What is TikTok?


What is TikTok?

TikTok is a popular social media application that allows users to create, view, and share 15-second videos recorded on cell phones. With its custom wacky short video feeds with music and sound effects, the app is notable for its addictive quality and high levels of engagement. Both amateur and professional creators can add effects like filters, background music, and stickers to their videos, and they can collaborate on content and create split-screen duo videos even if they are in different locations.

Understanding TikTok

Launched in its current form in 2018, TikTok joined the ranks of the social media giants in record time. It had around 1 billion monthly active users worldwide in early 2021 and had been downloaded in the US at least 200 million times, according to Wallaroo Media.

Like all social media companies, TikTok has been the subject of persistent, albeit vague, concerns about the possible use or misuse of the private information it collects about its users. The difference is that the majority of TikTok is owned by China.

Key takeaways

  • TikTok allows users to view, create and share 15-second videos recorded on cell phones.
  • The app was launched in 2016 by Chinese tech company ByteDance.
  • Now available in more than 150 different markets, TikTok has offices in Beijing, Los Angeles, Moscow, Mumbai, Seoul, and Tokyo.
  • The app had around 1.1 billion active global users in early 2021.

The history of TikTok

That may change soon.

First, consider what TikTok isn’t: it’s not Facebook. Facebook has been around since 2004 and still dwarfs every other social media site on the planet, both in audience size and advertising revenue. It had 2.6 billion monthly active users in early 2021, and that doesn’t count the parent company’s WhatsApp and Instagram sites. It made $ 17.4 billion in advertising revenue in the first quarter of 2020 alone. Approximately 80 million small businesses around the world have Facebook Pages.

So what does a rival in the social media business do to compete? On the one hand, wow the youngest with a bottomless ocean of short, nimble entertainment that will appeal to advertisers who want to reach them. Only 7.1% of TikTok users are 50 or older.

Facebook attracts more or less uniformly across generations.That’s good, but marketers looking for youthful demographics aren’t known for being personable. TikTok, not Facebook, has the target audience that the brands and marketing companies that serve them want now.

TikTok launch

The name TikTok is meant to suggest the short format of the videos. Launched in 2016 by Chinese startup ByteDance, it is known there as Douyin. Its stratospheric usage growth really began in late 2017, when it acquired a rival app, Musical.ly, and transferred its list of 200 million accounts to TikTok.

ByteDance was reportedly worth as much as $ 140 billion in mid-2020, based on the private sale of a small stake in the company. TikTok was only said to be worth around $ 50 billion.That would make it the most valuable startup in the world.

TikTok Business

Marketing on TikTok is still in its infancy, but a growing number of agencies are eager to help brands create the kind of quirky content that gets clicked on TikTok. Conventional advertising that emphasizes the superior qualities of a product does not work. Light and fun campaigns with music hit the spot. The ultimate goal is to go viral on the site and encourage copycats by TikTok users.

Some of the successful marketing campaigns on TikTok:

  • The Chipotle restaurant chain ran a Halloween “Boorito” coupon giveaway campaign that encouraged TikTok users to dress up for the holidays and post their images. The campaign garnered four billion views.
  • elf Cosmetics partnered with some social media influencers to create a reality show and online contest called #eyeslipsface. The ad campaign got more than 3.8 billion clicks.
  • The NBA signed up for an account and earned more than 12 million followers to date. His goal is to improve global awareness of the NBA, especially among young people.

ByteDance was reportedly valued at $ 75 billion as of 2018.

TikTok has offices in Beijing, Berlin, Jakarta, London, Los Angeles, Moscow, Mumbai, Sao Paulo, Seoul, Shanghai, Singapore, and Tokyo.

Other sources of TikTok income

Like many other social media sites, TikTok also makes money from in-app purchases. Users can purchase coins priced from 99 cents to $ 99.99 and use them to tip their favorite creators on the platform.

The company raised $ 80 million from in-app purchases globally, according to a April 2019 Report by Sensor Tower. In the first quarter of 2019, user spending reached an estimated $ 18.9 million globally, 222% more than the app collected during the same period last year.

TikTok only started running display advertising in 2019. Instead, brands open user accounts on TikTok and, like any of their users, create and post mini videos. They can pay to promote their videos to other users. The ultimate goal is to go viral and stimulate take-off, attracting a large audience for your brand message.

TikTok user base

TikTok is one of the most popular social media apps in the world and is available in more than 150 markets and 75 languages. The application reached nearly two billion downloads in March 2020, with 104.7 million downloads only in January 2020, according to market analyst Sensor Tower.

