- TikTok and its Chinese version Douyin last month saw a 10-fold surge in user spending to $78 million, pushing the social video app ahead of Google’s YouTube to become the highest-earning non-game app, per Sensor Tower. The researcher estimated that 87% of that user spending was in mainland China and 8.2% was in the U.S.
- YouTube’s in-app revenue rose 57% to $76 million in April from a year earlier, with about 56% of that growth coming from the U.S. and 11% from Japan, the researcher found. Tinder, Disney+, Tencent Video, Netflix, Iqiyi, Bigo Live, Line Manga and Google One rounded out the top 10.
- TikTok was the highest-earning non-game app in Apple’s App Store, while Google One performed best in the Google Play store for Android devices.
While TikTok’s parent company ByteDance has big ambitions to increase ad revenue, the social video app also has a healthy business selling digital coins that people use to pay tips to their favorite creators. Sensor Tower’s data suggest that in-app revenue for TikTok and Douyin could exceed $1 billion by next year. The practice of tipping creators is more common in China, and it’s not clear how much TikTok can grow that source of revenue outside the country. Instead, it’s more likely to monetize the popularity of its platform through ad sales while sharing revenue with creators and influencers who develop exclusive content.
TikTok’s further development into a mobile marketing platform is likely to come into focus with the hiring of Kevin Mayer, former head of Disney’s recently launched video streaming service, as its new CEO as of June 1. Mayer is a seasoned media executive who can help to position TikTok as an advertising channel that reaches younger audiences who are forming media consumption habits that include mobile devices.
Generation Z audiences tend to watch mobile video throughout the day, making TikTok’s short clips ideal for capturing their attention. TikTok highlights videos based on their chances of going viral instead of emphasizing accounts that users follows, while also urging people to share their own videos. That activity increases the likelihood that TikTok users will engage with brands that run ads or sponsor branded hashtag challenges that require audience involvement.
TikTok’s increased in-app revenue comes as the coronavirus pandemic drives a surge in downloads among people who are stuck at home and are using their mobile devices for entertainment or to keep in touch with others. TikTok has been downloaded more than 2 billion times, including a record 315 million downloads in Q1, a separate Sensor Tower study found. The app’s U.S. user base jumped 56% to 28.8 million from October 2019 to March 2020, according to Comscore data cited by eMarketer, and has plenty of room for growth against more established competitors like Facebook. EMarketer estimated that TikTok will reach 60.3 million U.S. consumers, or about 27% of social network users, by 2024.
That growth has drawn the interest of brands that either buy ad inserts in the app or sponsor hashtag challenges that spur viral growth as people share videos with their friends and followers. Brands including Chipotle Mexican Grill, E.l.f. Cosmetics, the NFL, Ralph Lauren, Walmart and Warner Bros. have adopted TikTok in recent campaigns.