which had been discontinued the previous year, and Dubsmash, another lip-syncing app that achieved viral popularity in 2014 and 2015 before laying off 20% of its staff in November 2016, and then all but five team members in the summer of 2017.
It was at this time that ByteDance swooped in to acquire Musical.ly, with the Wall Street Journal reporting the acquisition on 9 November 2017. The price tag for the app, while unconfirmed, is speculated to have been between $800m and $1bn.
ByteDance ran Musical.ly as a separate app to TikTok for nine months, before merging the two in August 2018 and gaining a ready-made audience of more than 200 million active users. Soon after, the company began a concerted advertising push to promote TikTok, with copious ad placements on platforms like YouTube, Snapchat and Facebook. While this incurred some backlash from users sick of seeing the ads, it also worked – TikTok was the talk of the digital town.
Comparing the respective success stories of Musical.ly and TikTok – both Chinese apps, one of which saw great success in the United States before declining and being acquired, while the other saw great success in China before going on to even greater success in the United States – it’s difficult not to wonder whether Musical.ly should have made another attempt at launching in its home market, where there was clearly a huge appetite for short-form video. Perhaps a Chinese launch in 2016 would have seen it compete with or even beat it to the punch?
However, as a startup with no other products, Musical.ly would likely have struggled to divide its time and attention between two very different markets. ByteDance, a more established tech company with multiple successful products (including the popular content platform Toutiao) was much better placed to expand and acquire properties overseas. Musical.ly wasn’t even ByteDance’s first short-form video acquisition; in February of the same year, it acquired Flipagram, a short video creation app once considered a potential threat to Instagram.
It also remains to be seen whether TikTok’s current viral streak will continue. As anyone who has been watching the digital landscape over the past five years knows, short-form video apps absolutely can achieve success in the West – but turning a profit with them is harder.
Can TikTok monetise successfully?
Despite being one of the world’s most valuable startups with an estimated $75bn valuation, TikTok’s parent company is currently making a loss: according to a report by The Information, it lost $1.2bn in 2018 following TikTok’s “costly” overseas launch. In spite of months of rumours, ByteDance has yet to go public, although the Wall Street Journal has reported that Wall Street banks are “lining up to lend” to the company.
Perhaps learning from Musical.ly’s ill-fated entry into the advertising space, TikTok has yet to fully throw its weight behind brand advertising, although the floodgates are beginning to open. In January, users spotted what appeared to be an ad unit test for food delivery company GrubHub (see it here).
The ad reportedly lasted for around five seconds, and had a button in the right-hand corner allowing users to skip over it. TikTok declined to comment on the test, but Digiday succeeded in acquiring a pitch deck that TikTok had sent to “a large advertising agency in Europe”, which sheds more light on the app’s advertising plans.
Digital media and marketing consultant Neil Perkin analysed the deck for Econsultancy’s Digital Shift Q2 2019. The pitch deck boasts that TikTok has 17 million monthly active users across Europe, with its most popular European markets being France, Germany and the UK. Across these markets, users are reported to open the app an average of eight times per day, spending an average of forty minutes per day engaging with the app. The deck also outlines four key advertising formats: brand takeover, in-feed native video, hashtag challenge and 2D, 3D and augmented reality lenses. Of these, the Grubhub ad test appears to have been an example of in-feed native video.
The hashtag challenge and lens formats are oriented towards user-generated content, with the concept of sponsored lenses a familiar one to anyone who has ever advertised on Snapchat. The hashtag challenge format, meanwhile, is designed to enable brands to work with influencers to kick off viral challenges on the platform. Hashtag challenges are well-established on TikTok (and on its predecessor Musical.ly), with users creating a video depicting a particular dance, stunt or move – usually set to specific music – and tagging it with a hashtag.
Popular TikTok challenges have included the #stairshuffle – a shuffling dance performed up a flight of stairs, set to a sped-up version of ‘Pretty Girl’ by Maggie Lindeman; the #unmakeupchallenge, a makeup removal challenge; and the #trustfallchallenge, in which the subject of the video performs a spontaneous “trust fall” onto an unsuspecting bystander.
TikTok has already carried out one sponsored hashtag campaign with fashion brand Guess: #InMyDenim, a fashion challenge inviting users to show off their best looks in denim, set to the song ‘I’m a Mess’ by Bebe Rexha. At the time of writing, the #inmydenim hashtag has been used a total of 37.8 million times on TikTok, with an additional 9,000 uses for #inmydenimchallenge (here’s an example).
Some celebrity figures have also discovered how to harness the power of TikTok without a formal brand deal. Talk show host Jimmy Fallon, for example, has publicly declared himself a fan of TikTok and dedicated a new segment of his show, Tonight Show Challenges, to challenges he issues on TikTok. The first challenge, The Tumbleweed Challenge – in which fans were challenged to drop down onto the floor and roll around like “human tumbleweed” in a clip set to western-style music – generated more than 8,000 submissions and more than 10.4 million engagements for TikTok – the biggest spike that the app has seen from a single challenge, as reported by Variety magazine.
