The inside story of TikTok's one billion MAU growth

Oct 25, 2021 Marketing

 

"China occupies the world's largest Internet market, but it is like a 'parallel world', where companies outside can't enter and companies inside can't get out." Facebook founder Zuckerberg, who has targeted the Chinese market for a long time but couldn't enter, said so.

That conclusion ruled the entire graphic social media era, only to be broken in the video social media era.

The game-breaker is TikTok, a company that has emerged from the short video track in China.

In the beginning, Zuckerberg was not impressed with TikTok, commenting that this customer who advertises on his platform is nothing but an Instagram Stories with exploratory function.

Even in 2019, when TikTok showed signs of taking off, he still said disdainfully (in an internal meeting): "The reason why TikTok is so popular is mainly the result of spending money on promotion. Once the promotion is stopped, the retention rate will decline."

In the end, his arrogance and contempt cultivated a global "problem" for himself.

Data shows that in only 4 years, TikTok joined the 1 billion monthly active users (MAU) club, a full double faster than Facebook.

While this surprised the market, it couldn't help but wonder how exactly did TikTok make it?

Simple operation and diversified content

There have always been two reasons why outsiders are skeptical of Chinese Internet technology companies entering the U.S. market.

First, in recent decades, most of the Internet forms have been exported from the United States; Second, Chinese Internet companies such as Tencent and Baidu have entered the overseas markets, but it is difficult to bridge the cultural gap, and most of them have suffered.

However, TikTok, to be precise, its predecessor Musical.ly, overturned these two situations.

In 2014, Musical.ly, a short video application based in Shanghai and featuring music elements, landed in the U.S. market. Three years later, it topped the U.S. App Store list, with a total of approximately 240 million registered users worldwide.

The key to great success lies in Musical.ly's gameplay — users can post a short video in just 15s by "lip-syncing" and "body acting" with popular music. It's new and easy to understand (without cultural differences), which quickly became popular among American teenagers.

For example, Business Insider, a leading U.S. tech blog, has described, "If there's a high school student in the house, you've certainly been featured as a human background in his 15-second 'lip-sync' video."

However, the number of American youth groups is limited after all, and Musical.ly could hardly avoid the situation of sluggish growth.

At the time of crisis, ByteDance acquired Musical.ly with $1 billion. It was renamed TikTok and relaunched in August 2018. TikTok no longer focuses on the music field, but transforms from a niche to the mainstream, pursuing users to break the circle.

To continue the disruptive nature of Musical.ly and avoid the cultural differences and usage habit problems that may be brought about by the enrichment of content, TikTok has done two things:

First, it copies the algorithm mechanism that has never been disadvantageous in the Chinese market to TikTok.

According to an internal disclosure by ByteDance, after connecting Musical.ly to ByteDance's back-end algorithm, the amount of time that users have been active on the application has doubled.

This is also corroborated in a report by U.S. data provider Apptopia, as shown below, where Musical.ly's daily visitors have increased rapidly since it officially changed its name to TikTok and introduced its recommendation algorithm.

And how to make users willing to share their content is the second thing that TikTok does.

It can be seen that TikTok's short video production tool is very competitive compared to other short video platforms that will be launched later.

Take the unique "Duet" function of the TikTok platform as an example. Using this function, users can play their videos together with other people's original videos, with excellent interaction and creative effects.

For example, through video editing, you can drink Coke from Jay Chou's Coke cup as if it were real.

In this way, the user's creative desire is stimulated.

Thanks to the "interconnected" Internet environment abroad, for example, Snapchat's content can be shared on Facebook despite being the archrival, TikTok brings the function of "create in TikTok and distribute elsewhere" to the forefront.

Given this, TikTok's free ads are posted on major social platforms, which not only amplifies the effect of content dissemination but also robs many users' attention.

Data shows that in May and September this year, TikTok's users in North America have spent more time than Facebook and YouTube respectively, becoming the number one "time killer" app in North America.

In summary, based on the product subversion of Musical.ly, TikTok uses the competitiveness of algorithms and tool functions to bypass cultural barriers and achieve passive accumulation of users.

But ByteDance's ambition does not stop there.

"We must sprint the number of overseas users without considering profitability." Zhang Yiming said in his 2018 internal instructions.

