TikTok Is Just the Beachhead for ByteDance’s Global Ambitions: “Story of TikTok” Author Matthew Brennan

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Matthew Brennan, the author of Attention Factory: The Story of TikTok and China’s ByteDance, says that ByteDance has ambitions to transform itself into a global provider of digital products and services following the immense success of its social media platform TikTok.

ByteDance’s TikTok has emerged as one of the most remarkable social media phenomena of the past decade, amassing over 2 billion downloads and 800 million active users since its international launch in 2017. 

In an interview with China Banking News, Matthew Brennan said that TikTok’s remarkable success can be largely attributed to the highly potent combination of the short-video platform with the latest recommendation engine technology.

“TikTok is not the first short video app by a long way – in fact it’s a late mover in this category,” said Brennan. 

“So the obvious question is what makes TikTok so special, and is why wasn’t it Music.ly or Vine, or why not Kuaishou or Meipai in China?

“A big part of the answer is ByteDance’s recommendation engine – nobody expected that the Vine experience plus a recommendation engine could be so powerful. 

“Combining these things together pushed the short video category to unimaginable heights.

“Youtube is a very useful paradigm for thinking about TikTok, and many of the problems that Youtube encountered in the early days have since been solved by recommendation.

“Around 2011 Youtube thought that channels would be the main way that could grow the content on the platform, with the idea being that the Youtube channel could be like a TV channel.

“After a few years however, it became evident that recommendations were going to be by far the most effective way for users to discover content.”

Brennan points out that the technology underlying TikTok’s recommendation engine was on the boil at multiple tech companies, but has only recently reached a sufficient level of development.

“For a recommendation-driven short-video platform to take hold in society today, there are a couple of important technologies that need to mature to a certain level. 

“Video classification is one – the technology needs to be there for them to see into videos that don’t have metadata to understand its content.

“That technology is not unique to ByteDance – every major tech giant has this at hand but it’s something that’s only matured in the last few years to the level where it can be useful for these purposes.  

“If you go back just five or six years ago, the technology wasn’t there to automate the tagging of video content. 

“Then there are augmented reality filters – they have new ones coming out pretty much every day, but that technology has only matured in the past five years.”

Brennan points out that ByteDance also spent copious volumes of money on online advertising campaigns in overseas market, attesting to the scale of a global strategy that also saw them drive the formation of localised communities based around signature content creators. 

“ByteDance were extremely bold in spending billions of dollars promoting TikTok very aggressively. 

“They spent more on advertisements for TikTok than pretty much more than any other Chinese company has ever spent on promoting an app. 

“Most of that money went to Facebook and Google, and you can argue now as to whether those companies should have accepted that money looking back on things today.

“Content operations and the community aspect cannot be underrated either – the act of building community on the app was very important in the early days, although less important now because Tiktok is such a juggernaut that it just doesn’t need this hands on approach.

“In the early days TikTok was implementing a systemic playbook on a country-by-country basis, in order to build out content communities – strong groups of early pioneers who would push this app forward and give it a distinctive identity.”

Brennan says that TikTok’s success attests to the addictive power of the short-form video – a genre whose potential value had previously been overlooked by the online tech sector.

“Before TikTok really blew up most people thought longer-form video content would be more important, and that platform like Netflix, Hulu and Youtube would be the predominant video platforms that would garner the most attention from people and become the most monetizable. 

“Short-form video is more powerful in the Chinese market however, and it’s a bigger cash cow than long-form content. 

“I believe the same will prove true over time in every market.”

While Tiktok is currently associated in the West with teenage ostentation and cat videos, Brennan points out that its Chinese counterpart Douyin has expanded vastly in terms of both content types and audience segments.

“In the West our thinking around TikTok is still centred around forms of content such as lip synching, dancing and comedy skits, but if you look at China though they’ve got all age ranges and all sections of society using Douyin (the Chinese version of TikTok), and I think the same thing is pretty much coming to the West.

“When Douyin first broke out in China in 2018 it was seen as an app for young people. Now older generations of my Chinese family are using TikTok on a daily basis – people I never would have expected to be using this app will end up using it.

“You’re going to find that every type of video content that’s found on Youtube will eventually migrate over – or has migrated over already to TikTok. There’s something there for everyone there.

“It’s a very addictive experience – far more powerful than Youtube, and it’s going to have a huge impact – people are just coming to realise this.”

One of its biggest impacts will be in the online advertising market, where TikTok could undermine the duopoly of Facebook and Google.

“Douyin has had an impact on the entire online advertising market in China, and I think we can expect a similar impact in the West given TikTok’s success,” said Brennan.

“It will undoubtedly offer some extra competition in a market which many people have come to view as a duopoly between Facebook and Google, which is a good thing for marketers. This is already in the early stages of happening.”

Brennan says the next step will be for ByteDance to follow the lead of other Chinese tech giants and expand into a far broader range of products and services, as demonstrated by its recent acquisition of a payments license in China.

“In terms of diversification of their services, this is just what every Chinese company does when it reaches a certain scale.

“Having your own payments platform is a must for all the multi-billion yuan Chinese internet giants like Meituan and JD.com, because there’s obvious places where they will be able to acquire users for payments transactions throughout their ecosystem.

“It’s unsurprising rhino that ByteDance would obtain a payments license. Owning that part of the value chain is an obvious thing for ByteDance to want to do – last year they even registered their own trademark around payments.

“If they can find ways to convert very large absolute numbers of users into BytePay or whatever they call it, and away from WeChat Pay or Alipay, it would be an absolute no-brainer.”

As the first Chinese company to create an internationally successful social media platform however, ByteDance is in a far better position than other homegrown tech peers to expand into the global marketplace. 

“[ByteDance CEO] Zhang Yiming is an extremely smart guy – he’s very ambitious and plans to expand into so many different areas.

“People need to realise that TikTok is really just the beachhead – it’s to break into the Western market, and every market around the world in fact.

“From there they’ll expand out into a myriad of services – very similar to how Google and Tencent offer a range of different services. 

“ByteDance will go even further – they will be the first Chinese company that will provide a whole suite of different things that include B2B and B2C. That’s the sort of thing we can really be expect them to be doing over the next two to three years.”

Brennan also foresees an IPO within China in the near-term for ByteDance, given its huge scale and a push for it within the company from senior executives.

“There’s been rumours of an IPO for at least three or four years in Hong Kong with Douyin – the company needs to IPO at some point and eventually it will happen.

“The company is too big now, and I know for sure there’s definitely willingness on the higher management side to do this.

“I’d be surprised if TikTok doesn’t break out as a separate entity from ByteDance, and I would also be surprised if it doesn’t go public in the next 18th months in some form.

“As for ByteDance in China – it seems most likely that it will go public in Hong Kong at some point, and I would expect that to happen within the next year.”

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