In just a few years, TikTok, the social media and entertainment platform owned by ByteDance—which also owns Chinese sister app Douyin—has risen from obscurity to become perhaps the most influential social media platform of the moment. Aside from its rapid growth, the platform is notable for its high engagement and powerful algorithm.
TikTok’s business model follows an Amazon-like flywheel that hinges on media, advertising, and commerce. This guide looks at how TikTok came to be and how marketers, creators, and retailers can leverage the platform to connect with audiences and shoppers.
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History of TikTok in the US
In 2017, ByteDance bought lip-syncing platform Musical.ly for an estimated $1 billion and merged it with TikTok to create the current platform. The merger allowed TikTok to acquire Musical.ly’s users, who were already somewhat comfortable with TikTok’s combination of short videos attached to sound clips.
TikTok’s popularity exploded during the COVID-19 pandemic, attracting users who were otherwise quarantined and looking for creative outlets. Between 2019 and 2021, the number of US TikTok users more than doubled from 35.7 million to 86.9 million, according to EMARKETER’s May 2023 forecast.
At its launch in 2016, TikTok’s maximum video length was 15 seconds. The social media platform allowed 60-second videos beginning in 2017, then upped its maximum video length to 3 minutes in 2021, then to 10 minutes in 2022, and, in October 2023, began allowing 15-minute videos for certain creators.
In 2023, TikTok released TikTok Shop in the US, creating a social commerce tab directly in the app for marketers and brands to sell directly from the app
Marketing and advertising on TikTok
The rise of TikTok meant its prominence as an advertising channel has also grown. While marketers are spending more time and budget on the platform, TikTok is also expanding its catalog of advertising options.
Ad spend rising
TikTok’s US ad business will see $8.66 billion in ad revenues in 2024, a growth of 31.0% YoY, according to EMARKETER’s October 2023 forecast.
- TikTok will make up 10.5% of US social network ad spend and 2.8% of US digital ad spend in 2024, per the forecast.
- TikTok’s ad growth has been remarkable. As recently as 2020, US ad revenues were under $1 billion.
TikTok makes up an outsized share of US time spent with digital media compared with ad spend. In 2023, TikTok accounted for 3.7% of US time spent with digital but made up 2.3% of US digital ad spend, according to our H1 2023 forecast.
A look at TikTok ad types
TikTok has a number of different types of ads.
In-Feed Ads: These act like a normal TikTok video, but are sponsored. In-Feed Ads are the quintessential TikTok ad.
- There are many ways to create In-Feed Ads, including building a campaign specifically to be an ad, crowdsourcing content from creators via Branded Mission, and turning organic content—either from a brand account or from creators with permission—into promoted ads via Spark Ads.
- Collection Ads are also available in-feed, which allow users to explore products within a gallery.
TopView: These ads are the first content a user sees when opening the app. When a user launches TikTok, the first piece of content they will see is often an ad, which they can either view or scroll past.
Branded Effect: These are custom effects, such as AR filters, that are sponsored by a brand. For example, a filter sponsored by a beauty brand may show how a user looks if they used the brand’s mascara.
Branded Hashtag Challenges: Hashtags help users discover content. Brands can sponsor their own hashtag challenges, which prompt users to create videos performing specific actions, like dancing to a song. Branded Hashtag Challenges lead to more awareness and engagement.
TikTok has also been rapidly expanding its ad capabilities. The platform has partnered with The Walt Disney Co., hinting at new ad formats, enhanced creative tools via its Effect House program, and boosted measurement capabilities to help with attribution.
Ad and engagement measurement
TikTok users commonly consume content for entertainment, delaying their search for products. Consequently, the current ad tracking process fails to associate later product searches with prior ad views. TikTok’s first-party measurement tool, Attribution Analytics, provides advertisers with a precise and extended view of user engagement and purchases linked to initial ad exposures.
Native content
Like other social media channels, TikTok allows brands to create native content on the platform, making it a useful tool for brands beyond paid advertising. Brands have successfully built followings on TikTok by engaging in trends and encouraging creators to make brand-related content. One particularly notable example of this was 2023’s Grimace Shake trend, where users made content related to the limited-edition McDonald’s product. TikTok allows advertisers to turn native content into paid ads.
Social listening
TikTok is also a useful platform for social listening, through which brands can view how consumers talk about products and either respond or draft future campaigns.
Content creators
In 2024, 54.0% of US marketers will use TikTok for influencer marketing, according to our July 2023 forecast. But TikTok doesn’t always follow the same influencer marketing tactics popularized on Instagram and Facebook, where brands approach creators to make sponsored content. Due to TikTok’s algorithm, any user can go viral on TikTok with user-generated content, meaning creators may make viral content that brands can later choose to boost with ad dollars.