Judging by these figures and the nature of TikTok, it seems likely that the two user-generated content ad formats will generate the best returns for advertisers, as they both invite engagement and generate exposure, all while playing into TikTok’s burgeoning influencer culture. Some of the most popular figures from Musical.ly’s heyday, like Baby Ariel, Cameron Dallas, and Lisa and Lena Mantler, have stayed on the app and are among TikTok’s biggest stars, while newer influencers like Spanish comedian Javi Luna have already built huge followings.
For less participatory ad formats like in-feed native video, the presence of a ‘skip’ button is key: research by Kantar Millward Brown found that Generation Z, the demographic most active on TikTok, are more likely to be positive towards skippable pre-roll ads, but are “especially damning” towards non-skippable ads, and other invasive formats like pop-ups. The agency also found that Generation Z will skip ads three seconds faster on average when compared with the older Generation X.
However, if TikTok can perfect an ad format that its users will respond to – or at the very least, not skip over – brands will have an opportunity to get their message in front of TikTok’s millions of users, greatly increasing brand awareness. The pitch deck from TikTok also revealed that in-feed native video ads can be combined with a hashtag challenge for maximum impact.
Influencers on TikTok: Will they stick around?
Influencers are one of the biggest selling points for an app like TikTok. They act as a major draw to the platform, keeping users coming back to the app and engaging with their content. For brands, influencer endorsement can add legitimacy and relate a brand message to their audience in a way that a company cannot.
One of the key factors in the demise of Vine, the TikTok of the early to mid-2010s, was that many of its most popular influencers departed the platform for social networks like Facebook, Instagram and Snapchat, where they could attract a larger audience and land bigger brand deals. While some amount of drift was inevitable as Vine influencers “outgrew” the platform or sought different creative outlets, by 2016, the problem for Vine was endemic, resulting in stagnant user growth, a dearth of search interest and brand interest, and the departures of some of Vine’s top executives.
A large part of the problem was a lack of compensation: while a handful of Vine’s stars landed lucrative brand sponsorships or major record deals, as a whole the top influencers on Vine felt under-compensated for their efforts, as well as neglected by the platform, which failed to engage them or address issues like persistent harassment and abusive comments. In the autumn of 2015, 18 of Vine’s top 50 influencers met with Vine’s creative development lead in an attempt to negotiate better compensation and much-needed product changes like comment filtering. However, Vine failed to act on their requests, leading to its demise a year later.
A recent piece by BBC Capital on the fortunes of TikTok stars suggests that TikTok’s top influencers are seeing relatively little compensation for their fame thus far, although things are improving, with the foundation of a talent agency for TikTok influencers, Influentially, and the advent of metrics that give influencers an insight into who their posts are reaching, providing an incentive for brands to partner with them.
The interviews between Capital and TikTok’s stars suggest that TikTok influencers are happy for now to simply have the platform as an outlet for their creativity and aren’t worried about bringing in huge paycheques – but that could change. While TikTok is understandably cautious about over-commercialising its platform, it needs to make sure that it doesn’t jeopardise its fortunes by waiting too long.
Fortunately, TikTok seems aware of the need to keep its creators happy, with popular TikTok users reporting that TikTok’s staff are highly responsive to their needs and keen to involve them in conversations – a situation that has improved since the app rebranded from Musical.ly to TikTok.
Over on neighbouring Douyin, the story is very different where commercial promotion is concerned. Brand content is plentiful on the app, with brands creating official Douyin accounts, posting links to ecommerce websites, and partnering with influencers to initiate hashtag challenges and promote deals.
Some influencers, such as the comedy duo Liu Qikun and Liu Yicun (better known on Douyin as Uncle Beibei and Dao Muxiong), have been able to make a living creating Douyin videos, earning money from advertising deals with companies like Alibaba.
Will this be the end goal for TikTok as well? Perhaps – but China’s brand and commercial landscape is very different to that of the west, and an article by TechNode recently noted that activity on Douyin is slowing down, with audiences becoming fatigued by influencers, who are beginning to saturate the platform.
It’s a fine line to walk for all social platforms, but particularly ones that depend on viral memes and influencer culture for success – and TikTok has recently faced other challenges as well.
Challenges and censorship
A few high-profile controversies have dogged TikTok over its short lifespan, mostly related to government intervention and public outcry over the content hosted on its platform.
On 3 July 2018, the Indonesian government temporarily blocked the TikTok app due to concerns about “negative content” on the app that Indonesian authorities considered to be blasphemous and pornographic. The government unblocked the app a week later, after TikTok agreed to remove the content in question, and open an office in Indonesia to liaise with its government on content concerns. TikTok also agreed to set up a team of 20 censors in Indonesia dedicated to monitoring and sanitising content, and put additional restrictions on users aged 14 to 18.
But these concessions didn’t prevent TikTok from incurring another ban less than a year later – this time in India, its fastest-growing overseas market. On 3 April 2019, the Madras High Court asked the Indian government to ban the app because it “encourages pornography” and put children using it at risk of being targeted by sexual predators. Two weeks later, Google and Apple both removed the TikTok app from their respective app stores in the country.
