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TikTok Business Model

TikTok Business Model

Curious about how TikTok makes cash?

The social media biz has been massively changed by TikTok. Time to discover its unique money-making methods and why it’s doing so well!


TikTok is booming with businesses and marketers who want to connect with their audiences. It’s a digital platform that offers a creative way to advertise products and services. For success, consider the target audience, competition, and the best channel for promotion.

Using TikTok for business lets companies reach out to their key demographic in a personal way. With so much time spent online, it can be a great tool for raising brand awareness and engagement. Content marketing experts see it as a great way to build relationships with potential customers.

For success, you need factors like budget, target audience, competitor analysis, content quality, and regular publishing. Knowing how to make the most of TikTok is essential for getting great returns.

Overview of TikTok

TikTok is a video-sharing social networking service owned by ByteDance. It was founded in 2012 in Beijing. People use it to create short videos with special effects and filters. It launched in 2016, and quickly became popular with teenagers.

TikTok is now a very popular platform. People from all ages love it for its content, filters, and collaboration features. It lets users join forces from all around the world!

The TikTok business model has 3 components. User acquisition & engagement, content monetization, and advertising. Ads bring in most of the revenue. Music streaming services, like Spotify, partner up with TikTok to gain more exposure. Musicians can earn money by allowing their music to be used in the app. Companies use influencers for marketing campaigns or product promotions to increase user engagement and brand awareness.

How Does TikTok Make Money?

TikTok is a top app for creating and sharing short-form videos with music, visual effects and performance elements. The app has become the go-to social media platform for creators who wish to build an audience and make money using 15-60 second video clips.

TikTok earns money through different ways. Advertising income is one of them. Ads appear in the “For You” feed, tailored to users’ interests. This makes them more valuable to brands wanting to advertise their products or services. Ads can feature on organic posts, or on promoted posts. This helps creators reach a wider audience. Ads also appear between videos, creating revenue opportunities.

In-app purchases are another way of earning money. Users can buy virtual coins called “Diamonds”. These provide exclusive access to content or give special effects to longer videos. Diamonds can be bought with real money, giving users extra incentive. Payment is also needed for some parts of the app, like voice filters.

Subscriptions are the last source of income. Certain content can only be accessed if you pay a monthly fee. This new form of revenue may be a new source of income.

All three sources of income together — advertising, in-app purchases, and subscriptions — make TikTok an incredibly profitable business model. This will continue into 2020 and beyond.

Advertising on TikTok

TikTok provides advertising options through the app, its own self-serve platform, and a network of third-party partners. Setting up ads is easy and can be effective if you target them to the right people.

Videos, brand takeovers, and hashtag challenges are all available for ads. Video ads can appear in the mid-roll format or at the bottom of Home & Following tabs. Brand takeovers are served once per user per day. Hashtag challenges can get users to create original content with your provided hashtag.

Ads can be targeted by location, gender, age, language, and interests. Tracking is also available to show how many views and shares an ad has gotten.

Influencer Marketing on TikTok

Influencer marketing on TikTok is a top promotion tactic for brands. It’s easy to work with influencers on TikTok – search, check metrics, then invite to collaborate!

TikTok influencers offer higher ROI than other platforms. Plus, influencers help spread word-of-mouth about products.

Strategies for influencer campaigns depend on brand goals and target audience. Examples include: link-in-bio collaborations, hashtag challenges, giveaways, support tags, brand ambassadors, livestreams, Q&A, etc.

These activities build real connections with the product – not intrusive. This leads to increased loyalty and conversions.

TikTok Pro

TikTok Pro is made for pro creators. Businesses can use it to track performance metrics. They must verify their account using email, phone, Facebook page or Instagram profile. After verification, they get access to view count, engagement rate, impressions and other analytics.

They can monitor views over time and check trends and insights. This assists them in optimizing their presence on the platform. Users can link other social media accounts to increase engagement between different platforms. This boosts visibility for businesses and increases potential for sales conversions.

TikTok’s Revenue Model

TikTok, the leading short-form mobile video platform, boasts 1.5 billion monthly active users – now valuated at over $50 billion. Despite criticism for its monetization, its rapid growth and user engagement make it one of the most popular social media platforms.

Digital ads are served through a bidding process, with prices ranging from $1 CPM (Cost Per Mille) for brand takeovers to $8 CPM for stories campaigns. Ad impressions are served based on the advertiser’s budget.

In-app purchases, such as virtual coins, also generate revenue. These can be used to buy virtual gifts, premium stickers, filters and sound effects. TikTok earns a percentage of each sale.

In summary, despite monetization criticism, TikTok is making money through digital ads and in-app purchases due to user engagement.


In the end, TikTok’s business model altered to become a hit. It has high-level user engagement, making money and keeping customers loyal. Influencer marketing and advertising help and algorithms show users suitable content when and where they need it. Plus, Gen Z grew up in a mobile world, so they want brands that understand them – which is a great offer for advertisers. All this explains why the company is more successful and profitable as time passes.