TikTok changing business?
On one side of the board game, we have influencers that practically allow brands and users to control their lives and the pace of their creativity for money. On the other side, brands and companies are capable of everything to ensure that their products and services reach the right consumers and flourish their euphoric desire to buy a new thing.
Ok but… The marketing and advertising business hasn’t worked that way since, let’s see, always?
I was surprised to read the latest issue of Fortune magazine (October/November 2021) and see that the cover story was just titled “Welcome to the TikTok Economy”, by Jeffrey M. O’Brien.
Let’s be honest, it makes sense when we look at the recent report by Neo Ranch and Influencer Marketing Hub which shows that the creator economy is a $104 billion market.
In 2019, Rebecca Fannin was talking about the strategy behind TikTok’s global rise, considering that few tech startups have taken off as quickly as Beijing-based ByteDance, the creator of the highly popular 15-second video app, TikTok. In just two years, TikTok has emerged to rival companies like Netflix, YouTube, Snapchat, and Facebook with more than 1 billion downloads in 150 markets worldwide and 75 languages. On the app, homemade videos showcase everything from comedy to lip syncs to dog grooming tips that users create and share on their phones.
The Fortune’s article discusses the executive Blake Chandlee, who believes the underlying business model of Facebook and its ilk – harnessing vast amounts of user data to deliver personalized ads – is falling out of favor, driven in part by the movement to allow consumers to control their data and manifested in, for instance, Apple’s security settings and the EU’s GDPR policies.
By contrast, Chandlee calls TikTok a “content graph” company whose primary goal is not to connect, but rather to entertain. The TikTok algorithm’s proficiency makes Facebook and Instagram seem like social media 1.0 in comparison. TikTok’s “For You” feed tends to be more explosive. It’s an auto-discovery engine, serving up a dopamine hit with every swipe. So TikTok is an awesome place for marketers if they’re brave enough to hand over their brand and let the audience run with it. A lot of brands are afraid to do that.
How People Are Making Money with TikTok?
Top creators can earn tens of thousands of dollars for a single sponsored post. For brands, it’s even more lucrative. “For every million dollars that brands spend on influencer marketing on TikTok, they’re seeing $7.2 million in sales over the first 90 days,” says Seth Kean, CEO of ROI Influencer, a New York City company that measures engagement and sell-through across social media platforms, according to Fortune’s article.
But Rebecca Jennings, in another article for Vox, remembers that this new way of making dollars changes everything. Basically, what’s happening is that tech people are finally realizing that no one is going to use a new app unless there is a possibility of getting rich and/or famous off of it (an exaggeration, but also not), and so a slate of platforms are emerging to leverage that demand.
As Li Jin argued in the Harvard Business Review in December 2020, the gap between creators making a living off of their content and those barely making anything is widening. At this point, pretty much all the wealth is sprinkled among the very top tier of influencers. “The Charlis and Addisons will always emerge and exist, but it’s vital for creator platforms to provide paths for upward mobility and democratize opportunities to succeed,” Jin writes.
According to the article, there’s a lot more money in the Creator Economy than just the money going into it: “Last year, TikTok launched a Creator Fund to pay its users directly for popular content. Snapchat launched a similar program called Spotlight, which offers creators millions of dollars of compensation a month. This past week, Facebook, which owns Instagram, announced that it would pay out more than a billion dollars to users across its platforms by 2022.”
I’m curious to know when TikTok’s plateau moment and the creation of short videos will happen, as well as if the microblog also reached its moment. But it doesn’t look like we’re close to this in the near future.
What do you think?
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