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Business Making Money Online

How Does TikTok Make Money? Overview of the Business Model

How do you spend your free time? Hanging out with your friends or watching videos on TikTok.

Is there anyone who doesn’t know TikTok? Of course nobody!!!

Even app developers are learning from TikTok’s success as it’s one of the prime industry examples of localization done right by a Chinese app company on a global scale.

TikTok was introduced by ByteDance in China. The ultimate goal of TikTok is to build an interactive experience for users. TikTok was united with Musical.ly. TikTok is leading in the United States, France, Indonesia, Russia, Germany and more. The application is accessible in 155 countries and 75 languages. According to marketing reports, TikTok has over 500 million active users around the globe. Among them, 85% of users are under 24 years. TikTok is a user-friendly application and available for free on Google Play Store and App Store. TikTok had a huge number of downloads when compared to Instagram, Facebook and Snapchat.

There are many benefits of TikTok such as wholesome entertainment, instant publicity and more. User can create 15 seconds of a short video in this app. Videos get viral and provide users with reputation and recognition.  They can select from a massive range of audio, songs, filters, special effects etc. Also, a user can make funny video content within a fraction of seconds.

Do you know? ByteDance was recognized as the “Most Valuable Startup Company in the World”. According to analysis, TikTok ByteDance income has reached more than 7 billion dollars in the first half of 2019. Sounds interesting right!!! Want to earn a billion dollars? Wondering how to make an app like tiktok, there are various application development tools available in the market. Among them, The App Solution is one of the best choices to create amazing applications in no time.

The million-dollar question is how TikTok is earning a billion dollars.

Let’s discuss the Tik Tok business model,

In-app purchase

Apps in every category on the Google Play Store and App Store can be an in-app purchase. Simply put, in-app purchase which prompt users to buy a product or subscribe or play a game. TikTok is making money through in-house purchase. This application provides in-app purchases of coins. These coins are starting at 100 to 10,000. Users can gift these coins to their friends or favourite creators. Also, these coins can be exchanged into digital gifts. TikTok users spent more than 3.5 million dollars on in-app purchases in October 2018.

TikTok ads

Have you ever heard about TikTok Ads? Of course many times!!!

Similar to YouTube, TikTok is providing an advertisement to promote brands. Small and large brands are using TikTok to promote their products or services through in-feed video ads. These videos are displayed in between user-generated content. Also, TikTok is offering brand takeover ads for their users. These ads help users to display their brand whenever they turn on TikTok.

There are various pricing models available in TikTok such as,

  • Cost Per Click: It charges the merchant or advertiser on TikTok whenever the user clicks on the specific ad. Users are not expected to purchase or subscribe to the newsletter.
  • Cost Per View: CPV is also called Cost Per Mile. TikTok charges advertise for 1000 impressions of their advertisement.
  • Cost Per Action: It’s an important pricing model for business. The advertiser pays to TikTok when a specific action is performed through the ad. The action can be app installation, purchasing, form submission, subscribing newsletter, etc.

Paid subscription plans

TikTok earns money through subscription model as well.

Everybody knows TikTok is a successful platform for news media. Now, TikTok is planning to launch a music streaming service. These service offers paid music subscription plans like Apple Music and Spotify. Users can create and share their videos at any time and anywhere. This subscription music plan helps TikTok to reach a diverse audience across the globe.

Fundraising

Is your project is at the initial stage? If yes!!! Fundraising is the best choice for you. Keeping it simple, fundraising is the process of collecting money by requesting donations from business, individuals or charity foundations. Even TikTok, fundraising one of the approaches to make money. According to research, more than 3 billion dollars have been funded by high-class investors.

Conclusion

TikTok is ruling the world. People just can’t stop using the TikTok application. Because it is the combination of Instagram, Facebook and YouTube. Companies are using TikTok to promote their brand and earning money. The same way, TikTok is implementing multiple ways to make money such as in-app purchase, advertisements, paid subscription plans, fundraising and more. Also, TikTok allows massive content creators to monetize their content and generate money from it. Considering long-term success for content creators TikTok can be a win-win strategy.