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TikTok is becoming a platform that advertisers are clamoring to be on: Analyst

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Tesla CEO Elon Musk possibly buying Twitter may be dominating the headlines but advertisers have their eyes set on a relatively new kid in town.

Like their 1 billion worldwide users, TikTok executives have many reasons to dance. A new forecast of the Chinese social media platform’s ad revenue reveals that ByteDance-owned TikTok may become an advertising juggernaut.

“We are estimating that this year TikTok will make $11 billion in advertising worldwide, to put that in context, that’s more than Twitter ($5.58B) and Snapchat ($4.86B) combined,” Insider Intelligence analyst Debra Aho Williamson told Yahoo Finance Tuesday.

That would be a staggering achievement for ByteDance who released the viral app TikTok less than six years ago. For those of you without children the short-form video platform was initially home to trendy dances, stunts and pranks but has evolved into anything users are looking for and it’s no longer just for teens.

“One in five social network users worldwide is using TikTok, among the the adult users, we estimate they spend 40 minutes a day watching TikTok videos, it’s absolutely a testament to how Tiktok is set up, its algorithm gives you a scrolling feed that’s pretty much endless,” said Williamson.

FILE - In this Sept. 28, 2020 file photo, a view of the TikTok app logo, in Tokyo. Senior managers at tech companies face up to two years in prison if they fail to comply with new British laws aimed at ensuring online safety for internet users, the U.K. government said Thursday as it unveiled the draft legislation in Parliament. The ambitious but controversial Online Safety Bill gives regulators wide ranging powers to crack down on digital and social media companies like Google, Facebook, Twitter and TikTok.  (AP Photo/Kiichiro Sato, File)
(AP Photo/Kiichiro Sato, File)

Still the lifeblood of the platform remains teens who flock to Tok day and night. Piper Sandler’s “Taking Stock with Teens” survey showed one-third of teens said TikTok was their favorite social media app.

“About two-thirds of all teens in the U.S. and about three-fourths of young adults 18-24 are monthly users of TikTok, we’re seeing a huge audience,” Williamson said.

Dogs, dances, recipes, sports, music, beauty, fashion, even financial advice is delivered 24/7 to users. And as Williamson points out, one of the really unique things TikTok has done is involve creators in the advertising, so a creator might partner with a brand, create a video supporting that brand, and share it with their followers (sometimes in the millions) and then in turn followers will create their own viral videos promoting the brand.

“We've seen this over and over again. And this really tight partnership between creators, brands, and then the followers of creators is really what's helping TikTok advertising tick,” she added.

In the grand scheme of things, however, TikTok is still small compared to Alphabet’s Google, which owns 29% of all online ad revenue, and Meta which had $155 billions ad business in 2021.

“It's nowhere near what we're expecting for Meta, the parent of Facebook and Instagram, which is leagues ahead still and remains to be that way,” said Williamson. “But more and more, we're really seeing TikTok coming on strong as an advertising vehicle that advertisers around the world are starting to clamor to be on, just like users.”

However, there are widespread privacy and data collection concerns regarding the Chinese-owned app. The concerns over TikTok involve how users' information is being used and where data is being stored, for instance is data being sent to China?

“TikTok says no, but that's really hard to prove. So I wouldn't say that advertisers, or users, for that matter, should disregard the privacy concerns or the concerns about data usage. But at this time, TikTok's momentum is really strong,” said Williamson. “And I think that both advertisers and users are really just willing to overlook that right now.”

David Briggs in an anchor at Yahoo Finance.