Time for TikTok to bring in the big bucks
From Will Smith to Arnold Schwarzenegger, it has become the social media app of choice for celebrities in lockdown. Many businesses have been struggling to simply survive, but in recent weeks the video-sharing platform TikTok has experienced a surge in global popularity that has enriched its Chinese owner, ByteDance, and left rivals including Facebook and Snapchat looking anxiously over their shoulder.
Last month, the app, which is used for sharing short videos of users dancing or lipsyncing to songs, crossed the 2-billion total download mark — just five months after hitting 1.5-billion downloads. In the quarter that ended March 31, TikTok was downloaded 315-million times — the highest number of downloads for any app in a quarter. That makes it the fastest-growing social media app in history.
With an army of loyal fans desperate for a new way to express themselves while stuck at home, this week TikTok scored another victory by hiring Kevin Mayer, a veteran Disney dealmaker, as its CEO. Known as “Buzz Lightyear” inside Disney because of his swagger and determination, Mayer led the launch of video streaming service Disney Plus. His appointment is a powerful statement of intent.
TikTok’s new CEO joins the business as it rides a wave of popularity across new demographics, outside of its core user base among teenagers and people in their 20s.
The app has even created its own category of celebrity, with teenage stars such as Charli D’Amelio, Addison Rae and Riyaz Afreen racking up tens of millions of followers for their mixture of dance routines and comedy sketches.
TikTok is also becoming an increasingly powerful player in online advertising.
Among the most pressing issues in Mayer’s in-tray is likely to be growing tensions over its Chinese ownership amid escalating tensions between Washington and Beijing. Hiring Mayer to run TikTok may help to ease some of these worries about its parent business.
“Having more American leadership is a priority” for TikTok, says Yuval Ben-Itzhak, the CEO of social media marketing company Socialbakers. “It’s definitely the smart way to do it.”
Last year, the Committee on Foreign Investment in the US began a probe into the security of TikTok users’ personal data. Regulators expressed concern that TikTok’s parent may have access to user data.
Experts say Mayer is also likely to prioritise striking valuable brand deals, which could help to increase the cost of ads on the service.
“The business problem they have is that they have a massive supply of consumers on the platform engaging with content but they have a lack of brands spending money,” Ben-Itzhak says. “The focus for TikTok now is ‘Let’s turn on monetisation.’ ”
Sensor Tower estimates TikTok’s gross in-app revenue for March at $44m (R805m), lagging behind $52m for YouTube.
Mayer will hope to catch up with YouTube and turn TikTok’s millions of users into paying fans of the app.