Despite an appeal from TikTok parent company ByteDance, which argued that it had removed more than six million videos that violated its community guidelines in a review of content from users in India, the High Court refused to overturn the ban. It was finally lifted more than a week later, on 25 April, but TikTok’s reputation was dented following its second government ban – and the block is estimated to have cost it as many as 15 million users in total, and $500,000 per day in revenue.
TikTok has also run afoul of authorities in the United States, incurring a $5.7m fine from the Federal Trade Commission in February for collecting data from minors under the age of 13, in violation of the Children’s Online Privacy Protection Act (COPPA). The company responded by implementing a “kids-only mode” for under-13s, in which users are allowed to view curated content and record videos but not to upload them, build a user profile, send direct messages or leave comments on other users’ videos. (This measure depends on younger users accurately reporting their birthdate, which of course some determined users may not).
Inappropriate content and privacy violations are by no means new problems for a social media platform, and TikTok has at least been proactive in finding a resolution to these issues – arguably much more proactive than major social networks like Facebook and Twitter. However, they have the potential to set TikTok back much further than established players by denting its establishment in new markets and tarnishing its reputation at this early stage. Inappropriate content and privacy issues are also inherently that much more serious on a platform primarily used by teenagers and young people, prompting more public outcry and stricter government crackdowns.
In China, short video platforms including Douyin and other ByteDance properties like Xigua Video are also being forced to grapple with strict new content regulations that dictate what can and can’t be portrayed in online videos – and that put the burden on the companies behind the platforms to censor and assume responsibility for “harmful” content. While TikTok is not subject to the same regulations and scrutiny, anything that impacts the fortunes of TikTok’s parent company and its sister apps will ultimately affect TikTok.
On the other side of the equation, the fact that TikTok is a Chinese-owned app has prompted no small amount of concern in the west. ‘We Should Worry About How China Uses Apps Like TikTok’ proclaimed Yale Law School fellow Nick Frisch in a New York Times op-ed, warning that, “The West’s increasing technological and economic exposure to China may have unintended consequences”.
These might seem like heavy issues to be associating with an app where teenagers post lip-syncing videos, and it’s unlikely that TikTok’s users are thinking too hard about the Chinese surveillance state when they sign up for the app. However, a Cambridge Analytica-style data scandal or full-scale government crackdown might ultimately pose a bigger threat to TikTok than monetisation or influencer retention.
The future of TikTok – and short-form video
For now, TikTok has made it over the obstacles in its path, and its present looks bright. What might the future hold – for it and for short-form video as a medium?
ByteDance is still focused on expanding and consolidating TikTok’s presence in various markets: it reportedly plans to invest as much as $1bn into TikTok’s operation in India, despite the ban that it incurred there earlier this year. The company has also branched out into events, the first of which it held in Paris in September 2018, and sponsored the MTV European Music Awards in November in a bid to further increase its profile with young Europeans.
Meanwhile, the short-form video market is heating up. Facebook was threatened enough by the success of TikTok that in November 2018 it launched its own short video-sharing app, Lasso, available only in the United States. The app was launched with little fanfare, and hasn’t generated much buzz since, with CNBC reporting in February that TikTok was “staying well ahead of Facebook’s Lasso”, with Facebook’s download figures failing to measure up to TikTok. A Tech in Asia analysis noted the lack of features like comments and a search function on Lasso, as well as TikTok’s superior video creation experience.
However, numerous commentators have also pointed out that it often takes Facebook a number of attempts to best a competitor: it launched four successive Snapchat copycat apps (Poke, Slingshot, Lifestage and Flash) that attempted to replicate different elements of the Snapchat experience before landing on Instagram Stories. But once it did, Snapchat was in trouble.
2019 will also see the launch of Byte, the long-awaited successor to Vine, by Vine co-founder Dom Hofmann. After the original plans for a Vine follow-up, V2, ran into legal issues, Hofmann announced in November 2018 that V2 was being reborn as Byte, with a launch date set for spring 2019. Last month, Hofmann sent out the first 100 invites to Byte’s closed beta, to considerable excitement.
The success of TikTok has cast a little bit of uncertainty over the prospects for Byte, which would have had the market to itself before TikTok came along. Commentators have queried whether the world “needs” another Vine when it has TikTok, but Hofmann seems unfazed, telling TechCrunch that he perceives TikTok to be an evolutionary step past Vine, but not in the same direction as Byte.
While competition might be stiffer for Byte with TikTok in the market, TikTok’s hype could also work in Byte’s favour, generating excitement around the format of short-form video and prompting each platform to improve its offering to compete with the other. Users who dislike one platform will have an alternative, and influencers will be afforded more bargaining power than if they had no other option than to build a following on TikTok (or Byte, or Lasso).
The resurgence of interest in short-form video suggests that the medium has more resilience than might have previously been believed. It only remains to be seen where it will go from here.
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