From Dancing to Cha-Ching, TikTok is Breaking The Bank
Short-form video content behemoth TikTok has become the first app to exceed $10 billion in user spending in a single year, as per the recent data from data.ai, Bloomberg reported. The publication's analysis shows that TikTok took a large share of the total app spending in 2023, surpassing $10 billion in in-app purchases. This is the first time in history that a non-gaming app has achieved such results. This demonstrates the app's dominance in the market, despite facing legal challenges in several countries.
The data shows despite games spending being down, video and content apps, TikTok, and Disney+ drove an 11% rise in consumer app sales in 2023. The gaming app industry witnessed a double-digit sales decline in China which dragged global sales down by 2%.
Here’s How TikTok Exceeded $10 Billion in User Spending
TikTok achieved such phenomenal success as it drives in-app spending in a multitude of ways. From tipping creators to shopping on the app, several activities drive income for the app. Even the in-app creators are roped into this. While most of them earn a sizable income from direct tipping from viewers, several others make an earning from a percentage of sales made through the links they share on their videos.
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TikTok, which has been focusing on in-app spending, has made it extremely easy for creators to link products to their content. There are highlighted yellow buttons at the bottom of videos which allow users to click through to the TikTok Shop and start browsing, and buying the products promoted in the video.
Earlier, a CNBC report suggested that young viewers, especially Gen Z women are driving spending trends on TikTok. As per the report, women in their 20s spend more time on the app than male peers. Further, trends like #wardrobehaul or brand haul, in which creators share products of a brand, are creating a sense of FOMO for viewers, driving even more spending.
“Social apps and the creator economy pioneered new pathways to monetization beyond advertising,” Lexi Sydow, director of corporate marketing and insights at data.ai told Bloomberg.
Further, according to an eMarketer report, U.S. adults spent 55.8 minutes per day on TikTok in 2023, which was up from 45.3 minutes in 2021. Also, the number of monthly users on TikTok in the U.S. has surpassed 150 million, nearly half of America’s population.
However, the biggest revenue source for various apps, remained advertising, according to the data.ai report. Advertising revenue rose to 8% of the total app revenue in 2023.
Trends to Look Out for in 2024
Looking ahead to 2024, the report suggests that direct consumer monetization in social apps through in-app purchases will grow by 150% to $1.3 billion. This will be primarily driven by people spending more time than ever on their phones and therefore social apps.
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As per an Adage report, TikTok will attract several fast-fashion and consumer goods brands to its internal e-commerce platform, and heavily promote the videos and infomercials on the popular product on its “For You Page.”
