Saturday, 02 March 2024

Ganizo | Technology

The TikTok Formula for Success

TikTok's rise to success is not surprising. The video-sharing app, originally launched in 2016 as Douyin by Chinese tech company ByteDance, has reached 1 billion users faster than any other social media app.

In the United States, it has become the most popular place to watch videos, surpassing all other social media platforms. This has led major players from Facebook to YouTube to try to imitate TikTok's model and methods, with limited success.

But what is it about TikTok that has made it so popular?

The basic concept is pretty simple: It is a video sharing app that allows users to create and share short videos extremely easily. However, the main novelty that sets it apart is its algorithm.

Unlike other social media platforms, TikTok doesn't rely on a network of friends or acquaintances, but has a super-fast learning algorithm to show videos - from its entire database - according to preferences. of the user. Therefore, anyone can go viral without thousands or millions of connections or subscribers.

The stats speak for themselves: TikTok users spend an average of over an hour and a half on the platform, with 60% of Gen Z using the app. In addition to the appeal of short, fun videos, the rise of TikTok is changing the name of the game in a number of industries.

One of TikTok's biggest impacts is digital advertising.

According to Omdia, TikTok's ad revenue will skyrocket from $13 billion in 2022 to $44 billion in 2027, while TikTok Douyin (an app in China) will skyrocket from $28 billion to $76 billion . By 2027, online video advertising will generate more than $331 billion globally, of which TikTok accounts for 37% of that revenue, or $120 billion.

Meanwhile, YouTube and Facebook together account for 24% of the $77 billion market. This presents a huge opportunity for businesses to reach and engage with young audiences.

The platform's targeting and advertising options allow businesses to effectively reach specific demographics, and the platform's influencer-based marketing opportunities are also becoming increasingly popular.

Another industry affected by TikTok is e-commerce.

The platform has launched live stores in various geographies (e.g. UK, Southeast Asia, USA) on user profiles so that users can make purchases without exiting from the application. If TikTok succeeds, live shopping streams could be the next big step in e-commerce, helping to increase revenue and brand loyalty.

In China, TikTok now derives most of its revenue from in-app direct sales and is rapidly taking market share from established e-commerce giants like JD and Alibaba. Douyin is betting heavily (in China) on so-called "interested" e-commerce (driven by people's interests and passions), in hopes of attracting more and more consumers. gain insights through multi-channel approach (short video, live stream), research, etc.).

The music industry is also affected by TikTok.

The platform's algorithm can effectively match the music to the video, leading to more viral hits and even success on the major charts. TikTok has also introduced the concept of a "TikTok challenge", where users can create a video with a specific song or trend, increasing visibility for the artist or song.

However, TikTok's success is not without controversy.

China's ownership of the platform and potential data privacy issues have led to scrutiny and calls for regulations from government officials in several countries, including the United States. Ky.

Additionally, TikTok has been criticized for its lack of moderation and censorship, with some arguing that the platform has allowed the spread of misinformation and inappropriate content.

Despite these controversies, there are some key takeaways businesses can take from TikTok's success.

Keep it simple: TikTok's success can be attributed to its simplicity. The app allows users to easily create and share short videos that make it engaging. Businesses can take inspiration from this and focus on simplicity and ease of use for their products and services.

Personalization is key: TikTok's algorithm is capable of displaying videos based on user interests, which sets it apart from other social media platforms. Businesses can use this as an example and focus on customizing their products and services to meet the needs of their customers.

Use influencers: TikTok influencer marketing opportunities are becoming increasingly popular. Businesses can use this as an example and focus on using influencers to promote their products and services.

Embrace e-commerce: TikTok has launched in-person stores in various geographies, allowing users to make purchases without leaving the app. Companies can take inspiration from this and focus on integrating e-commerce into their overall strategy.

Leverage data: TikTok's algorithm can learn and adapt to user preferences, which is a huge advantage for businesses to target and personalize offers based on their audience.

Note the privacy issues: China's ownership of TikTok and potential data privacy issues have led to scrutiny and calls for regulations. Companies need to be aware of privacy issues and be transparent with customers about how their data is used.

Embrace content creation: TikTok's success is down to user-generated content, which businesses can learn from by incentivizing and investing in content creation from their customers and employees.

In short, the success of TikTok serves as a valuable case study for companies looking to stay ahead in the ever-changing digital landscape.

By focusing on simplicity, personalization, influencer marketing, e-commerce, data usage, privacy issues, and content creation, businesses can learn from the growth of TikTok and adjust its strategy accordingly.

Sources: TikTok, Behaviour Report