Users spend an average of 95 minutes on TikTok and open the app eight times daily. Considering the audience’s love for TikTok, brands have actively started investing in advertisements on the platform.
Hence, due to the increasing number of brands taking an interest in the platform, TikTok is forecasted to generate an advertising revenue of $13.2 billion in 2023, four times more than the figures from 2021.
Are you curious about the latest updates about TikTok ad revenue?
In the following article, I have provided details about TikTok ad revenue and the factors that have contributed to the increase in revenue.
So, without further ado, let’s get started.
TikTok Ad revenue: Keypoints (2024)
- As of 2023, TikTok is expected to generate $13.2 billion in ad revenue.
- There will be a 13% of growth in the ad revenue of TikTok as compared to that of the year 2022.
- In 2022, TikTok generated ad revenue of $9.9 billion, 2.5 times greater than that produced in 2021.
- By the end of 2025, TikTok will generate $22 billion as ad revenue.
- The advertising on TikTok increased by 11% on the platform in March 2023.
- TikTok advertising revenue share is expected to increase from 22% to 375 by the end of the year 2027.
- 92% of TikTok users take action after viewing video content on TikTok.
How much does TikTok make in a year from advertisements?
According to the latest reports and analysis, TikTok is expected to generate an annual ad revenue of $ 13.2 billion in 2023. These numbers denote a 33% rise in the TikTok ad revenue compared to the past year.
In contrast, the TikTok ad revenue in the year 2022 was calculated to be $9.9 billion. This ad revenue was almost 2.5 times more than that of 2021, recording a 155% yearly increase.
These figures prove that TikTok’s ad revenue has grown drastically over the past years and is expected to skyrocket in the upcoming years.
Here is a sneak peek at the figures of TikTok ad revenue generated over the past years and the revenue predictions for the upcoming years.
|Ad revenue generated by TikTok.
|$17.2 billion (forecast)
|$22.0 billion (forecast)
Brands increased their Ad spending on TikTok in May 2023
There was an 11% increase in the advertising rate on TikTok in May 2023. Some of the biggest contributors were Pepsi, Amazon, Doordash, and Apple.
This increase was majorly due to the soaring popularity of influencer marketing and short-form video marketing.
Plus, TikTok does an applaudable job of reaching a large audience, targeting a specific audience according to their interests, and increasing engagement and sales. Further, brands can target the young generation, like GenZ, with the help of the app, leading to a better impact on advertisements and generating more sales.
What more will a brand need from a platform?
These reasons were enough for FedEx and State Farn to turn their attention from traditional Television ads and increase their spending on TikTok ads.
This wasn’t a surprise considering how the app’s content affects the consumers’ purchasing decisions.
Additionally, the latest rolled updates like TikTok Pulse and Pulse Premier are more likely to contribute to increased Advertisement revenue on the platform.
Publishers will get a 50% cut from the Ad Revenue for the Ads they publish.
According to the latest update released by TikTok on 3rd May, Pulse Premium is now available for brands to invest in.
According to Pulse Premium, Advertisers can place their ads alongside the premium content created and posted by the Premium publishers. Besides, 50% of the ad revenue generated from these ads will be shared with the premium publishers.
This will encourage the brands to advertise to a large audience and motivate premium publishers to display more advertisements alongside their posts. Ahaa! Smart move by Tiktok.
Another update launched on 4th May is known as TikTok Plus. It will let the advertisers book their slot in the lineup after the top 4% of content on a platform in a specific category.
This will help to increase the brand awareness and audience reach. To learn more about TikTok Plus, check out their official page.
By the end of 2027, TikTok ads will generate higher revenue than YouTube and Meta combined.
Brands are turning towards TikTok for advertising and are slowly turning away from Meta and YouTube. According to research conducted by Omdia, TikTok’s online advertising revenue share is expected to increase from 22% to 37% in the year 2027.
This percentage includes both TikTok’s revenue and Douyins’s (Sister app of TikTok used in China) Revenue.
Here is a glimpse of the research that indicates the revenue share of TikTok and other advertising platforms.
|Revenue share as of 2022
|Revenue share as of 2027
One of the greatest reasons for such a huge diversion of brands towards TikTok is the platform’s strategy to boost its advertising business. TikTok encourages brands to advertise their products as simple advertisements and by creating meaningful content. This strategy helps to increase brand reach as the users do not skip or scroll entertaining advertisements.
Further, the hashtag “TikTok Made Me Buy It’’ gained popularity in the past months, encouraging consumers to buy the products they see on TikTok.
TikTok beats Snapchat as the favorite app of teens in the US.
Snapchat has recently become known as the most popular app among GenZs. However, TikTok has surpassed Snapchat’s popularity and become the most popular app for teens.
TikTok was voted to be the favorite social media application by 33% of respondents in a survey conducted. However, Instagram still ranks as the platform with the most engagement, with an 89% user engagement rate. While TikTok ranks third with 80% of engagement, following Snapchat with an 84% user engagement rate.
Here is a table displaying the teen Social media network users in the United States.
From the above table, I concluded that as TikTok is gaining popularity among teens (the group most impacted by what they see), it is more likely to succeed with its advertising business. This means that the platform’s ad revenue is more likely to increase over time.
Why do Brands prefer TikTok for advertising over other social media platforms?
92% of global users take action after watching a TikTok video.
TikTok users trust the experience of the TikTokers more than the ingredients present in the product. Hence, most brands send their products to TikTok influencers to give users a view of it.
This review post attracts many users and increases the sales of the
brand. A large audience of an influencer even leads to making the product viral on the platform.
Let me explain to you with an example:
According to one of the creators in Vietnam, the users present on TikTok focus more on the review provided by the creator than what the brands say about it.
Another example of an organization utilizing the platform’s reach is the Singapore Police Force. To make the citizens aware of online scams, Singapore police hopped into the latest trends.
Moreover, when discussing advertising on TikTok, Starbucks surely aced the game. They hired an influencer to increase awareness of their limited-edition drinks and invited the audience to try and rate them.
Conclusion: TikTok’s ad revenue will reach $22 billion by 2025.
With more than 1 billion active global users, TikTok has entered the top Social media applications list. These increasing numbers have caught the eye of the brands, which will have a huge contribution to the increase in the advertising revenue of the platform.
Today, TikTok is widespread, especially among teens, for in-app shopping and social commerce. Hence, considering all the factors, TikTok’s ad revenue is forecasted to cross $22 billion by the end of 2025.
You can check out TikTok statistics for further stats related to the platform.
TikTok is forecasted to make $13.2 billion by the end of the year 2023. Hence, by 2025, TikTok is expected to make $22 billion in ad revenue. These increasing numbers are due to businesses shifting towards TikTok for advertising and expanding their reach.
TikTok advertising has gained quite a lot of popularity over the past few years and has become a top choice for brands to advertise on social media. This sums up that advertising on TikTok is extremely profitable due to the increased reach of the audience on the platform and the users’ trust in the content creators.
TikTok creator funds pay the creators 2 to 4 cents per 1000 views. Hence, the creators earn only $20 to $40 per million views from TikTok.
The average conversion rate of TikTok ads is 1.1%. However, this conversion rate varies from industry to industry. For example, the real estate industry has a high-value conversion rate. At the same time, Health and beauty sales are low-value conversions. This makes it crucial to understand your industry figures to set up a target for your conversions is crucial.