TikTok in 2020: Reaching New Heights in Popularity and Scrutiny
How the hottest social app plans to capitalize on its growing popularity while fending off competitors and regulatory scrutiny
There is no denying that TikTok is the breakout app of the past two years. When we wrote about its early success in May of last year, it was evident that this short-form video app had struck a nerve with the younger generations with its unique mix of user-friendly video creation tools, built-in meme culture, and algorithmic feeds.
Since then, TikTok has only grown bigger and more prominent in its impact on not only social media trends, but also the global digital culture at large. While TikTok has only recently begun to develop an ad platform, innovation-forward brands are already jumping on board to capitalize on the app’s growing audiences and cultural impact.
Still, with greater visibility comes greater scrutiny from both the public and the regulators regarding its alleged data privacy and censorship practices, which, combined with the unstable economic and political circumstances, clouds TikTok’s long-term prospect.
The Quarantine Bump and Growing Ambition
TikTok was undoubtedly the breakout app of 2019 in the U.S. and other key global markets such as India and the UK. By the end of 2019, TikTok had cemented itself as the fastest-growing social media app in the world and especially popular with younger digital audiences. In the first quarter of 2020, TikTok accumulated 315 million installs worldwide across the App Store and Google Play, setting a record for the most global app downloads within a quarter. In the U.S., TikTok amassed a total of 37.2 million users in 2019, with 63.5% of them in the ages 10 to 29 bracket.
As with other social media apps that received a boost in usage from people bored from the lockdown and social distancing measures in recent months, the “quarantine bump” helped TikTok broaden its appeal among comparatively older demographics and further propelled its overall growth. In the U.S. TikTok added 12 million new users in March alone, bringing it up to 52.2 million total US users, per Comscore. The share of U.S. visitors ages 25 to 34 grew by 5% from January to April, and visitors ages 35 to 44 grew by over 3% over the same time frame. The increased presence of millennial and Gen X users will further broaden TikTok’s appeal to marketers, partly because these users have more immediate purchasing power than younger users.
The “quarantine bump” helped TikTok broaden its appeal among comparatively older demographics and further propelled its overall growth.
Besides expanding and diversifying its user base, the quarantine bump has also given TikTok a major boost in user engagement. According to Comscore, average time spent per visitor for the TikTok app and website combined was 476 minutes (nearly 8 hours) for the month of March, which marked a 55.6% increase since October, beating out the average of 319.5 minutes (roughly 5 hours) U.S. users spent on Instagram app and website in March.
In addition to benefiting from the lockdown-induced boredom, TikTok’s continued growth momentum can also be attributed to two factors: the broad distribution of its content on other social platforms and the timely rollout of its live-streaming feature. For the former, TikTok makes its videos easily downloadable and sharable to other social platforms such as Instagram and Twitter, thus allowing the wide circulation facilitated by meme accounts to earn organic impressions for its content with clear watermarks. For the latter, the explosion of live content on social media during the lockdown era helped TikTok close the gap with rival platforms such as Instagram and Facebook and deepen user engagement.
With such strong growth momentum, it is no wonder that TikTok is starting to plot its expansion plan, including a standalone music streaming service that builds on its strong influence on the music industry, as well as a host of ad-products aiming to get brand advertisers on board and make the app more profitable. TikTok’s parent company ByteDance expects the app to generate about $500 million in U.S. ad revenue this year, according to a report from The Information.
“Don’t Make Ads; Make TikToks”
Throughout most of 2019, TikTok has been prioritizing growing its global user base and deepening engagement over monetizing the massive attention captured by its platform. Sure, there were some periodical early tests of sponsored challenges and app-install ads, and it even went as far as beta-testing some invite-only ecommerce features with select content creators, but overall, TikTok’s emphasis has been on building out its platform for users rather than advertisers.
Now, this is finally about to change, given the sustained growth TikTok has achieved. Besides the obvious financial incentives, getting brands on board is a necessary step for TikTok to expand its cultural footprint and become further ingrained with the U.S. digital media ecosystem. Of course, brand marketers have been increasingly intrigued by TikTok’s growing audience size and cultural impact, so the timing is right for both sides.
Last week, as part of a concerted push to court brand advertisers, TikTok announced a marketing solutions platform called “TikTok for Business,” which provides brands with access to its various ad products and formats, including TopView and Brand Takeover, two full-screen ad units that pop up when a user launches the app; in-feed video ads; branded lens effects; and the aforementioned branded Hashtag Challenges. It is worth noting that the branded effects unit, which previously enabled brands to apply 2D images and 3D effects in a custom-made camera lens effect, have now been expanded into augmented reality. This new AR unit, called Brand Scan, will allow users to drop a 3D brand asset in either the foreground or background of their TikTok videos.
