Reporter He Chang.
Edited by Gao Yulei.
Although it is not new for ByteDance to be good at monetization, its strong earning power is still beyond the imagination of many people.
On December 20, ** reported that ByteDance's revenue in 2023 increased by 30% year-on-year to $110 billion. This means that Byte's revenue in 2023 is not only far ahead in China, but also close to Facebook's parent company Meta in the international market, which is expected to have revenue of $133 billion this year.
Revenue comes from business. For ByteDance, a company that believes in "vigorously producing miracles", as it gradually grows into a continuous and non-stop Internet "money printing machine", the outside world may be more concerned about why it makes money and what it makes money through
To a certain extent, behind the rapid growth of ByteDance's revenue and profit is a strong algorithm distribution model, extremely high traffic conversion efficiency, and on this basis, it can be called "crazy" exploration and attempt.
TikTok and Douyin: Short ads and live broadcasts attract money.
ByteDance has six business segments: Douyin, Dali Education, Feishu, Volcano Engine, Chaoxi Lightyear and TikTok. Among them, the Douyin segment is responsible for the overall development of the domestic information and service business, and the TikTok segment is responsible for the TikTok platform business, while supporting the development of overseas e-commerce and other extended businesses. The two can be regarded as the two wings of ByteDance's traffic ecology, supporting revenue growth in operation and iteration.
Since the beginning of this year, ByteDance's VR, games and other businesses have successively shrunk to a certain scale, and PICO and Chaoxi Lightyear have both faced personnel optimization and organizational adjustments. Especially in the game business, which once invested heavily - starting from the acquisition of Chaoxi Calendar (the predecessor of Chaoxi Lighthead) in 2017, ByteDance has frequently fallen, mergers and acquisitions, expansion, and the establishment of studios ......In 2021, ByteDance was revealed to have acquired Mutong Technology for a consideration of $4 billion to complete the territory, but today, the game may be called ByteDance's "abandoned child".
It is worth mentioning that on December 22, the National Press and Publication Administration issued the "Measures for the Administration of Online Games (Draft for Solicitation of Comments)" to solicit opinions from the public. It mentions that online games are not allowed to set inducing rewards such as daily login, first recharge, and continuous recharge. Online game publishing business units must not provide or condone the trading of virtual props in the form of speculation, auctions, or so forth. All online games must set user recharge limits and publicize them in their service rules, and pop-up warnings should be given to users' irrational consumption behaviors.
After the news was released, game stocks dived rapidly, and as of press time, the stock prices of Hong Kong stocks Tencent and NetEase were **6%γAt this time, in the eyes of the outside world, ByteDance's "abandonment" of the game business is no longer the so-called strong man's chokehold, but has become a withdrawal and timely stop loss.
In contrast, the short ** is still a torrent. Recently, the mobile data research agency DataAI mentioned in the report that Douyin and TikTok have reached $10 billion in cumulative consumer spend, becoming the first non-gaming apps to achieve this goal.
This is not the end. data.AI expects TikTok and TikTok to see even greater revenue growth in 2024, with $15 billion in consumer spend, which will also be higher than other revenues** β with users of the platform spending more than $11 million a day for their favorite content creators, which is expected to propel it into the highest-grossing mobile app, surpassing Candy Crush Saga the most profitable mobile game to date. By the end of 2024, "users will spend 40 hours per week, a 22% increase over 2023."
The ability of short ** to absorb gold can be seen. However, unlike the membership model of long-term platforms, Douyin and TikTok do not offer paid subscriptions β at least for now. Since both of them belong to the product form of short ** platform, although they are in different backgrounds, the revenue ** is generally the same. Taking Douyin as an example, its revenue can be divided into three parts: advertising, live streaming reward sharing, and commissions from e-commerce and other businesses (i.e., platform technical service fees).
Advertising is the core of Douyin's revenue**. A former ByteDance employee once told the power plant that Douyin set its core metrics as DAU (the number of daily active users) and user time spent in order to sell more ads. "The longer a user stays, the more content they view, and the more ads they can sell. Of course, in this process, the excessively high ad loading rate inevitably causes a decline in the user experience, which needs to be adjusted in time, and the user's ridicule of "6 out of 10 Douyin is an advertisement" is a portrayal.
In fact, every time a user browses, they are indirectly contributing advertising revenue to ByteDance. Hua Chuang** in "Internet Advertising Review, Nearly a Trillion Market, Who Will Rise and Who Will Fall in 2022?".According to the report, in 2022, ByteDance will rely on the rapid growth of e-commerce advertising revenue to achieve the first place in the industry, and become the main force of China's Internet advertising incremental contribution.
