Tik Tok: Using AI to take over the world
Tik Tok uses AI to promote specific contents to different consumers, and helps content creators make videos with music, filters and other enhancement.
1. Introduction
Tik Tok is a leading short video sharing platform, used by over 600 million users in over 150 countries (Picture below) all over the world. Starting from China in 2016, Tik Tok (DouYin in China) allowed user to share a 15 seconds video on line. The mother company of Tik Tok is ByteDance, founding in 2012, with other services such as Toutiao, Lark, Xigua video and Helo.
2. Value creation
- For ordinary people to become famous
The videos shared on Tik Tok are not only from celebrities, but more from ordinary people. Tik Tok provided chance for lots of ordinary people to become influencers. With over 50% users below age 35 (Picture below), it gives young people a platform to make themselves celebrities and earn money.
Source: Global Web Index
- Have fun in boring time
It is hard to believe that average daily using time of Tik Tok is over 1 hour. In some regions, the average daily using time even increases to over 3 hours during the Covid-19 spread time. Many people feel that Tik Tok made their life happier with lots of creative ways of making videos and reviewing videos. Tik Tok installation kept increase from 2016 to 2019.
- New marketing tools for shoppers
For small shoppers who can not make TV advertisement or get celebrity endorsement which needs lots of money, Tik Tok became a new way of making marketing campaign. Lots of small shoppers on Alibaba in China spend money on Tik Tok to promote their products.
3. Value capture
- Advertisement revenue. Like mentioned above, shoppers could seek help from Tik Tok to sharing product link in their video to promote their product. Tik Tok earn money from shoppers’s advertisement spending.
- Virtual coins revenue. If the audience like the influencer and wanna show their passion, the audience could buy virtual coins form Tik Tok and give virtual gifts to their loved influceners. This is another income for Tik Tok.
- Gain influence for Bytedance in China and other countries. As the most famous global app for Bytedance, Tik Tok’s monther company, Tik Tok significantly gain Bytedance’s influence all over the world.
4.What does AI help with?
- Consumers (audience) side: Tik Tok use AI to calculate what content will be the best fit for the consumer. When consumer use the app, consumers even do not need to put their preference. AI will automatically get a sizeable database of the consumers’ behaviors.
- Producers (content creators) side: Tik Tok will help content creators build the virtual videos, by editing with music, filters and other enhancement. An example is how Tik Tok using technology to create controlled rain in this video: https://youtu.be/MTuX-h6I0Hs.
5. Future
Competing with Alibaba, Tencent and Baidu, Bytedance has a great ambition to make more influence in China and all over the world. As one of the most famous Chinese app globally, Tik Tok’s mission is to inspire creativity and bring joy (from company website).
Source: App Annie
In China, Tik Tok (Douyin)’s daily active user is around 400 million in early 2020. Average daily using time in Tik Tok is over Taobao, JD.com, because of the short video feature. With the board user base and long using time, Tik Tok has the potential power to go to payment industry, delivery food industry, and online shopping industry. There is no limitation for Tik Tok and Bytedance in the future, especially with AI technology and lots of intelligent talents.
Reference:
[1] Minh H. Vo, Anne Yang. ByteDance Beyond China: Leveraging Consumer Artificial Intelligence (AI) from Toutiao to Musical.ly and TikTok”
[2] Mansoor Iqbal. Tik Tok Revenue and usage statistics 2020.
[3] Beauty Tech. How cutting-edge AI is making China’s TikTok the talk of town
[4] https://www.tiktok.com/.
Thanks for putting this overview together! I’ve been a huge fan of TikTok’s product for some time (I frequently un/re-install the app to manage my craving ). While I personally love the product, I wonder how much true staying-power it has: With an advertising budget surpassing $1B in 2018 and more than $3M/day in 2019 much of this growth has to be bought. How sticky is the average users? Are many of them burning out or does TikTok have enough discovery built into their algorithms to keep folks entertained in the long run. For comparison, Snap spent $30M in 2019 and has a bit more daily active users.
Very important question, Leo.
Although the spending is quite high, I think the user are very sticky based on below data:
(1) According to official TikTok statistics, its users are very loyal with 90% of users using the app multiple times per day. (Source: https://influencermarketinghub.com/tiktok-statistics/)
(2) Cloutmeter indicates that TikTok users average a healthy 52.1% engagement. (Source: https://influencermarketinghub.com/tiktok-statistics/)
(3) According to App Ape statistics, 22.6% of users actively used it for at least 2/3 of the month. Indeed, only 26% of those who had downloaded TikTok failed to use it during December 2019, meaning that 74% used it at least once. (Source: https://influencermarketinghub.com/tiktok-statistics/)
(4) By September 2019, the TikTok retention rate in U.S. had climbed to 39%, according to GlobalWebIndex TikTok stats.
I guess TikTok has even more opportunities in value capture. For instances, 1) virtual gifts to user creators, similar to online gaming communities; and 2) in-app instant purchase, e.g., users can purchase products within TikTok in a few seconds, in stead of click the link and purchase on 3rd-party websites.
Can’ agree more! Amanda. I am using TikTok a lot during the quarantine time. hahaha.
Thanks for writing this very clearly! I’m intrigued by Tik Tok, especially since it reminds me of Vine, which had about 200M active monthly users at its peak. Tik Tok kind of gives me the same vibe. Moreover, it seems like the kind of thing Facebook could implement and compete with (ex: Instagram stories hurting snapchats entire business model). How could TikTok differentiate themselves and stay ahead of the curve, preventing either being taken over completely or having its business model copied and improved upon?
Thanks for comments. From my understanding, TikTok is leading in this industry by its technology. When I use other similar apps, their feature are not as friendly as TikTok. I think TikTok should keep developing its technology to create more new features and funny videos to keep user retention. Another thing is to discover deeply on customer behaviors. Tik Tok is focusing on young, cool people, mostly from urban area. There is another famous app “Kuaishou” in China focusing on people in rural area. To fully discover the customer needs will help TikTok stay ahead.
Thanks for sharing, Haoran! I also agree with dknab1892’s point earlier that Tik Tok reminds me of Vine, and I wonder whether Til Tok could make their platform more defensible by expanding beyond videos, or perhaps into more high-end video content along the lines of new entrant Quibi. It seems like they could be susceptible to the same issue Snapchat had in coming up with a novel and fun but ultimately reproducible technology, and they are particularly vulnerable without the social networking ecosystem that Facebook (for example) can leverage.