Understanding TikTok’s Recent Growth

In December of 2019, when TikTok‘s first tremors resounded through America’s social media landscape, I decided to look into the app and try to understand the hype (link to my write-up).

At the time, the app had just over 40M people using it on a monthly basis in the United States. I concluded that its market was dichotomized between a mostly young, avid demographic that loved the product and retained well, and others who gave the app a whirl but left soon after— so while it could prove popular within particular niches, it likely lacked the broad appeal to become a mass-market app like Facebook or Instagram.

As of March of 2022, that figure is now up to roughly 112M. There’s no doubt it’s more far more popular now. And certainly much more popular than my prior analysis had anticipated it would be. What’s driven its growth? Here, I take another look at TikTok 3 years later (strictly in the U.S. market).

The Big Picture

Figure 1 (Note: All data in this publication was obtained from AppAnnie)

To begin, for the last year or so, the number of people downloading the app on a monthly basis has more or less stayed steady (Figure 1). The app has seen consistent positive growth since 2018. Given no signs of plateauing so far (as new user growth has not slowed down), it has likely not exhausted its market yet and has room for increased penetration.

Figure 2

While active usage has also consistently been on the uptick, its growth has been less linear. After relative stagnation initially, it inflected in early 2019 and experienced rapid growth into early 2020, before proceeding onwards on a more gradual ascent (Figure 2).

Before 2019 (Figure 3), in any given month, at most half of people who had the app installed opened it at least once during that time period — but this figure had shot up to around 90% by early 2020. This means that people who had the app installed on their phone were far more likely to open the app post-2020 compared to before. That is, they are likely far more engaged.

Figure 3 (Note: Open Rate = Active Users ÷ Install Base)

This increase in usage can be hypothetically attributable to 3 things:

1. Newer cohorts began coming back to the app more often (greater retention)
2. A good chunk of existing users became much more dedicated (greater stickiness)
3. People who’d deleted the app came back (reversed churn)

Retention

Figure 4 (Note: Retention refers to the proportion of a cohort that opens TikTok within said time period after joining)

Beginning in 2019, new batches of users who joined came back increasingly more often — given similar cohort sizes throughout (Figure 1) — compared to late-2018 cohorts, the proportion of people who returned within a week was twice as high among early 2020 cohorts (Figure 4). These sets of new users were finding far more value in the product within their first week on the app than older cohorts were.

Figure 5

But it wasn’t just new cohorts who were retained at greater rates. Figure 5 can be viewed as a proxy for average retention of all prior cohorts at any given point in time— this metric has also greatly increased.

The sum total of new cohort populations was ~500K between mid-2019 and mid-2020. This figure is >1M counting all cohorts that joined before mid-2019. Therefore, the average retention must be largely driven by existing users (from older cohorts) getting more engaged as well. Both newer cohorts and older cohorts began finding more value in TikTok during this time period. (Both hypotheses #1 and #2 from above hold true).

Stickiness & Engagement

Figure 6

Figure 7

Until 2019, stickiness — how engaged the average user is — had already been on the ascent for a while, but growth was somewhat fragmented (Figure 6). But when the wave of more dedicated cohorts joined in early 2019, they helped catalyze TikTok’s lasting growth. Now, it’s become an increasingly daily-use app. Overall, TikTok has done a great job at translating monthly users into weekly users, and weekly users into daily ones (Figure 7). Stickiness is one area where TikTok will probably continue to grow — even if new user acquisition stalls, the app’s success in converting casual users into diehards bodes well for its future.

Figure 8

When we zoom in even further, temporally, we see further evidence of TikTok’s surge in stickiness. In this timespan, not only did TikTok get users to return more on a daily and a weekly basis, but it also succeeded in getting them to come back more within the span of a day (Figure 8).

Conclusion

The key story here is that 2019 was a great year for TikTok. While it’s gained users at a steady, sustainable rate since its early years, it was between 2019 and 2020 that 1) newly acquired users really became habitual users and 2) the app at large became a much stickier product, even among much of its existing base. Today, the vast majority of monthly users are also weekly users, and if engagement continues to grow, it can continue to close the gap between weekly/monthly and daily usage.

Whether/why (1) new cohort retention improved or (2) existing user engagement grew or (3) churned users returned could each be attributed to a host of (possibly overlapping) reasons. App updates, adoption by highly-receptive homogenous demographics, successful advertising, and the rollout of a new notification mechanism, all may be factors, compounded by general network effects.