Here’s a breakdown of some of the app’s most notable demographics:

  • 69% of users are between 13 and 24 years old.
  • 60% are women.
  • Its users spend an average of 46 minutes a day.
  • A quarter of the app’s downloads come from India, with over 200 million active users.
  • Use in Thailand is increasing, with one in seven people downloading the app.
  • About 96 million downloads They are from the USA.

TikTok Policy

Like most social media sites, TikTok is not immune from controversy.

TikTok and many other Chinese-made apps were banned in India in mid-2020 as a danger to the nation’s sovereignty. The move came amid growing tensions between the two nations.

TikTok is banned in Bangladesh. It was also briefly banned in Indonesia for “pornography, inappropriate content and profanity.” The ban was revoked a week later, after the company promised to remove all objectionable content from the platform and establish a local office to monitor and disinfect the content.

In February 2019, the company paid $ 5.7 million in the US to resolve allegations that it illegally collected personal information from children. It is the largest civil penalty ever obtained by the Federal Trade Commission (FTC) in a child privacy case.

TikTok vs. President Donald J. Trump

Starting in July 2020, then-President Donald J. Trump launched a public attack on TikTok, threatening to ban it in the US, arguing that the Communist Party of China could use the data collected about its users to spy. to US citizens. He demanded that TikTok be sold to American interests to eliminate the threat.

Concerns about the use and misuse of private information by social media companies is a bipartisan issue in Washington, so the concern gained some traction. However, in September 2020, Trump had declared that he had solved the problem. TikTok’s US operations would be separated from its Chinese owner, ByteDance, and incorporated as a US company.

The proposed deal would have created a new spin-off company, TikTok Global. Oracle would own a 12.5% ​​stake in the company and become its cloud provider in the US This may have been intended to ease concerns that China was using TikTok to collect data on Americans, but apparently the actual change is minimal. TikTok data on US users has always stayed in the US, so they are simply moving from one cloud to another. Meanwhile, Walmart tentatively agreed to buy a 7.5% stake in TikTok Global. Plan live-streamed shopping events hosted on TikTok. The remaining 80% would remain owned by ByteDance.

The tentative settlement was stalled by numerous court challenges, and the future of the proposed settlement remains uncertain under the Biden Administration. During a briefing at the White House on February 10, 2021, press secretary Jen Psaki denied that President Biden had established a new policy on the app. “It is not accurate to suggest that there is a new proactive step by the Biden White House,” Psaki said. “Generally speaking, we are assessing the risks to US data, including TikTok, and will address them decisively and effectively.” Psaki declined to set a timetable for when such a review would conclude.

TikTok FAQ

Here are the answers to some frequently asked questions about TikTok.

What company owns TikTok?

The majority owner of TikTok is ByteDance, a Chinese technology company. In late 2020, following pressure from the Trump Administration, ByteDance agreed to create a new company, TikTok Global. In this proposal, ByteDance would continue to own 80% of TikTok Global, with Oracle and Walmart as minority owners and US partners. As of May 2021, the deal is awaiting review by the Biden Administration.

What is the purpose of TikTok?

TikTok is a social media application dedicated to short-form videos created and consumed by users. The length of the videos is between 15 and 60 seconds.

The format lends itself to entertainment and comedy. However, it is being used more and more for infotainment. So-called influencers who get a consistent audience on TikTok offer tips and advice snippets along with self-promotion. Beauty, fashion, personal finance, and cooking are popular topics for informational videos.

Celebrities with a young audience perform for him.

Increasingly, the format is used to sell products.

How do I invest in TikTok shares?

TikTok is not publicly owned (100% privately owned by ByteDance) and the previous agreement to create TikTok Global remains on hold. This includes any plan to issue an initial public offering.

Is TikTok a publicly traded company?

TikTok is not publicly owned as of May 2021. Watch for the announcement of an initial public offering for TikTok Global.

Is TikTok Banned?

At the time of writing, TikTok is banned in India and Pakistan. It was briefly banned but restored in other countries, including Indonesia and Bangladesh.

Then-President Donald Trump threatened a ban in the US, but withdrew after a deal with owner ByteDance to spin off TikTok as a separate entity, TikTok Global, with minority ownership in the hands of US companies Oracle and Walmart. .

www.investopedia.com

READ ALSO:  Definition of Go-Go Fund
About the author

Mark Holland

Leave a comment: