TikTok: More than what catches the Eyes

Comments on TikTok's strategy in India, reasons that led to its meteoric growth, and why it is trying to reposition itself

Let's face this, you can hate it, but you can't ignore it. Well, that cliché, but it is what it is. I certainly have encountered people calling out content on TikTok' cringe'. Heck, we have seen a High Court ordering a ban on the platform, episodes of name-calling, and roasting (if you don't know about it, it is totally not worth it), app rating going down to 1.4 stars, and reports of inappropriate content on the platform. Oh, Boy! It is messy.

Then on 29th June, the Indian government banned 59 mobile applications, citing national security concerns. But that was after I thought I'd do a story on TikTok, so I decided to go ahead with it anyways.

Coming back, I, myself, have criticized the content and stayed away from the platform and for the most of it. Then I saw this.

A couple of more such instances piqued my interest in the platform. TikTok is a User Generated Content (UGC) platform which was clocking around 800 million worldwide users pre-ban. (going forward please read stats as pre-ban) Why does it need to sponsor such events?

The Company

TikTok's is owned by ByteDance, which currently is the highest valued start-up in the world, valued at $100 billion. Allow me to give me some perspective on that. That's more than all the Unicorn start-ups combined in India and about 2/3 of Reliance industries' market capitalization. So, yeah, this is one big company.

In 2016, ByteDance launched Douyin in China that allowed users to create and share short videos. Douyin emerged a success in its home market, achieving 100 mn DAU (Daily Active Users) within a year of its launch. ByteDance took Douyin to the international market by the name TikTok in 2017. Back then, India had a similar app called Musical.ly (US-based), which was acquired by ByteDance for a reportedly $1 billion deal. It touched a massive worldwide scale. The question is how it becomes so big in a highly competitive market where every SM platform is fighting for the user's screen time.

Interface that sticks

Users were sticking more on TikTok than any other platform. With a data revolution fuelled by Jio, Indians were spending increasingly more time on smartphones. An average TikTok user was spending up to 52 minutes on the platform. A key attribute enabling this was the user's habit of passive content consumption.

In existing mediums like Instagram/Facebook, a user must scroll and tap on the content, in YouTube one often enters with a pre-notion of watching something or discovers content and decides to watch it. Simply put, you are actively involved in content consumption. TikTok is different. Its 15-second videos are played on a loop with the user taking a backseat, swipe, or just do nothing. The content is quick; before you judge one, the next one is up.

Content Democratisation

Well, TikTok, a company based out of communist-ruled China democratized content (notice the irony?) For the People, To the People, delivered by the People's Republic of China. (Ok! No more China jokes, promise)

TikTok made content generation easy and cheap. Anyone with a smartphone, internet connection, and some acting skills was good to go. While the internet, in general, made it easier for individuals to create content and get famous, there were a couple of things that posed a creator's entry barrier: costs of content and need of established social affiliation.

First, short videos needed lesser skills, production quality, efforts, and time to create videos, meaning there was no shying away from trying. Second, TikTok didn't want you to have an existing social affiliation. You'd observe that almost all social media platforms like FB, IG, LinkedIn, Twitter ask you to make a social capital investment (friends, followers, groups, comments, etc.) before you start experiencing the content platform. TikTok, on the other hand, offered content as soon as you entered the application. Then gradually, its AI algorithms start recommending content for your basis your engagement on the platform.

Network Effect on steroids

Like almost all social media platforms, TikTok befitted from the network effect. But there was something interesting about it. It hit me when my mother said that she wanted to know how to operate TikTok because she has seen Bhajan and Good Morning forwards on WhatsApp with a TikTok watermark on it (sweet lady wanted to send some of her original forwards)

TikTok made cross-posting and interoperability seamless. Content created or discovered using the platform (enactment, lip-sync, video merges) can be shared on all other platforms in an easily downloadable format with a watermark on the bottom, which increases the visibility. Now you see videos from TikTok on WhatsApp, IG, FB. Notice even the ones not using TikTok will come across its videos? C'mon, we all know that one friend of ours who was lip-syncing.

In the Theory of Diffusion of Innovation, E.M. Rogers seeks to explain how, why, and at what rate new ideas and technology spread. It explains there are four main interacting elements of the theory: an innovation, communicated through certain channels, over time, and among members of a social system. He divides adopters to a new idea in five categories: innovators, early adopters, early majority, late majority, and laggards.

Now my mother, who would have been a late majority/laggard, becomes early adopter through 'communication through certain channels, overtime on the social platform'. No matter if you're a content creator or someone randomly scrolling some other social media platform, you would see TikTok videos again and again.

