TikTok manages to create an amazing interactive experience for its users. This is why it has become the fastest growing social media app.

Even though it is extremely popular, it is still unclear to many how does TikTok actually make money. 

Let’s reveal the mystery behind this ever-evolving and intriguing app!

How Did TikTok Start?

TikTok’s sudden boom actually hides several years of development.

The app was initially released in China as Douyin. A year after it was bought by ByteDance, it changed its name into what we now know – TikTok. The company was created by a former Microsoft engineer and is the parent company of several other social media apps.

ByteDance bought the Musical.ly app in 2017 and merged the two platforms. This is how TikTok got into the top 4 most downloaded mobile apps in the world.

This was only the beginning of the app’s huge success. 

How Does TikTok Make Money?

The TikTok algorithm has the power to make a video viral overnight. This is why it has attracted many marketers and influencers to use the app. It can literally make the product you are promoting extremely popular for a short period of time.

But apart from all these benefits for the users, you might be wondering how exactly the app makes money through all the trends and TikTok famous content creators..

TikTok Coins

One stream of income for TikTok is the in-app currency – TikTok coins. Users can earn these and receive virtual gifts from their followers. Here’s how it works.

The coins and gifts that followers give to their favourite creators are bought with real money. The presents users receive are turned into diamonds. The app charges 50% of what you will earn with the commission fee. Every diamond is 50 cents. Therefore, if we have diamonds with a value of $100, TikTok takes $50 and the creator as well. 

TikTok Ads

Similar to every other social media platform, TikTok has also developed the process of playing ads and allows creators to create ads. This is why we can see the increasing use of hashtags under posts.

TikTok ads are a great opportunity for marketers to reach a bigger audience and get noticed in a short period of time. The way the ads currently operate is by charging advertisers a certain Cost Per Thousand Impressions (CPM). TikTok is trying to optimize the process and make it easier for sponsors to promote their products.

Try to implement your best TikTok ideas into amazing ads.


The most popular TikTok ad formats are the following:

  • In-feed video ads – these are short videos that appear in between the ones from the regular feed. 
  • Brand takeover ads – these are ads that appear right when you open the app. This is used for giving the target audience a direct message.
  • Branded hashtag challenges – brands use this type of ads by paying TikTok to show their tags on a top position on people’s For You pages. Creators can reuse the tag and increase the brand awareness of the business.

In-App Purchases

Another way of utilizing TikTok coins is allowing creators to link their products and other users being able to buy them directly through the app. This method has also proven to be very effective and brings much profit.


TikTok Pricing Model

Since TikTok has been trying to polish their ads procedures, they have introduced a few pricing models on the platform:

  • Cost Per Click – TikTok charges advertisers for the number of clicks their ad has received.
  • Cost Per Action – every time that a viewer performs an action (purchase, sign up for a newsletter, etc.), the advertiser is charged. 
  • Cost Per View – TikTok charges sponsors for every 1000 impressions that their content receives.

TikTok Investors

One of the biggest investors in TikTok is SoftBank Group Corp. It led to funding rounds in an attempt to secure a $3-billion deal. During the first round, ByteDance was valued at $75 billion.


Recently, Tiger Global Management has also invested in TikTok stocks. The investment amount is not yet revealed. However, since ByteDance shared their share prices, the valuation is supposed to be between $90 million and $100 million.

TikTok Revenue

As of 2020, business reports have claimed that the app has generated $965 million. To compare, TikTok managed to generate only $176.9 million in 2019.


Sensor Tower reports that before the app started playing ads, TikTok generated around $3.5 million in 2018 only through in-app purchases. Compared to 2017, it was a 275% increase!

TikTok Growth Plan

The growth of the app up to this point has been so aggressive that it has made other social media platforms reconsider their main purpose. Facebook was even prompted to create an identical social media app, Lasoo, to fight the competition coming from TikTok. 

However, any attempt against the determined growth of TikTok would be doomed.

TikTok continues to target teenagers and the younger generation. It lures them into producing more and more videos in order to fill the app with never-ending content. Their penetration strategy has been extremely successful up to this point because they managed to secure top positions among other trending social media apps.

Another characteristic that distinguishes TikTok is the fact that they have focused on developing the algorithms through Computer Vision, machine learning, etc.

The app is doomed to be successful!

Now that you know how TikTok makes money, try to go viral and get along with it!