Oct 21, 2022

What is the business model of the successful app TikTok?

Business Model Idea
Business Model Pattern
by Stefan Lemmerer

What makes TikTok special?

When a new software enters the market and quickly gains popularity, it's frequently difficult to comprehend why it's necessary. For TikTok, there is a sizable market of consumers looking for a few minutes of micro-entertainment and distraction each day. If a video is particularly intriguing or engaging, the algorithm immediately re-shares it on the "For You" tab, where it receives millions of views. With a TikTok account, anyone can produce video content that incorporates music, unique filters, and even visual effects. The objective is to develop movies that immediately capture users' interest, compelling them to pause scrolling and pay attention. The longer time a user spends with a TikTok creator's video, the more likely it will go viral. The TikTok For You page is the most popular component of TikTok and is where visitors discover fresh content that the TikTok algorithm has discovered. When a TikTok user launches the app, the For You page is the first page they view. Much like Twitter and Instagram, the TikTok platform is heavily influenced by current trends and hashtags that users may use to discover new content. ByteDance, a huge corporation, is behind TikTok. ByteDance's AI Lab is highly obvious.

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Among these are recommendation systems, data visualization, automated translations, social network analysis using artificial intelligence, and speech and text processing. However, speech recognition and voice mapping, speech synthesis, face recognition, 3D reconstructions from 2D images, and Visual Question Answering are also included. Visual Question Answering is an attempt to teach an AI to recognize individual elements in images and videos, but also to understand their context and respond to questions about them. All of these tools and tests will be based on a highly adaptable software framework designed specifically for the AI Lab and dubbed zhongtai - central platform in German. Among the capabilities ByteDance is creating, and which are of special interest to TikTok, are systems for precisely recognizing people's movements in videos - both body, face, and hands. Additionally, it is developing a tool that TikTokers may use in their videos to apply filters to their faces and foreground, as well as to adjust the length of their legs, for example. But most importantly, ByteDance has devised a system that gives users what they want to see - or at least what they appear to want to see - anticipates what might be hot, and so keeps people glued to their devices.

TikTok SWOT Analysis

The SWOT Analysis of TikTok is about the strengths, weaknesses, opportunities and threats of the companies business model.

TikTok SWOT Analysis ©Business Model Ideas

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Business Model Canvas of TikTok

This canvas shows a detailed explanation of how the business model of TikTok is structured.

Business Model Canvas of TikTok ©Business Model Ideas

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2 of 11 Business Model Patterns behind TikTok

Proven strategies to design successful business models.

The Business Model Ideas Patterns are a collection of mechanics, themes and strategies used to delineate business model building blocks. Use them as inspiration and blueprints for designing your business models.
The best way to do this, is to look at the design theme and ask yourself, what would this mean for our business?
For each design theme we provide a short explanation, some key questions you can ask yourself and links to analyzes at Business Model Ideas, illustrating the design theme in practice.

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Business Model Patterns of TikTok ©Business Model Ideas

How Does TikTok Make Money?

Here are some of the ways the video-sharing app TikTok generates revenue despite being a free app.

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TikTok Ads

TikTok For Business, which was introduced in June 2020, is a revenue stream for the company. Similar to YouTube, TikTok allows brands to promote their products and services through paid advertisements. TikTok For Business enables brands to enhance their marketing solutions with in-feed videos, brand takeovers, hashtag challenges, and branded effects. Here is an overview of these and other features:

  • Top-view ads: Unlike brand takeover ads, which appear as soon as the user opens the app, top-view ads appear once the user is already using the app and can last up to sixty seconds.

  • In branded hashtag challenges: brands create their own hashtag challenge and pay TikTok so that their tag appears on the discovery pages of users. TikTok users can take part in the challenge by posting with a designated hashtag. While entertaining, it increases brand awareness.

  • In-feed video advertisements: In-feed video advertisements are brief videos that appear between users' feeds as they scroll through the For You page. Typically, these advertisements are identical to those that appear in Instagram Stories.

  • Brand takeover ads: If you’ve ever opened TikTok and received an ad immediately, that’s a brand takeover ad. Brands can use this type of ad to deliver a message right away to their target audience.

In-App Purchases

TikTok generates revenue through in-app purchases, as do many other social media platforms. The app offers 100 to 10,000 virtual coins ranging in price from $0.99 to $99.99.

TikTok coins are an in-app currency that users must be at least 18 years old to purchase. Users can purchase virtual gifts for other users to express their appreciation for their content using the coins.

Marketing Section of TikTok ©Business Model Ideas

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TikTok advertises the ease of use of its app. Even new users immediately understand how the platform works.


TikTok advertises the technologies they use in their app. Examples include the ease of video creation for entertainment and the algorithm they use to suggest the perfect videos to their customers.


TikTok advertises that it can be used anywhere with an active internet connection.


It is advertised with great variety and content in a wide range of areas. Tiktok wants to offer as wide a range as possible for different interest groups.

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