YouTube v/s Tiktok: A Business Perspective

Original article was published on Artificial Intelligence on Medium

YouTube v/s Tiktok: A Business Perspective

As a millennial obsessed with social media and spending a large part of my day scrolling on my phone, I closely followed the series of events that happened with the YouTube v/s Tiktok feud. It is amusing how a YouTube video could stir up emotions of millions to millions of people thereby disrupting businesses of a firm valued over $100 billion. I kept pondering about the issue on multiple fronts — platform owners, content creators, behavioral aspects of viewers, and implication on businesses.

What is the issue about?

The entire feud started with a video by Elvish Yadav roasting the influencers from Tiktok. This sparked a series of videos commenting on the credibility of content creators across both platforms. The issue was blown out of proportion with a video posted on 8th May 2020 by an Indian YouTube content creator, CarryMinati roasting Amir Siddiqui, a creator from Tiktok went viral on all social media platforms. The video had about 67 million views only to be taken down on the grounds of online harassment and bullying. This stirred the emotions of followers who went to downrating the application on Google Play Store. The app rating went from 4.5 to 1.3 in a few days due to this action.

How are these platforms different?

YouTube, currently owned by Google, has been functional since 2005 and has about 2 billion monthly active users worldwide. Tiktok on the other hand is a product by ByteDance, a Chinese internet technology company, and is about 4 years old and has around 800 million active users in the world. While YouTube has its major revenue coming from advertisements and premium subscriptions, Tiktok gets its revenue mostly through in-app purchases. While Tiktok pursued aggressive growth in terms of customer acquisition, they are now piloting advertisements on their platform.

As for content creators, YouTube share from the ad revenue is one part of their earnings. India has a low Cost Per Mile (the amount advertiser pays for 1000 views) as compared to other first-world countries. But creators also work on affiliate marketing, sponsored content, and sources of revenue outside the platform. Tiktok on the other hand has not fully rolled out its partner programs. Hence the creators must resort to other means of social media marketing such as brand promotions, affiliate marketing, and leveraging of other platforms through their content created on Tiktok.

Businesses have spent about $ 1.8 billion in 2019 on digital advertisements in India as per the Digital Advertising Report published by Dentsu Aegis Network (DAN). The ever-changing advertisement landscape has been pushing these numbers to grow at a rate of 26% YoY. While YouTube has a well-established platform in terms of targeting and more formats of ad placement, (display, overlay, skippable, non-skippable, sponsored, etc.) Tiktok could be more experimental given the format of the content dissemination and the aggressive growth in the user base. Yet another distinction could be user demographics. More than 70% of Tiktok users in India are in the age group 16–24. There is also a clear distinction in the popularity of these apps in the economic strata thus making it easier for marketers to reach their target segments.

What are the implications of the YouTube vs Tiktok brawl?

The need to focus on consumer sentiments is a prominent takeaway from the entire fiasco. As for Tiktok, the reason for product rating decline was not directly linked to their product, but it is necessary to focus on the general perception of the product. Tiktok has been acting upon the blames by suspending accounts that have been posting objectionable content. Play store app ratings assign more weights to recent reviews & ratings. This means that the rating might come back to a normal state in the future as it happened with Snapchat, but the key takeaway here would be to lay strong emphasis on the sentiments and morale of the target consumers rather than just on the product features. While consumer brands such as Maggie and Paperboat have been very well able to leverage this to their benefit, it can be the next wave of marketing in other segments of B2C products.

Tiktok, as a platform has always been receiving criticism for various reasons. The platform was once banned in India for promoting objectionable content and misguiding the youth. ByteDance, the parent company, is now being criticized for essentially working on AI products while positioning itself as an entertainment/ educational content platform. This can as well be seen in Tiktok as the content appears on the feed based on your past views. There have been numerous articles as to how Tiktok is associated with data privacy issues. The problem has been more serious considering the cybersecurity laws of China.

The flip side of this situation is the benefits of using Artificial Intelligence-driven marketing. Most firms traditionally have been finding it difficult to find the right target segments to place their ads. Data-driven marketing and AI can help businesses cut down on the costs by finding the right segments to invest their advertisement spends. YouTube has also been working on this front and has proven a 20% cost reduction in campaign costs for Ford Motors in alpha tests.

Businesses also need to realize the potential of micro-influencers in reaching out to their audience. Tiktok and many other platforms have been more popular in the Bottom of the Pyramid (BOP) segment in India as compared to other social media platforms. While businesses have always relied on traditional media to reach this segment, the new platforms such as Tiktok have opened this new possibility to reach this segment digitally. Numerous agencies are now acting as mediators between the businesses and these influencers. While India has about a 40% smartphone penetration rate, this medium of micro-influencer marketing could be the way to tap the new users and the majority of the BOP segment.

Conclusion

As a takeaway, social media platforms need to be receptive to user sentiments and take more stringent measures to regulate their content quality and data privacy issues. For content creators, it is important to adhere to the platform rules. While staying loyal to one platform can help build a fanbase, it is wiser to tap into the opportunities that are opening elsewhere. As for businesses, the trends are changing from digital marketing on mainstream platforms to leveraging the opportunity to use micro-influencers. They can now reach niche segments and the ones that were so far inaccessible. Last but not the least, businesses can now make use of data-driven marketing on these platforms without having to dent their pockets.