The Rise of TikTok's Advertising Revenue

TikTok is China's leader in digital Ads in a game of thrones for consumer attention.

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While in China, Douyin is showing incredible synergy with E-commerce sales, in the West and globally, TikTok has nearly limitless ability for mobile search and Ad revenue growth disruption.

In late 2021 we found out that TikTok revealed it had 1 billion active global users, indicating steady growth of the short-form video app.

• The company reported nearly 700 million monthly active global users last summer.

• Still, the ByteDance owned company trails Facebook in users.

In 2022, confidence in Facebook has collapsed and Instagram Reels doesn’t seem a valid competitor to TikTok. TikTok has apparently also eclipsed “Google” in being the front page and most visited app or website on the planet.

On this front I made a poll about the ability of Amazon and TikTok to disrupt the Ad duopoly in the U.S. and globally, you can vote here:

The majority of professionals who reacted to the poll do believe TikTok’s fast growth eventually scales to the size of Meta and Google. In the disruption game, it’s important to note that Amazon is more than 3x that of TikTok currently.

TikTok is expected to increase its net U.S. ad revenue by 184% in 2022

I think what shocks many is just how quickly the GenZ channel is becoming a mainstream channel and how fast ByteDance’s ad revenue is growing. Douyin in China (among ByteDance’s other apps) is also perhaps able to disrupt Baidu in mobile search and Alibaba in advertising revenue as well.

TikTok is expected to increase its net U.S. ad revenue by 184% this year, or $5.96 billion, according to a recent report from research firm Insider Intelligence.

As Reuters wrote Monday (April 11), the report also predicted that ad revenues for the video-sharing app — owned by Chinese tech giant ByteDance — will drop to a double-digital growth trajectory beginning in 2023 and top $11 billion by the following year.

The headlines are astounding but also mean it will eclipse Twitter and Snap combined.

Leaving Snap and Twitter in the Dust

According to a report by Insider Intelligence , the Chinese social network will generate an income of more than $11 billion dollars , tripling that obtained during the past year. Of that figure, $6 billion corresponds to the United States where TikTok will have a growth in revenue of 184.5%

The study indicates that, in addition, TikTok will exceed the combined income of Twitter ($5.8 billion) and Snapchat ($4.86 billion) this year and will keep 2.4% of the total digital advertising investment of $250 billion dollars , just one percentage point below YouTube. This figure will reach 3.5% in 2024.

TikTok has an excellent chance of becoming a global super-app, if it’s not that already. Like YouTube is for Millennials, TikTok is even challenging YouTube with longer-form content. Its recommendation engine I think by 2023 will be comparable in stickiness to YouTube.

GenZ globally are disenfranchised with western Capitalism where wealth inequality, housing affordability, inflation and other concerns are spiraling out of control. China having the grip of an entire generation isn’t just a National Security risk it’s a clear strategy for how the future of behavior modification. This is also about the weaponization of algorithms, should things sour increasingly between the U.S. and China.

What is happening it appears is that mainstream people are leaving Facebook and Instagram and spending more YouTube time on Tiktok now. ByteDance is also just getting better at its delivery of Ads. Thus in 2022 TikTok’s ad revenue is on track to triple this year. That’s a lot of momentum, and Mark Zuckerberg must have shed more than a tear about the demise of his platforms and antitrust violating acquisitions of Instagram (2012) and WhatsApp. That Facebook acquired IG for $1 Billion in 2012 sounds nearly absurd today.

TikTok and thus ByteDance is breaking the mould of Silicon Valley’s legacy dominance on our attention paradigm. China can leverage TikTok’s popularity to benefit its entire ecosystem of technology players that are increasingly going global. China’s consumer is already the most important in the world, now its apps seem to be following that momentum.

This could signify that there is a changing of the guard for consumer apps, whereby Chinese companies compete in a more diverse mobile innovation ecosystem, with less duopolies and monopolies to contend with thus promoting more consumer-centric capabilities, product, design and implementation. ByteDance among others are now very experienced in launching apps, failing and trying again at a pace that would be impossible for Facebook even at its zenith.

TikTok quickly became the darling of the marketing world because young people loved the product so much. The consumer video app now has implications in E-commerce, Ed-Tech and the very evolution of the Creator Economy and the personal brand. It’s positive content is also a sign of sentiment censorship online where even platforms like LinkedIn now amplify for positive sentiment (in the extreme). I’ve noticed even Reddit is pivoting in this direction in 2022.

The Slow Ascent of TikTok to Dominance

ByteDance is maturing but still has a long ways to go.

Realistically Google and Facebook had a huge headstart.

Although TikTok obviously still a long way from the 28.2% of Google ($70.5 billion) and the 22.3% of Meta ($55.75 billion), its growth is still impressive considering the concerns that once existed around the use that the Chinese company ByteDance could make of the data of the users. ByteDance will become an AI-consumer apps company eventually equal to the sophistication of Google.

As of October, 2021 company's valuation was listed at $140 billion in a 2020 funding round, according to market researcher CB Insights, compared with $100.3 billion for the No. 2 SpaceX. In mid 2022, it’s realistically must closer to $400 Billion by now, and we’ll know more when it finally goes IPO likely at the end of 2022 or sometimes in 2023.

When you have as much momentum as TikTok has, you consume the world with a Super-app. Silicon Valley never even had such a super-app, whereas China has WeChat among others. China innovated past Silicon Valley crucially with mini-programs, ecosystems of consumer utility and apps within apps.

There’s a greater than 70% probability TikTok and ByteDance eventually eclipse Meta and Google in advertising revenue, I’d say it’s possible by 2032. But you’d have to look in a more detailed way at the numbers. Also its probable the U.S. attempts to sanction China and its BigTech and ban TikTok well before that occurs. What do you think?

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