TikTok Poised to Triple Ad Revenue to $11.6 Billion This Year – Surpassing Twitter and Snap Combined | Charts

·4 min read

TikTok is on track to triple its ad revenue this year, surpassing the revenue of Twitter and Snap combined.

Boosted by growing engagement and commerce activity, TikTok’s ad revenue is projected to triple from $3.88 billion in 2021 to $11.64 billion this year — up a whopping 200% — according to eMarketer’s forecast. That makes the ByteDance-owned app’s ad business larger than both Twitter’s ($5.58 billion) and Snap’s ($4.86 billion). And by 2024, analysts expect TikTok’s ad business to double again to $23.58 billion, with over half of that revenue coming from the U.S., allowing it to catch up with YouTube’s $23.65 billion haul in ad revenue.

“TikTok’s user growth has been nothing short of meteoric,” Jasmine Enberg, analyst at Insider Intelligence, told TheWrap. “TikTok’s ad business is still relatively new but it’s also seen enormous growth as advertisers continue to shift their spending toward where their customers are spending their time. At the same time, privacy changes, like the iOS update, have leveled the playing field between a newcomer like TikTok and digital advertising giants like Meta.”

That rapid growth makes sense when you dive into the numbers. TikTok was the top app in worldwide downloads in the first quarter of 2022, hitting more than 175 million downloads since January, according to Sensor Tower. The Chinese app has surpassed 10 million downloads for the past nine quarters, with YouTube following closely behind. But no app has gotten more downloads than TikTok since 2018, according to the report.

But it’s not just the total downloads that make TikTok the top social competitor — it’s also its impressive rate of growth that has Facebook and Instagram parent Meta worried. It took TikTok roughly four years after launching worldwide to reach 1 billion users last year, whereas the same feat took Facebook, YouTube and Instagram about double that time — nearly eight years.

As TheWrap previously reported, TikTok has increasingly crushed competitors Instagram and Snap as social media users have grown up. The video app’s popularity boosted it past 1 billion monthly users last September, while older platforms like Facebook continue to lose users, especially in Gen Z. In fact, Facebook is expected to lose 700,000 teen users between 2022 and 2025, leaving it with around 8 million, while Twitter is expected to lose 100,000 teens during that same period and leaving it with 5.2 million, according to eMarketer.

Another reason TikTok has been able to rise so quickly is its recommendation engine, which makes the app highly addictive as it’s able to learn about users and predict their interests faster than its rivals. As a result, TikTok’s “For You” feed is filled with tailored content after learning how long users lingered on a video or rewatched particular posts.

But TikTok’s effectiveness may also become a hindrance to advertisers as it has been a point of contention for critics who found the app home to misinformation, hate speech and other harmful and violent content — which its recommendations engine can continuously serve up to users.

“TikTok is working to address those issues, including by introducing features that filter out harmful or unsavory content,” Enberg said. “The reality is that most of its users are young, and many of them are underage. Advertisers still need to tread carefully when marketing to those users.”

For the most part, TikTok’s success in user engagement helps it attract advertisers and content creators — boosting shopping and time spent on the app that, in turn, has bumped up revenue. Some influencers have gotten movie deals and brand sponsorships out of their TikTok fame, and these power creators generate greater ad dollars through their content.

“TikTok will see an increase in their paid media spend from brands running ads on this content, increasing their overall revenue,” Ryan Detert, CEO of social data company Influential, told TheWrap. “The reason TikTok is seeing this historic rise in growth is because they are the platform early on that leaned the hardest into giving creators the tools they need to activate on the platform.”

Yet despite TikTok’s explosiveness, it remains a small player in the global digital ad market. It will own around 1.9% of the ad market share this year, compared to Google parent Alphabet’s 29% and Meta’s 21.4%, according to Insider Intelligence. However, ByteDance’s Douyin (TikTok’s Chinese version) and TikTok combined are the world’s fifth-largest digital ad seller, and analysts expect TikTok to keep gaining market share.

“TikTok’s U.S. ad revenues will be ahead of YouTube in 2024,” Enberg said. “That year, TikTok will rake in $11.01 billion in U.S. ad revenues, versus $10.71 billion for YouTube. To put that into perspective, it will take TikTok just five years to accomplish what it took YouTube about 16 years to do.”