- TikTok boosted revenue 310% to more than $50 million in Q4 from a year earlier, according to an estimate from researcher Apptopia. The gain was especially impressive compared with the prior quarter, when the social video app generated in-app purchases (IAP) of about $20 million, TechCrunch reported.
- Apptopia's estimate of TikTok revenue is tame compared with one from Sensor Tower, a rival app researcher. TikTok's revenue surged 521% to about $87 million in Q4 from a year earlier, Sensor Tower estimated in a separate report cited by TechCrunch.
- In addition to selling sponsorships, TikTok makes money from the sale of virtual currency known as "coins." Users buy coins to tip their favorite video creators, encouraging them to develop more content for the platform. TikTok sells the digital coins in bundles, such as 100 coins for $0.99 or 500 coins for $4.99.
Apptopia and Sensor Tower's separate estimates of TikTok's revenue growth indicate that the social video app has developed a respectable IAP business that drives revenue for the popular app, but doesn't interfere with brands' mobile marketing efforts on the platform. TikTok's digital coins can be used to buy virtual gifts in the app, keeping the revenue under ByteDance's purview. The company has a growing opportunity to carve out a slice of the digital ad market, which is estimated to grow to $518 billion worldwide by 2023 from $385 billion this year, according to researcher eMarketer.
TikTok has been downloaded more than 1.5 billion times worldwide, but only has about 24 million users in the U.S., according to AppAnnie, another app researcher. Its key advantage is its popularity among Generation Z, a fickle audience that ByteDance needs to capture to develop its advertising business and tap into the audience's changing media consumption habits. In the U.S., about 42% of its users are ages 18 to 24, while 28% are 13 to 17 years old, per internal data cited by The Wall Street Journal.
TikTok's popularity among Gen Z has drawn interest from brands, such as American Eagle Outfitters, Chipotle, Ralph Lauren, Uniqlo and Walmart, which have created branded hashtag challenges to urge users to create videos and raise brand awareness. The buzzy platform also is testing social commerce capabilities that let influencers link to pages where users can purchase products featured in videos.
Meanwhile, privacy concerns around TikTok have emerged as the app catches on around the globe. The U.S. Department of Defense last week recommended that military personnel delete TikTok from all government-issued smartphones amid heightened security concerns, The New York Times reported. Parent company ByteDance said it keeps data outside of China and doesn't share any information with China's government.