As a result, TikTok began to quickly focus on user growth on a global scale by copying the model of Chinese Douyin.

Targeting the young market and localized operations

TikTok's overseas target user groups are mainly young people. The preference of young people has always been elusive.

To make this clear, TikTok's global user expansion - buying and operation process - uses localization as the base for acquisition (of course, this can also avoid cultural barriers).

In terms of volume buying and promotion, like many companies, TikTok's first step in cutting into or opening up local markets is to invite local pop stars to collaborate on promotion.

Of course, the initial progress in this step is not always smooth everywhere. For example, the entertainment industry in Japan was not very receptive to it initially.

According to Yu Czech, head of development at TikTok in Japan, "Most of the time, companies will not allow you to communicate. Or they talk well, but they will eventually be rejected by the senior management."

Unfavorable assignments and slow progress, TikTok has added hundreds of millions of additional investment budgets.

The celebrity effect has brought a large number of young users to TikTok. After downloading, these users quickly spread across the campus. Soon, videos with TikTok watermarks began to be popular on social networks.

After the celebrity effect "broke the ice", larger advertising buys continued to follow.

The information shows that TikTok's advertising spending in the United States in 2019, from $1 billion in 2018 plummeted to about $4 billion.

In addition to regular brand advertising displays (such as sponsoring the 2020 U.S. Super Bowl), a large part of the money sprinkled is spent on social platforms such as YouTube, Facebook, Twitter, and Snapchat for targeted group precision marketing.

Take Facebook as an example, related reports say that in 2019 Q1, 13% of Facebook Android ads are about TikTok.

After almost every round of purchase promotion, TikTok's app downloads will have a significant increase.

Some may question that this is no different from what Zuckerberg said above. TikTok's user growth is the result of cash-burning, and there is nothing unique.

So, what exactly does TikTok rely on to take off? The answer is localized operations.

The most thorny issue for Chinese Internet companies going overseas is local operations. Because of disputes involving management and control issues, companies will inevitably not let go.

For example, in the Kuaishou overseas edition, the position of chief growth officer in charge of overseas business continues to be changed - successively experienced Chen Han, and former ByteDance international business president Liu Xinhua, the current control has returned to Su Hua's hands, which greatly restricts its overseas development.

With the lesson learned from Kuaishou, TikTok chose an open model to let it develop.

On the one hand, from grassroots employees to senior management, they are recruited locally as much as possible. For this reason, it directly fought with many giants.

For example, at the end of 2019, TikTok opened an office in Silicon Valley and blocked the door of Facebook to poach talents. The competition between the two companies has been upgraded from competing for young users to competing for talent.

And as of now, most of its executives around the world are from Disney, Google, Facebook, Microsoft, Sony, Warner, Hulu, and other companies.

On the other hand, the localization team has absolute rights. TikTok's head of Japanese market development, Yu Czech, once said in an interview that the company gave him great power in the development budget, almost as many as the number of approvals.

With the localization operation team in place, it takes actions according to local conditions:

·U.S. version users pay attention to the experience of hunting and entertaining;

·Indian version users prefer dancing and song videos;

· Japanese users are chasing the second dimension and group challenges.

According to the characteristics of such user needs, localized content can be precisely exported.

For example, it replicates the tag challenge of Douyin. It organizes tag challenge activities in cooperation with brands and Internet celebrities from time to time to attract fans to create follow-up and co-production, and expand the dimension of content.

In addition, platforms in various regions have established special chat communities for creators to tap into the content supply space by providing technical support and cooperation opportunities. This approach has a positive impact on creator stickiness.

"TikTok does the best job in terms of close contact between creators and platforms. I talk to, text, and even meet with TikTok's local partners almost every week." Nathan Piland, the creator of TikTok and Facebook and Spotify platform accounts, said so.

In summary, the cash-burning model and localized operations like a button that activates the user's increase.

However, TikTok's leapfrog development has awakened the giants, whether it is Facebook and other imitations to follow the trend, or related policy restrictions, etc., that have added uncertainty to the future development of TikTok.

This is an article from WeChat official accounts Finance Vision (ID: excel-ers), written by Guo Danchun and Wang Huimin.