Despite a potential ban, TikTok ad revenue to double by 2027
Advertising revenue, or ad revenue, for social media companies continues to increase in recent times. As more advertisers move away from traditional advertising methods to digital ads on social media, revenue also breaks records.
In fact, when it comes to digital ads, the social media ad market is the second-largest, reaching US$226 billion in 2022. The amount is expected to grow up to US$385 billion by 2027. Some of the biggest players in social media ads are Meta’s Facebook and Instagram, YouTube, Twitter, TikTok, Snapchat, and even LinkedIn.
Interestingly, a new report shows that TikTok is the fastest-growing social media company by ad revenue. Not only did the Chinese social media company report a 26% YoY growth in ad revenue, but TikTok is also projected to double its ad revenue by US$7.4 billion over the next four years.
What’s more interesting is that TikTok is also expected to take over 37% of the ad revenue market share globally by 2027. This means the company’s ad revenue could double to US$13.8 billion by 2027 and could eventually overtake both Meta and YouTube as well. Both Meta and YouTube are also expected to lose market share during this timeframe.
While the numbers are looking good for TikTok, the social media company still has to deal with regulatory issues and a potential ban in the US. Currently, TikTok is already banned on government devices in US states, with a total ban being a possibility in the next few weeks. The US has just introduced a bill that could see apps that pose a threat to national security face a ban in the US.
Apart from the US, Canada and several other European countries are also looking to ban TikTok. India, the country with one of the most social media users, has already banned TikTok since 2020.
So, if the app is facing potential bans, why are advertisers still preferring the platform, and why is its revenue continuing to increase?
That’s because of its users. While Facebook, Instagram, and other social media have high users as well, most brands feel that content on TikTok is more likely to get engagement from other social media sites. A recent report also showed that most social media users are now turning to TikTok to get news updates and other content. Statista also reported that the streaming platform Netflix is the most talked-about brand on TikTok.
At the same time, ad revenue for TikTok’s Chinese counterpart, Douyin, is also expected to increase as well from 15% to 23%. Combined, TikTok and Douyin will command 37% of the marketing ad spend.
With a potential ban on the horizon, it will be interesting to see how TikTok will continue to maintain its progress and increase its revenue in the years to come. The social media company continues to highlight how it uses its data and that it has no other hidden agendas. It remains to be seen whether or not this is enough to convince the US not to fully ban the app. But one thing is for certain, social media advertising is only going to continue to grow for the years to come.
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