In December 2023, TikTok sunsetted its $1 billion creator fund. The creator fund served as a way for users to make money directly from TikTok for posting content, rather than from shared ad revenues or brand deals. This shutdown is part of a greater trend away from these sorts of programs. Creators can still make money from taking a cut of ad revenues, brands paying them to post content, and users paying for exclusive content or otherwise tipping creators directly.
Best practices for TikTok marketing
Brands advertising with TikTok should set up a business account in order to use TikTok for Business. TikTok for Business offers a suite of dedicated commercial tools that will make running ads easier.
Because TikTok users skew young, it’s easy for brands to seem out of touch when creating content. A good marketing strategy will use quality content from brands and creators highlighting a product, using music or a TikTok sound, featuring branding and logos subtly to drive awareness, and including a call to action to make sure viewers know what they’re being asked to do.
TikTok content should not be overproduced, or it will not feel native or like authentic content to the platform. For example, this TikTok from Celestial Tea plays up the meme-level notoriety of the Sleepytime Tea bear and a trend of showing unique tattoos. The video does not use expensive production tools and has still gained hundreds of thousands of views.
Like other platforms, the use of relevant hashtags allows users to follow certain trends, and is also a way for marketers to track emerging behaviors.
What sets TikTok apart from other social media platforms?
While short, vertical video has taken off on other platforms like Instagram and YouTube following TikTok’s surge, there is still a lot that sets TikTok apart.
Algorithm
One of TikTok’s most powerful features is its algorithm, which excels at recommending content based on a user’s behavior. For example, a user who watches a lot of user-generated content of cat videos will likely be served other cute animal videos on the platform. This algorithm has contributed to TikTok’s impressive time-spent statistics, as users can spend hours scrolling endlessly through personalized content. It also helps TikTok deliver ads that are relevant to a given user. The algorithm is so powerful that two TikTok users can have completely different content experiences on the platform.
Target audience
TikTok users skew young, although older people are increasingly adopting the platform. TikTok tends to be associated with Gen Z, and is a good place for reaching the generation and keeping tabs on any relevant trends.
- In 2023, 44.7% of US TikTok users were members of Gen Z, making Gen Z penetration higher on TikTok than on any other social media platform except Snapchat, according to our forecast.
- 76.4% of US mobile phone users ages 12 to 17 and 77.7% of users ages 18 to 24 will be TikTok users in 2024, according to EMARKETER’s May 2023 forecast.
- But older users make up an increasing share on the platform. US users ages 65 and older made up just 1.0% of TikTok’s audience in 2020. Come 2026, they will account for 7.0%, according to the forecast.
Because Gen Z engagement and time spent are so high on TikTok, the platform has become a machine for real-world trends. Marketers should learn from trends on TikTok in order to understand how to appeal to Gen Z and beyond.
Internationally, TikTok penetration is highest in North America, where 30.8% of the population will use the platform in 2024, according to EMARKETER’s May 2023 forecast. But that stat doesn’t tell the whole story. In China, where TikTok’s sister app Douyin is used instead, 59.2% of people will be Douyin users.
TikTok is now one of the largest media channels, and will have over a billion users worldwide in 2024, per our May 2023 forecast. That said, around half (48%) of US adults on TikTok have never posted a video, even if they’re active users of the platform, according to Pew Research.
Social entertainment, media, and networking
TikTok’s rise represents a pivot from networking toward social entertainment. Historically, social networking platforms were a place for users to connect with people they knew offline. As the internet evolved, social networking became social media, where users could browse a timeline of content from people they didn’t know but chose to follow, like influencers. But on TikTok, the advanced algorithm delivers media to users beyond just the people they follow. In this way, TikTok functions not just like a social media platform but as an entertainment platform.
Time spent
TikTok’s time spent data shows just how powerful the platform can be.
- Adult US TikTok users will average 54 minutes per day on the platform in 2024, according to EMARKETER’s February 2024 forecast.
- Among the general US adult population (which includes people who are not TikTok users), use will average 18 minutes per day.
- TikTok already has Instagram beat in time spent and will pass Facebook in 2025, per our June 2023 forecast.
- TikTok also has YouTube beat in time spent by users, per the February 2024 forecast.
TikTok has a higher engagement rate than Instagram’s short-video feature, Reels, for creators with over 100,000 followers, according to September 2023 data from The Influencer Marketing Factory.
TikTok as a search engine
TikTok sets itself apart from other social platforms through its powerful search capabilities. Some 43% of Gen Zers begin their online product searches on TikTok, according to February 2023 data from Jungle Scout. And TikTok has integrated Wikipedia snippets into search results—similar to Google.
TikTok Shop and social commerce
TikTok is more than entertainment or social network, it’s also a powerful ecommerce platform for potential customers. TikTok has followed the blueprint sister app Douyin set by introducing TikTok Shop.
What is TikTok Shop?