TikTok's success numbers were what any internet company would aspire for. It touched a whopping 2 billion downloads by April 2020, claiming most downloaded app status both in 2018 and 2019. India comprised of nearly 45% of the overall downloads of the application in 2019. Honestly, just on the stats that the company has delivered, there could be a separate post.

Going further, we see how the platform has emerged as a new marketing destination and what lies ahead.

(You can check recent reports and understand how and why a marketer can benefit from the platform).

Where's the money at?

In 2019 as TikTok opened for monetization in India, it gained significant traction from companies. Close to half of the user base was aged between 16-24. The engagement rate is more compared to the other platforms. But there are certain core elements to an advertisement on TikTok, which make it famous.

First is its access to non-metro and rural parts of India. This opened opportunities for FMCG and other B2C companies like Flipkart, OLX, etc.

Second, TikTok offered mode of advertisement display much preferred: short videos. Video advertisements on TikTok got embedded naturally on the platform. Ads could slip in the regular, bite-sized content without the consumer feeling interrupted in the experience (We know how irritating it gets when YouTube places Ads in between videos). Nearly after every ten videos, there would be an Ad. Also, TikTok offered a full-screen size for the advertisement to run instead of banner posts.

Third, viral campaigns. The most lucrative offering to the brands that TikTok has is hashtag challenges. Once brands buy ad space of the platform, TikTok gets its influencers to participate and push the challenges. The algorithm is such that it pushed viral content upfront on a user screen. These, coupled with the fact that the platform offers the user to click on the music played in the challenge and create their own video of the challenge, are a recipe for virality. Pepsi's #swagstepchallenge (23 billion views), OLX's #OLXDekhaHai (12 billion), and Flipkart's #bigbillion stars (14 billion) were a few success stories of 2019. Hashtags, which were meant to collate content on the vast social platforms, has been turned into a money-making tool by TikTok.

TikTok worked on a model of creating hyperlocal influencers in Tier 2 and Tier 3 cities. From tutoring the famous creators on how to develop content, arranging for nationwide creators' meetups, sending clothes and accessories, TikTok has focused on taking care of its creators in order to retain them on its platform. Switching cost for a creator on social platforms is low, and hence retention becomes important.

Recently, TikTok has launched TikTok For Business, a platform solution for its advertisers. It will include Brand Takeovers, Top View, In-Feed Videos, Hashtag Challenges, and Branded Effects among the offerings. Some of the interesting features to note are allowing the marketers to embed the products in a 2D, 3D, and AR format.

Change of footing

TikTok has been increasingly seen as an 'app pastime.' In my opinion, the company has identified this and has worked in the past year to transform it into a platform of social value. In 2019, they launched hashtag campaigns such as #EduTok and #EduTokXCampus #TikTokEduTok to remove the user dissonance of the brand image. Partnerships to bring events like TEDx and foray into online education seems to be logical steps aimed at broadening and attracting a variety of user bases.

During the lockdown, I also came across news of TikTok hosting music concerts featuring the likes of Amit Trivedi and Honey Singh (I was surprised to see him still getting work) among other 35 artists.

This move aimed at diversifying their content repository puts them into the territory of Instagram and YouTube both. TikTok was conceptualized to engage more users to engage on the platform by creating content like Instagram. But going forward, we might see premium company produced repositories of videos along with the UGC, which could place it competing with YouTube. Logically, as a user, you have limited time to spend on your overall viewing hours, and TikTok wouldn't want to get segmented to be viewed as an entertainment only platform.

The Void

TikTok historically has been in trouble internationally and nationally because of the objectionable content on its platform. As the content creators grew, there were allegations of hate speech, pedophilia, pornographic elements, and violence, something that has happened with nearly all UGC platforms. In due course, the company has weathered all storms. It revised its policy, made assurances, and was able to grow its audience, let alone retain it.

The recent ban, which is seen as an economic retaliation by India on China amidst the tensions at Indo-China border, is more like a cyclone and has sure left a large void to be filled. TikTok's success and then disappearance from the market presents a golden opportunity for the Indian start-up ecosystem to build an enduring business model. Indian apps like Roposo, Chingari, and Mitron have been able to attract a sudden surge in the audience. It will be vital for them to employ strategies in order to create a moat in the market, which can be leveraged in case TikTok comes back.

As for TikTok, if it comes back, the challenges will be enormous. It will be dealing with what we call externalities – something that you can't control but simply manage. Its survival will be determined by the emotions of the nation and the response of its competitors in its absence. It will a tedious journey of brand revival and an interesting case to study.