In addition to short**, live streaming is another form of content on Douyin. In most cases, half of the user tips received by anchors will go into Douyin's pockets. Those floating on the mobile phone screen "Porsche", "private jet", "Douyin No. 1", "carnival", etc., need to spend 1200 coins, 3000 coins, 10001 coins, 30000 coins - 10 coins are equivalent to 1 yuan, their unit prices are 120 yuan, 300 yuan, 1000 yuan, 3000 yuan, 3000 yuan. A person who used to work in the live broadcast industry told the power plant that it is common for top anchors to earn millions a month. "And their share ratio is generally higher, even so, the platform can take three or four percent. β
According to dataAccording to AI statistics, U.S. users and Chinese iOS users contribute 60% of user revenue to Douyin and TikTok, totaling $6 billion. This is followed by Saudi Arabia, Germany, the United Kingdom and Japan, which together contribute 13%.
With the extension of business tentacles to e-commerce, local life and other fields, another heavy revenue** has entered ByteDance's field of vision. Every transaction completed by a user in Douyin Xiaodian, Douyin** and other fields will create a certain amount of commission for it. For Douyin e-commerce, the commission ratio is usually between 2% and 5%, which varies according to the category.
In addition, Douyin is also involved in many business branches such as healthcare, social networking, and search, and is a veritable "challenger".
Outside of advertising, how about the stamina.
Traffic isn't always invincible, but there's always an arrow that goes in the desired direction. As mentioned above, e-commerce is TikTok's most outstanding new business in the past two years. At present, TikTok Shop has been launched in the United States, the United Kingdom, Singapore, Thailand, Malaysia, the Philippines, Saudi Arabia and other countries, covering North America, Europe, Southeast Asia, and the Middle East market.
The attack on new business is often firmly tied to ambition and expectation. However, the aforementioned former employees of ByteDance believe that whether it is domestic or overseas, e-commerce or local life, the purpose of ByteDance's entry into the game is to make full use of its abundant traffic. At the end of the day, it's a more efficient way to sell ads.
After all, the gross profit margin of advertising is extremely high. In his view, an ideal state is that users have the willingness to consume goods while consuming content on the platform, so as to create an increase in advertising demand for the platform and attract users to place orders again, and so on.
This is equivalent to replacing the "middleman", taking on the role of the whole process, and "making all the money that can be earned by yourself". For example, Douyin launched a shopping cart function opening plan in 2018, and after jumping to ** links, it has successively entered platforms such as JD.com and Vipshop. Today, external links are hard to find, and transactions are more often left on Douyin. An e-commerce person said that Douyin has content dividends, and the data of explosive products has a considerable performance, which is suitable for merchants with stable pallets to enter.
After building a closed loop, Douyin e-commerce ushered in amazing growth. According to a previous data obtained by the power plant, the GMV of Douyin e-commerce in 2021 was 880 billion yuan, and the overall user penetration rate reached 26% (that is, the proportion of e-commerce users in Douyin users), and the GMV in 2022 was 138 trillion yuan, with an overall user penetration rate of 45%. According to a report by LatePost, the GMV of Douyin e-commerce from January to October this year was close to 2 trillion yuan, with a year-on-year growth rate of nearly 60%.
The increase in deal size was accompanied by a boost in advertising revenue. It's just that the business is mixed. A brand person found that even peers with an annual GMV of more than 100 million yuan are difficult to break even in Douyin e-commerce, because "the cost of traffic is getting higher and higher, and if you add the cost of the live broadcast team, the whole is even a loss." The person added that his brand only chose to cooperate with Douyin's small and medium-sized talents in a relatively lightweight way in live streaming, and "the main position is not here".
But ByteDance, which is unwilling to "make money lying down", has finally tasted the sweetness of "running to make money". ByteDance said in a report shared with employees that the company's revenue in 2022 was $85.2 billion, a year-on-year increase of 38%;Operating profit exceeded $20 billion, compared to an operating loss of 71 in the same period in 2021$500 million.
In March this year, Liang Rubo, CEO of ByteDance, said at the anniversary event that in the coming year, the company will focus on investing in the two main businesses of information platform and e-commerce. The former includes TikTok and TikTok, and the latter is an extension of the former.
At present, the number of daily active users (DAU) of Douyin has exceeded 800 million, and TikTok, which has been hit hard, is still highly sought after by users. Although there are many skeptical voices among them - Tesla CEO Elon Musk said that he does not want to take advantage of human weakness and inertia to make money. Even so, ByteDance, a company with a huge number of users at home and abroad, has never given up exploring various possibilities for traffic monetization.
In October, ByteDance offered to buy back from current employees for $160 per share. Wall Street** reported that ByteDance has 1.4 billion shares outstanding, meaning it is valued at $223.5 billion, down nearly 26% from $300 billion a year ago. From this point of view, making money is not only an end, but also a means, for competition and for valuation.