TikTok - A Product and Strategy Analysis
Analyzing the product, its addictive effect, how competitors are reacting, and where its parent company would head next
In a previous post, we compared Snapchat to TikTok. This time, let’s take a deep dive into the hugely trending TikTok, and what enabled its growth.
TikTok was created by the tech giant ByteDance. It was released in September 2016 under the name “Douyin” in China. Originally, this was marketed as a video-sharing social networking service similar to Facebook and Instagram.
At its core is a machine learning model to know a user’s preferences very quickly based on their interactions (swipe up/down, share, and so on).
In 2017, Bytedance acquired another social media app, “Musical.ly”. This app allows users to create and share short 15-second lip-sync videos. This was deprecated, but most features were included in Douyin.
Musical.ly itself was originally designed for a different purpose - making it easier for lesson planners to create educational and entertaining videos - but this did not get much traction.
Instead, they rebranded and shortened content into 15 second snippets, while providing readily-used songs, filters, and movie clips. This is important, as users now have a base of content to generate their own clips from.
Driving traffic was an issue as videos made on this app was not referenced elsewhere - so, Musical.ly included a watermark logo in their videos, and became super viral after.
Eventually, Bytedance rolls this out to the rest of the world, and you have the current TikTok - massive user base, engagement, and of course revenues - almost $110 million a month from user spending alone. We have not even counted Ad revenues.
Video editing+ filters, effects
Likes and Comments
From TikTok’s March update, the Playlists seems to be leaning towards a combination of Youtube and Netflix, except the content is purely user-generated.
Any new feature that boosts engagement is likely to bode well for their monetization - brands and merchants could benefit by launching tutorials and product features as episodes, where consumers can periodically “check-in” for the latest content.
This adds to engagement as it would lead to a larger pool of consistent users who keep coming back.
Target Audience and Interactions
The three big aspects which make TikTok tick:
Swipe up, down, left or right. Just with 1 thumb. What a lazy way to get entertained at home, but it’s exactly what people are looking for.
The concept of swiping continuously may become boring after a while. Tiktok overcomes this by introducing the concept of variable rewards.
Variable rewards make user’s experiences interesting.
Users may not know exactly what’s coming next, but by having sporadic types of content - happy, sad, enlightenment (knowledge sharing or tutorials), or jealousy (big one), users will continue to scroll.
And for TikTok, this means content continues to be consumed, and more ads can be shown.
Videos are auto-played, and displaying how many likes, comments, and shares there are. The higher the number, the more viral it is right?
And the more you know you haven’t seen it but others have, that FOMO is going to want to lead you to watch through that 15 seconds, lest you miss out on the next most popular thing!
The Bottom Half of The Phone
Wait, what? Seriously?
UI/UX designers know where is the amount of time gestures are done, and for phones, thumbs take precedence due to the low effort required to move it.
The reward comes from content, and if there is a well-balanced way to achieve a low-effort high-reward… the addiction comes.
You may also notice that it’s harder to get out of applications if you are continuously “stuck” at the bottom half of the phone, rather than at the top.
And if you don’t see the need to move, you won’t ever do it, because you don’t feel uncomfortable, bored, or having something else to distract you - you’ve created a bubble for yourself!
This is DouYin, the TikTok in China. In-feed, these ads show up while users are swiping between videos. They help to display brands, whenever they turn on TikTok.
Put into marketing terms, it’s straightforward to charge Cost Per Click, View, or Action based on this button.
Since TikTok already has a robust, scalable way to classify which user belongs in which target audience bucket (note: machine learning), this can be widely used by many types of marketers and businesses.
The more types of content there are, the more user groups that TikTok can cater to, and the more revenue possibilities there are.
In-app Purchases of Coins
Coins are used to gift friends or your favorite creators. Coins can also be exchanged for digital gifts, which can be used while the creator is streaming to give them your sincerest thoughts.
Creators have several ways to make money:
TikTok provides them with an avenue to reach millions while keeping the creation and distribution process simple for creators.
Social Media Impact
Can competitors replicate? What are the alternatives?
Very much so. New platforms are popping up every month. Let’s take a look at how existing players are reacting to TikTok (no pun intended)
On your YouTube mobile app, you might notice a small section while scrolling down. In Beta mode, you can view some insights to how YouTube is intending to take on TikTok - by replicating a very similar experience.
Tap, and you’ll be lead to a TikTok-like experience - swipe up or down to navigate related videos, or record a short. Sounds familiar?
YouTube already has user-generated content too. Now, can they have as accurate recommendations as TikTok? What else is missing?
We can probably do a deeper dive on this once YouTube releases more features.
We were not kidding about blatant copycat approaches. Notice again that the “Create” button is at the center of all menu buttons, with the search always being on the left.
From surveys done by UXPlanet, here’s why:
Overall, the participants’ top 1st action is either to search, or scroll. So let’s give users more of that!
Videos are maxed at 15 seconds, and you can share them to the public or with friends within Instagram.
The screen interactions are also almost the same - scroll up/down in the video’s focus mode, and swipe right for the content creator’s profile.
Tangi by Google
Google focuses more on a niche trend within the larger realm of short-video sharing. Tangi is all about bite-sized tutorials, thus this does not overlap as much with YouTube shorts, which is meant for a general-purpose 15-second snippet sharing.
The content is about a lot more focus on DIY and creative work. Being niche, it can probably attract some kind of crowd and is possibly monetizable, but it remains to be seen if Tangi can get the same kind of engagement metrics TikTok has.
Effect on Content Creators
More platforms could mean more ways to engage with audiences. One video could be uploaded several times, but it does not necessarily mean all platforms are going to be successful. More time would be needed to find and craft creators’ personal brand and content, especially those who are just starting out.
More monetization options. For the creators who do make it, more ways to engage, or prioritize content, or funneling users from one to the other can provide additional means to get extra income. There is a caveat however:
Saturation and shift of trends. The TikTok experience becomes mainstream - you start to see the same UIs, interactions, videos, and trends everywhere else. TikTok may not be so popular after a while - that may mean having no choice for creators, but to find other ways to get more audiences, and that means having to try different platforms in the first place.
Quite cannibalistic in that sense, but that’s how consumer trends flow in the content creation space.
A bulk of revenue is going into 3rd party e-commerce streams. Instead of issuing others a cut, ByteDance could build their own end-to-end e-commerce, with TikTok as their main funnel
In-video commerce links, allowing merchants to run TikTok campaigns via Shopify dashboard
Continue growth despite bans in US and India, by expanding heavily into Southeast Asia.
TikTok is a well-built product riding on a huge trend of community-generated content.
Arguably, TikTok has successfully monetized very quickly through ads, and without users churning.
The execution of the team is something to note - for a small product growing into such a large user base. The technology stack is one that is commendable, while operations are able to keep up.
This infrastructure has enabled the app to scale worldwide, while also providing an excellent way for marketers to reach out to different audience segments effectively.
Bytedance has many flywheels inbuilt into TikTok, and it would definitely be interesting to see how other competitors try to replicate their success.