While Facebook, Google, Amazon, and Twitter recorded low revenue numbers for the tech earnings season, Tiktok continues to grow stronger.
"A Larger Threat"
According to a report by CNBC, the low revenues for the said platforms is attributed to the rising inflation, Russian invasion in Ukraine, Apple's privacy changes, and general pullback in ad expending.
However, Tiktok's immense popularity is becoming much of a larger threat for these platforms and digital advertisement giants in general.
Tiktok is the world's third largest social network in 2021, only behind Meta's Facebook and Instagram, reported by Insider Intelligence. It is owned by China's ByteDance, a private company that is valued at $140 billion.
Based on Insider Intelligence's forecast, TikTok will garner 755 million monthly users globally in 2022, and its market share in social networking could top 20% this year or nearly 25% by 2024.
The short-video-based platform's immense popularity is exactly the reason why it is making the competition field harder for other platforms.
"Across the industry, short-form video continues to take a greater proportion of time spent," Atlantic Equities analysts said, reported by CNBC.
They added that "primarily driving and benefiting from this trend has been TikTok, with some concern that this was creating a competitive challenge for Meta."
Meta's Challenge
Meta reported on Wednesday that the ad revenue for Facebook only increased by 6.1% in the first quarter, which is the slowest growth in the company's 10-year history.
Hence, Facebook launched a product called Reels to challenge Tiktok's short-video market. In fact, the company stated to investors that 20% of time spent on Instagram is consumed on Reels, while 50% of the time on Facebook is spent on videos.
Alphabet's annual report said that ByteDance is a contender in social networks together with Meta, Snap, and Twitter as competitors for digital services like Amazon, Netflix, Hulu, Disney, and other platforms.
The report also stated that Youtube only grew by 14% instead of the forecasted 25%. There were many factors that played into this short growth, but Tiktok is considered an additional factor for its slowdown in ad revenue.
Tiktok Competition
According to Cowen Equity Research's estimates, they are expecting Youtube to grow by only 7.5% in the second quarter compared to the previous 19.7% estimate.
In CNBC's report, BMO Capital Markets analysts also wrote in a note that "revenue results were largely fine, but not enough to soothe investors' rising ad recession anxiety, nor growing TikTok competition concerns after YouTube missed again, and by a larger margin than prior,"
To compete with Tiktok's popularity, Youtube shorts was launched in September 2020, wherein users can upload short videos that are closely similar to Instagram and Tiktok.
Despite the substantial growth of audience that Shorts has achieved, the lack of monetization options and the beta phase of advertising is still not at par with Tiktok's popularity. Hence, their ad revenues are not meeting analysts' expectations.
Alphabet is still in the process of building and testing ad formats for the "Shorts" in hopes of improving their revenue.
Meanwhile, Facebook CFO Dave Wehner acknowledged that short-form video is a huge opportunity for the whole industry, and while Tiktok has strong offerings, they are pleased with their Reels to compete for share and time in the market.
This article is owned by Tech Times
Written by Joaquin Victor Tacla
