Unless you’ve been living under a rock lately, chances are you’ve heard of TikTok. And you’re certainly not the only one. TikTok is one of the fastest-growing social media platforms, providing millions of users with entertainment through short videos every day. But have you ever wondered how TikTok makes its money? The app is free to download, so how do they turn a profit? In this article, we’ll explain how this mysterious app, which millions of younger generations can’t get enough of, makes its money. Read on to find out!
One clear way TikTok makes money is by running ads. In June 2020, the popular video-sharing app launched TikTok for Business as a way for brands to run their own ads within the app. And since January 2022, it has also been possible for companies and advertisers in the Netherlands to create ads on TikTok. There are different types of TikTok ads, including In-Feed ads, Brand Takeovers, and Branded Hashtag Challenges.
In-Feed ads appear between videos as users scroll through their For You pages (similar to how ads appear in Instagram Reels). If you’ve ever been greeted by an ad immediately after opening the app, that’s a Brand Takeover ad. With Branded Hashtag Challenges, brands can create their own hashtag and challenge, then pay to have the tag appear in people’s Discover feeds.
To run an ad on TikTok, you naturally have to pay a hefty sum of money to TikTok itself. Now that TikTok has an established advertising program, it is one of the app's primary sources of revenue.
Even before ads were a thing on TikTok, the app was already making money through TikTok Coins. This is an in-app currency that users can purchase with real money. This currency is traded in the form of coins, which users can then use to buy virtual gifts for popular TikTok creators, and those creators can exchange the gifts for real money. Naturally, TikTok takes a cut of that money, providing another stream of revenue.
If another company eventually buys TikTok from ByteDance, it could introduce more ways for the app to be profitable, or simply ride the wave of what the app is already doing. Either way, the free app certainly has the potential to become a major cash cow.
You’ve surely noticed influencers competing in livestreams against other influencers to rake in as many ‘donations’ as possible to win the match. Over the past year, these livestreams have become extremely popular on TikTok. This is highly profitable for TikTok, as they take a large portion of what is donated to these influencers. This is becoming a lucrative revenue model for TikTok; they reportedly earn up to 70% of the donations from these livestreams, with millions of donations being made every week in the Netherlands alone.
Do you want to hand over your TikTok Ads worry-free, boost your sales, and maximize your profit? Then you’ve come to the right place at The Ecom Agency!
We take the entire burden of your TikTok ads off your hands and strive for optimal results. Discover the possibilities of TikTok ads and schedule a free strategy call .
Do you want to hand over your TikTok Ads worry-free, boost your sales, and maximize your profit? Then you’ve come to the right place at The Ecom Agency!
We take the entire burden of your TikTok ads off your hands and strive for optimal results. Discover the possibilities of TikTok ads and schedule a free strategy call .
