TikTok owner tops Baidu as China's No. 2 digital ad company

Brief:

ByteDance, the Chinese tech giant that owns social video app TikTok, overtook Baidu and Tencent to become the second-biggest digital ad platform in the country. ByteDance captured 23% of digital media spend, or 50 billion yuan ($7 billion) during the first half of 2019, per estimates from consulting firm R3 cited by CNBC.
Chinese e-commerce giant Alibaba was the market leader with 33% of digital media spend during the period. Baidu, which has been described as the "Chinese Google," came in third place at 17%. Tencent, parent company of popular messaging app WeChat, was in fourth place with a 14% share.
ByteDance's ad revenue surged 113% during the first half of 2019 from a year earlier. Most of the growth was from Douyin, China's version of TikTok, and by ByteDance's news app, Jinri Toutiao, R3 estimated.

Insight:

R3's estimates of media spend in China indicate that ByteDance has become a significant force in the country's digital media market. The report doesn't apply to TikTok, ByteDance's social video app that's become a worldwide sensation since being introduced last year. TikTok surpassed 1.5 billion lifetime downloads from Apple's App Store and the Google Play, and has generated $115.3 million in user spending so far this year, app researcher Sensor Tower estimates. Last month, the researcher said TikTok's downloads fell 4% to 177 million in Q3 from a year earlier, indicating the app could be maturing past its heady high-growth stage.

ByteDance's growing power in China doesn't necessarily mean the company will experience similar growth in global markets where TikTok competes more directly with Facebook and Google, the dominant companies in digital advertising. Facebook and Google don't have access to the Chinese market, making comparisons difficult.That said, TikTok stands as the third-most downloaded non-gaming app this year, behind Facebook's WhatsApp and Messenger. Downloads are ahead of both the core Facebook app and Instagram.

In the past year, U.S.-based marketers have run a variety of campaigns on TikTok to reach its coveted audience of teens and Generation Z. American Eagle Outfitters, Chipotle, the NFL and Walmart are among the first major brands to create campaigns for the social video platform.

TikTok is building out its app on several fronts, including this month's introduction of a software development kit (SDK) to integrate more third-party apps with the platform. Share to TikTok was the first feature in the company's nascent TikTok for Developers program. Last week, it confirmed it's testing social commerce capabilities to let influencers link to pages where users can purchase products featured in videos. The move followed the introduction of shoppable ad formats for brands that aim to make the app more competitive with rivals like Instagram, which has added a slew of commerce features this year to capitalize on consumers' steady shift to mobile shopping.