TikTok launched its social commerce tab, TikTok Shop, in September 2023, but social commerce has been prominent on the platform for years.
TikTok Shop is a fully integrated commerce solution, per our TikTok Commerce 2023 report. “Brands and creators can sell products directly to TikTok users from short videos, in livestreams, and through storefronts on their TikTok accounts. Shoppers can add products from multiple brands into one shopping cart and check out without leaving the app or using a pop-up browser.”
TikTok Shop has had a successful first few months, but the feature is still new.
Social commerce
TikTok has really strong social commerce potential, building off of the blueprint set by sister app Douyin in China.
- TikTok will have 40.7 million US social buyers in 2024, according to EMARKETER’s September 2023 forecast.
- That’s 40.8% of TikTok users, putting the platform ahead of Pinterest, Instagram, and Facebook in terms of social buyer penetration.
Discovery
TikTok serves as a powerful discovery machine. Its entertaining videos, shoppable content, and excellent search capabilities make the platform a useful tool for seeking product recommendations or discovering products organically.
- TikTok and Instagram are Gen Z’s favorite platforms for product discovery, as noted in our Gen Z’s Path to Purchase report.
- The platform can be more useful for inspiration than for actual shopping. In 2023, 36% of US adults said they would use TikTok for holiday shopping but only 10% said they would actually buy items from TikTok Shop, according to ESW.
TikTok Live: Livestream ecommerce
One area where TikTok does not yet measure up to sister app Douyin is in livestream ecommerce. While livestream ecommerce (i.e., the process of selling merchandise online as a creator promotes it during a live video) is popular in China, it has yet to take off in the same way in the US. But TikTok has been promoting live shopping in the hope of boosting adoption. And TikTok has been emphasizing entertainment to increase live-shopping viewership and engagement.
Other TikTok endeavors
Beyond its platform, TikTok has a number of other focuses:
- TikTok has out-of-home ambitions and is making moves to extend its video content to a variety of public screens, including ones at airports, gas stations, and movie rental machines, to grow its presence beyond mobile.
- ByteDance’s video-editing app, CapCut, has launched CapCut for Business, which offers an AI-fueled script generation tool along with AI-generated presenters.
- TikTok has ventured into live events with its TikTok in the Mix concert, which featured musicians performing for in-person and digital audiences.
Who are TikTok’s competitors?
Because TikTok has interests in social media, entertainment, and commerce, the platform has a number of competitors on many different fronts. Many of these competitors are losing share to TikTok, be that in commerce, search, advertising, or product discovery.
Commerce competitors include Amazon as well as Shein and Temu, both fast-fashion retailers with ties to China.
All social platforms should be aware of the threat TikTok poses. But Meta in particular, which is an advertising and social commerce giant that owns both Facebook and Instagram, stands to lose as TikTok’s success grows.
TikTok is also an entertainment platform, which poses a threat to the likes of YouTube and Netflix (and Amazon once again).
Controversies
Like other large platforms, TikTok is certainly not without its controversies. But its China-based roots have also led to a few unique challenges for the company.
Potential ban
In April 2024, President Biden signed a bill into law mandating ByteDance sell TikTok or the platform would be banned in the US. The potential ban shows the importance of diversifying a brand’s social media presence across platforms.
Nearly half (47%) of US adults support a ban on TikTok due to its ties to China, per an August 2023 Reuters/Ipsos study. ByteDance is actively working with the US government to quell such efforts by offering insights into and oversight over the platform.
As of May 2024, TikTok and its Chinese parent company ByteDance filed a lawsuit against the US government to block the measure.
Ties to China
TikTok has long faced suspicion due to parent ByteDance’s ties to China. The app has been accused of spreading propaganda in Europe and of spying on US users for military and economic advantages.
Misinformation
TikTok users are also susceptible to misinformation and disinformation, which can spread rapidly on the app and are difficult to moderate. This problem isn’t unique to TikTok—every social platform struggles with inaccurate information. But because TikTok’s algorithm can cause videos to go viral so quickly, the spread of false content isn’t easy to contain. This phenomenon is happening in news stories related to elections, the COVID-19 pandemic, and more.
Child safety
Like any other social media platform where children are consuming unvetted content without supervision, TikTok has garnered child safety concerns. These relate to content children can see, use of children’s data for ad targeting, and mental health concerns.
TikTok’s influence on other social media platforms
Following TikTok’s success, a number of other platforms have created short-form video feeds that borrow from the formula from which TikTok found success.
- YouTube Shorts is YouTube’s vertical-video product.
- Reels is available on both Instagram and Facebook, and functions similarly to TikTok and Shorts.
- Snapchat Spotlight is yet another vertical-video copycat.
These platforms come as text-based platforms like X (formerly Twitter) are struggling, signaling an overall pivot in content consumption.