Given the variety of ad products available, TikTok is also rolling out a learning center to help marketers better understand its platform and offerings through product guides, resources and creative best practice. It also recently debuted Creator Marketplace, a native influencer marketing platform for brands to browse the top content creators on TikTok worldwide and match with the most suitable ones based on focus topics, location, and reach.
One message TikTok keeps hammering home is that brands need to understand how TikTok works before they advertise on TikTok. Any attempt to transplant existing brand assets and creatives made for other social platforms onto TikTok would not work well, given TikTok’s unique environment and user experience. To unleash TikTok’s full algorithm-driven potential, brands need to forget about conventional social media ads and learn to make TikToks that convey brand messages in a fun and authentic tone that befits the platform.
Brands need to understand how TikTok works before they advertise on TikTok.
As expressed by its motto “Don’t make ads; make TikToks,” brands on TikTok typically deploy the types of hashtag challenges or other videos that are picked up by the app’s feed and have the potential to go viral in an organic fashion. Cosmetic brand NYX’s recent #BrowFitness challenge, for example, managed to amass 705 million views in two days by seeding the challenge with various beauty influencers on TikTok and promoting it with a prominent banner in the Discover tab. The aforementioned AR ad unit and influencer platform are also worth exploring for brands looking to kick up their TikTok game a notch.
It is also worth noting that unlike its Chinese sibling app Douyin, whose monetization heavily leans on social commerce integrations to drive sales directly for brand partners, the social commerce elements has been somewhat downplayed in TikTok for the U.S. marketers, reflecting the difference in market readiness and leaving room for future developments. Nevertheless, brands like Serta Simmons are already taking a page of the social commerce playbook of many D2C brands and leveraging TikTok’s reach among younger audiences to drive direct sales.
One downside of advertising on TikTok has been in its lack of targeting and measurement capabilities, especially compared to the likes of Facebook and Instagram. In an encouraging sign, TikTok has partnered with ad-tech firm Sprinklr to develop better audience segmentation and ad targeting options. While TikTok’s ad options are predominantly platform-wide at the moment, this Sprinklr partnership, which opens TikTok’s ad API for the first time to a third-party ad solution and features a targeting component that allows marketers to tailor their ad creative in real time, is indicative of the direction that TikTok is developing to build out its ad platform. With certain TikTok ad prices jumping as much as 50% quarter-over-quarter, brands would be smart to get in early and start exploring the variety of ad products available.
Assuming that TikTok can keep its momentum and continue to grow its audience and develop its ad platform, by the end of 2020, social media marketers may need to prioritize spending on TikTok, as its growing user base and maturing ad platform would make it no longer an experimental channel. That assumption, however, is being challenged by two significant factors — increased competition and intensifying scrutiny.
Everybody Wants to Be TikTok
It is no secret that since TikTok first started blowing up outside China, major tech firms have been vying to counter its explosive growth with their own takes on short-form video apps. Back in November 2018, when TikTok first started gaining momentum in the western world, Facebook quietly launched Lasso, an app whose functionality maps closely to that of TikTok, and later tested it in Mexico. But Lasso failed to catch on and has been abandoned to make way for Reels, another TikTok-inspired app made by its subsidiary Instagram.
First launched in November 2019 in Brazil, Reels has gained traction among the test audiences, as indicated by Instagram’s recent moves to expand Reels to France and Germany, as well as incorporating it into Instagram with dedicated sections both in user profiles and, for public accounts, the Explore tab.
Facebook’s strongest competitive advantage is its massive scale. Were it to incorporate Reels into Instagram like it integrated the Stories formats four years ago to deter Snapchat’s growth — and its recent move suggests that it is indeed exploring that option — TikTok would instantly face a major competitor. However, the distinct ways in which that Instagram and TikTok surface their respective content means that it would be much harder for Instagram to fully co-opt TikTok’s unique features, such as its remixable soundtracks for video creation and a complete disregard for real-life social graphs, without compromising its existing user experience.
Besides Reels and Lasso, YouTube announced last week that it started testing a new feature on mobile that will allow users to record 15-second long multi-segment videos, the same default video length for TikTok. As a result, users can no longer record video content longer than 15 seconds within the YouTube app itself. Instead, they’ll have to record longer videos on their phone and then upload them from their phone’s gallery to YouTube.
This interesting shift in mobile content creation is clearly aimed at encouraging mobile users to create more TikTok-style short videos, but its video creation tool still severely lacks the kind of features that TikTok offers to lower the entry barrier for content creation, such as filters, AR effects, background audio tracks, and video duets. Even though YouTube has a content recommendation engine that could rival TikTok, simply focusing on the length of the video won’t be enough to jumpstart short-form content creation on YouTube.
