Why is Microsoft so Interested in Buying TikTok?

TikTok and Microsoft

Each year a new app gets created and takes over social media. This time is no different. 2020 is all about TikTok, an app which is on the verge of being banned in the United States due to concerns of privacy and ties to the Chinese state. However, Microsoft has revealed that it is currently in the talks of buying the U.S operations of TikTok. So why exactly does this American tech company want to buy TikTok?

The New Trend

tiktok trend

For those of you who don’t know, TikTok, formerly known as Musical.ly, is a social media application designed to create, share and discover short music videos. The Chinese video-sharing media app was launched in 2017 and globally released in 2018. It is currently available in 150 countries.

Let’s start with some fun facts!

  • On the 29th of April, Sensor Tower reported that the TikTok app has been downloaded over 2 billion times worldwide.
  • In June 2020 only, TikTok was downloaded 87 million times worldwide.
  • As of July 2020, the app has been estimated to have 800 million active users.

Tiktok is mostly used by teens as a means of expression through singing, dancing and lip-syncing. What makes TikTok so trendy among teens, you ask? Videos on it are short and bubbly. The tech-savvy can follow other accounts and create a feed of new content from people they enjoy most. In addition, for many of the young users, gaining likes, followers and getting their videos featured on the app are important priorities. Therefore, TikTok users shifted from being online audiences to content creators. It’s all about taking someone else’s idea, re-making it your own way and adding a touch of lip-synced audio footages. Even the account with the smallest number of followers can go viral, making any young person an online celebrity overnight!

Advertising on TikTok

tiktok ads

This app provides an amazing opportunity for advertisers. Although it is not so heavy on the ads like Twitter or Instagram, big brands like Nike, Disney, Fenty Beauty and Apple Music have relied on TikTok ads to promote their products in a visually attractive and creative way. We, at Brain Space, use TikTok too for our clients’ campaigns! If this is not a good enough reason for Microsoft to pursue its purchase, maybe the below reasons are:

1. Young Audience:

TikTok was unanimously developed to be primarily used by teenagers and young adults. Topics of trending videos on the app are all youth-oriented. Almost half of the number of total users of TikTok users are aged between 16 and 24, and 66% of them are all under 30. This platform is undeniably the best choice for advertisers because it targets GenZ and younger Millennial. Therefore, a TikTok deal would give Microsoft another shot at a fast-growing, youth-oriented social media property as Debra Aho Williamson described it.

2. Ads for all:

For any marketer, TikTok ads should be a top-of-mind platform for any type of campaign, especially if they want to target youngsters. It can be used by companies of any size.

On one hand, If you are a small company looking to grow your business, TikTok Ads is the way to go. You can set up your own free account and create in-feed ads. The length of the ads can go up to 60 seconds. Moreover, your ads’ features can easily be tweaked to encourage website traffic as well as app installs. Detail Page, Post-roll and Story are several other options for small businesses wishing to advertise.

On another hand, larger companies can also benefit from the in- feed ads as it starts at 10$ per CPM (cost per 1000views). In terms of campaign preparation, this requires a minimum investment of 500$, which makes Tiktok Ads a great fit for large businesses looking for efficient and predictable advertising options.

3. High Reach:

Since TikTok is new to the advertising game, the app will most likely need the help of a tech company in order to level up to their own audience. According to Comscore, Microsoft sites had 225 million U.S users in June 2020 while TikTok had 68 million. A user opens the TikTok app 8 times per day. They spend an average of 52 minutes per day on it. As mentioned earlier, TikTok has several advertising plans for all businesses. And, all plans have a specific target reach.  So, the two companies would combine at a formidable scale. Therefore, obtaining TikTok will improve Microsoft’s target reach in digital advertising.

To Sum It Up

The explosive growth of the Chinese owned social media platform has certainly grabbed the attention of global companies like Microsoft. By obtaining TikTok, Microsoft could be in the lead in the digital advertising market. Forbes estimates that TikTok USA is worth 20 billion dollars, so will Microsoft take the leap?