TikTok generated more than $350 million of IAP in the fourth quarter.
As the global economy continues to put pressure on businesses around the world, many social media platforms like TikTok are generating such revenue that they seem to be forming the foundation for other players in the world of micromessaging and social media. According to a recent Forbes reportTikTok grossed $205 million more than the combined in-app purchases (IAPs) of Facebook, Instagram, Twitter, and Snapchat.
Adding to the shrinking global economy, the privacy policy instituted by Apple Inc (NASDAQ: AAPL) in 2021 reduced social media platforms’ access to customer data. This data is what these companies rely on for the targeted ads that make up the bulk of their revenue prior to this point.
With this track now tense, many are exploring new ways to get users to pay directly for some enhanced products and services. While this IAP will still be subject to a cut of at least 10% by either Apple or Google, it creates a new path to cushion the shortfall in their respective ad revenue.
“Facebook, Instagram, TikTok, Twitter, and Snapchat don’t have paywalls yet, but now they all offer paid products/services through an in-app purchase (IAP), of which Apple and Google get a cut.” says Adam Blacker, vice president of mobile metrics company Apptopia. “TikTok, Facebook, Instagram, Snapchat, Twitter combined have increased quarterly IAP revenue by 91% since Apple introduced ATT.”
IAP is new for some companies like Meta Platforms Inc (NASDAQ: META), which introduced payments for official badge verification on profiles. The feature costs $12 when purchased on the web and $15 when purchased in-app. Subscription will also open up access to other features, including increased visibility and better account security across the board.
For its IAP over the course of the last fiscal year, Facebook has generated a meager $56 million.
TikTok leading the charge for revenue
In addition to Facebook, other US-based entities, including Snapchat and Twitter, also require a subscription from users. According to Apptopia data, Instagram brought in around $1 million, while Twitter raised around $900,000. Snapchat has been offering IAPs for a longer period of time and currently rakes in an average of $125,000 per day.
While these numbers serve as the start of something that may eventually prove sustainable for these companies, they all lag behind TikTok, which generated more than $350 million of IAP in the prior fourth quarter.
“TikTok has had IAP [in-app purchases] since its inception and its app revenue last year was a whopping $1.5 billion,” Blacker says. “Their IAPs are similar to Facebook’s in that users pay for coins that can be used to tip and pay for things from their favorite creators.”
The business ecosystem for these companies is changing and with TikTok’s successes with respect to IAPs, there is still great promise for these giants to continue moving forward in this regard.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about the real-life applications of blockchain technology and innovations to drive mainstream acceptance and global integration of emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based sites and media. Benjamin Godfrey is a lover of sports and agriculture.