Besides the attempts made by Facebook and YouTube, there is also a growing list of short-form video apps that wish to capitalize on TikTok’s success, including Vigo, 4Fun, Vmate, Dubly, Zynn, and Byte, a new app made by the creators of Vine, the OG short video app. However, none of them seems to be gaining enough traction to break out as a legitimate contender. Similarly, its domestic rivals like Kuaishou and Likee are both playing catch-up with Douyin in terms of social commerce integrations and global expansion. Without the kind of billion-dollar marketing campaigns that TikTok’s owner ByteDance launched to promote TikTok in global markets, they are unlikely to break out of the Chinese market.
All things considered, TikTok is in a rather secure position in terms of staying ahead of direct competitors for now. However, a larger threat to its long-term prospect is taking shape in the court of public opinions as well as in the arena of geopolitics.
TikTok is in a rather secure position in terms of staying ahead of direct competitors for now.
Candle in the Headwind
From the start, TikTok’s meteoric rise worldwide has been mired in a series of controversies. From allegedly sending user data to the Chinese servers, to censoring pro-LGBTQ content and politically sensitive topics, to reportedly suppressing content from users that are deemed “ugly and poor” by content moderators, to snooping on users’ clipboard content, and the many, many, dangerous and problematic hashtag challenges that have bubbled up on TikTok, the long list of controversies over the past two years kept the app constantly in the news and attracted increasing public and regulatory scrutiny. For an app that was once called “‘fundamentally parasitic” by Reddit CEO Steve Huffman, TikTok clearly faces a lot of challenges when it comes to building public trust and managing its reputation.
To its credits, TikTok has taken some substantial steps to address those controversies and improve its platform. Countering data security concerns, the company published a blog post in October stating that it keeps all U.S. user data in the United States, with a backup server in Singapore, and that none of it is subject to Chinese law. In March, the company announced it has formed a content moderation committee consisting of outside experts to address content censorship concerns. It also rolled out some transparency initiatives to address the user privacy concerns in the U.S. To comply with EU’s regulations, TikTok has joined the EU’s Code of Practice on disinformation and announced plans to transfer the privacy oversight of European users from its United States entity to its UK and Irish entities. In addition, TikTok recently hired Disney’s streaming chief Kevin Mayer as its new CEO, whose veteran expertise in dealing with U.S. media companies and regulators is certainly a much-needed asset for TikTok.
Still, being the first Chinese app that broke out onto the global stage comes with its special set of risks. Its Chinese ownership guarantees that it will often be heavily scrutinized out of geopolitical concerns, as evidenced by the national security concerns raised by the U.S. Department of Defense in January. This existential threat for TikTok reached a new level when news broke on June 29 that TikTok, along with 58 other Chinese apps, has been banned in India by the Indian government, ostensibly citing security and privacy concerns. However, many have connected this sweeping ban of Chinese apps to the recent border conflicts between India and China and the rise of anti-China sentiment among Indian consumers.
Being the first Chinese app that broke out onto the global stage comes with its special set of risks.
Regardless of the reasoning behind the ban, this is no doubt a huge loss to ByteDance, given that India is a huge market for the app and has accounted for 30% of TikTok’s two billion downloads worldwide so far. Naturally, the ban created a vacuum for TikTok competitors and local alternatives to move in and convert hundreds of millions of users that were left hanging. For instance, the aforementioned Instagram Reels has promptly started testing in India this week, and Roposo, a homegrown TikTok competitor, saw its user base jump by 22 million in the two days following the official ban.
More importantly, this ban sets a precedent for nations to ban Chinese apps, or apps from any foreign country for that matter, as a form of economic sanction and political leverages. For an app as controversy-prone as TikTok, the ongoing trade war between the U.S. and China poses a major cause for concern. Already, the U.S. government is reportedly considering a ban on TikTok and other Chinese social media apps. Given the growing geopolitical complications, TikTok’s future is as precarious as a candle in the political headwinds.
Even ramping up its ad platform and endearing itself to U.S. companies as a marketing channel won’t necessarily help shield it from regulatory sanctions — if anything, the recent ad boycott of Facebook over its failure to stop the spread of hate speech and misinformation has proven that brand advertisers are increasingly taking their social responsibility seriously and holding social media platforms accountable.
That being said, TikTok still has one card up its sleeve that could ultimately save it from itself, and that is its increasingly entrenched position as the ground zero of digital culture and the go-to platform for democratized creativity. So long as it can stay clear of third-rail issues and keep heavily influencing the music industry, foregrounding queer youth culture, driving the evolution of influencer culture, and facilitating digital activism, TikTok’s growing soft power will keep it appealing and popular among the general public and therefore away from harsh regulatory sanctions. And as long as it stays culturally relevant, it is a platform that brands need to explore and invest in.
As long as it stays culturally relevant, TikTok is a platform that brands need to explore and invest in.
