Behind TikTok’s Rise
You have probably heard of TikTok. It has quickly emerged as one of the world’s most popular social media apps. But, is the product really doing that well? I will analyze the product’s influence across the world and look deeply into the US and India — two of their largest countries.
TikTok is increasingly being used across the world
Above are the 8 countries that use TikTok the most. China boasts the largest share of users, followed by India, Pakistan, and America. Few key insights:
- Douyin is huge in China but is less ticky than top social apps — TikTok is available through an entirely different app (Douyin) in China. Despite its heavy presence, it is less sticky (DAU/MAU) than the best products. Products such as Whatsapp, Instagram and Facebook have much higher DAU/MAU ratios (> 65%). This requires a deeper understanding.
- People open the app on a monthly basis — High levels of monthly open rates in most countries indicate that people use the product at least once a month. This is a very good sign for TikTok as there is potential to convert these users to daily.
- Users like the product in the top usage countries — The users in the top countries are more sticky (DAU/MAU) than the lower countries. They use the product roughly 10–14 days a month. While TikTok is doing reasonably well, it has a long way to go as the stickiness is lower than the top products.
- India and Pakistan are very similar — India and Pakistan have a very similar open rate and DAU/MAU probably due to relative similarities in culture, demographics, and economic conditions.
TikTok is thriving in the US
Overall, the user base is growing and the product is improving its stickiness. However, the retention and stickiness are lower than top social products and they may be churning through their users by aggressive marketing.
TikTok is gaining users. From Figure 2, we know that DAU, WAU, MAU are all steadily increasing; there are now nearly 20 million monthly active users, up from around 7M at the beginning of 2018. More than 7 million people return to the product every day, nearly double what it was a year ago.
Figure 3 = DAU/MAU in US
The product is increasingly sticky. Here is where it gets interesting. Let’s look at stickiness (DAU/MAU), or how engaged users are with the app, over time. (Figure 3)
- The Daily Active users are increasing at a much faster rate than Monthly Active users. This means that users are increasingly finding value on a daily basis.
Figure 4: DAU/WAU and WAU/MAU in the US
We will have one more look at stickiness (Figure 4) — this time in the form of a scatterplot of WAU/MAU (the # of weeks in a month users return to the app) and DAU/WAU (the # of days in a week people return to the app). The dots are a measure of the MAU. Bigger dots represent more users (more recent).
- People are using the app 12 days a month (in 2019) compared to roughly 7 before (in 2018). People return to the product on a weekly and monthly basis more frequently than they do on a daily basis.
- Users who open TikTok more days a week also use it for more weeks a month. Figure 6 reveals that DAU/WAU is increasing with WAU/MAU.
The app is clearly becoming much stickier- this carries positive implications for its long-term retention. Since people are coming back to the app more, they are far more likely to stay on the app longer.
Figure 5: MAU/Cumulative Installs for the US
Figure 5 shows us the amount of monthly active users relative to the number of cumulative installs. Few key insights:
- Initial growth stemmed from new-user acquisition- this explains the lower disparity between monthly active users and cumulative downloads in early cohorts. In 2016, the app experienced a surge in novelty-driven downloads. However, it subsequently dropped steeply once the fad died.
- It has witnessed a positive trend in the last 2 years- remarkably TikTok’s monthly active users count is outpacing the app’s installs which implies improved retention of the user base.
Now, we’ll look at its recent daily retention.
Figure 6
I benchmarked TikTok to similar products; Instagram and Snapchat are two prime examples, as they have similar purposes and share common demographics. Few key insights:
- Retention is lagging behind- In figure 7, we notice that TikTok is not retaining its users nearly as well as Snapchat and Instagram are (less than 5% of users even touch the app a month after downloading it, less than half of Snapchat’s number)
- Although this is not a good sign, it will certainly rise in the future, evident by increased stickiness. However, the low daily retention also likely indicates TikTok may be churning through their user base. More on this later.
TikTok is Growing in India, too
Overall, TikTok has been experiencing a surge in downloads and more people are using the app on a daily basis than ever before. Although only 1 in 20 who download the app come back on a daily basis after a month, this number will rise in the future due to increased stickiness. There are very likely two groups of users — one group that is immensely dedicated and come back to the product frequently because they find value and another that churn out soon after installation.
Figure 7
TikTok is seeing very strong user growth in India. From Figure 2, we know that DAU, WAU, MAU are all steadily increasing; there are now nearly 65 million monthly active users, up from around 7M at the beginning of 2018. More than 30 million people return to the product every day, nearly double the figure from a year ago.
Figure 8
Users are growing increasingly dedicated- We already know from Figure 7 that more people are using TikTok than ever before. However, people are returning more often than ever before as well. In mid-2018, users opened the app less than 10 days a month, whereas today, users come on the app nearly 15 days a month. This is so because only users who find value in the app keep TikTok and use it more than once a month.
Figure 9. Note: bigger dots represent more users.
People are coming back more than ever. The strong positive trend indicates that individuals are increasingly returning on both a daily and a weekly basis, important for retention. At first, users did not return as regularly, but as time progressed, both daily & weekly visitation has increased.
Here is TikTok’s Weakness- TikTok experienced a surge in new users between 2016 and 2017. Most of the initial installers stayed on the app shortly before abruptly leaving, giving us the spike in mid-2016. Over time, more of these non-engaged users churned, leaving only the core base on the app. In other words, MAU only make up 15% of cumulative downloads because since the hype has died off, fewer new people are downloading TikTok. At the same time, the number of active users is steady as they are satisfied with the app.
Figure 11
It has observed an uptick in open rates across the board- The open rate is the proportion of active users to the number of new downloads. People are using the app more on a daily, weekly, and monthly basis. 9 in 10 people who own the app open it at least once a month, compared to 6 in 10 in 2018. Why is this so? Due to the sheer number of people that initially downloaded the app, say 40% were uninterested and eventually deleted the app. However, those 6 in 10 that remained were engaged with the app, and this darwinesque cycle of churn continued until only the truly dedicated people kept and used the app.
Open rate growth is slowing, due to increased market penetration- TikTok clearly grew at a fast pace in its first few years. However, after the initial spike from early 2018 to 2019, it has plateaued out. This is likely because since the app has penetrated much of its addressable market, fewer new people are installing it, while the number of active users (mostly the core fans) is also more or less constant.
Figure 12
It is seeing better performance in India than in the US- Although less than 5% of users come back to the app on a daily basis after a month in both countries, more people are staying on the app in India than in the USA. Also, there is a much smaller margin between TikTok and Snapchat in India than in the United States. As I explained in another article, Indians don’t really use Snapchat as much as their American counterparts do.
The Big Picture
This a tale of two groups of users — one group that loves the product and another that have uninstalled the app.
TikTok relied on its initial virality to acquire most of its users. These people churned out in massive numbers; after a month, less than 5% of users come back on a daily basis in both countries. Moreover, only 10–15% of the users that have downloaded the app currently use it on a monthly basis. Given that the open rates on a monthly basis are very high, this implies that a very significant number of people have uninstalled the product as they likely did not find value in the product. Due to this reason, TikTok will likely never be able to grow as big as FB or Instagram, as it lacks widespread appeal. Those that keep the app, however, are avid users- the numbers tell us that its demographics are majorly concentrated in younger groups and the app lacks the potential for the widespread appeal enjoyed by similar apps such as Facebook and Instagram.
Although at first glance TikTok appears to be doing well, by sewing together the narratives from both countries, we can understand TikTok’s principal issue — they will very likely never be as big as Facebook or Instagram — in India or the US. However, the people that love TikTok still do.
All data courtesy of App Annie
