Xiao Hong Shu Company Competitor Analysis ByteDance – TikTok, KeSong, Lemon8 ByteDance Business Portfolio Analysis The first step is to identify the key businesses that make up the company, we’ll be using product or market expansion grid to analyze ByteDance. ByteDance is globally known for its short video app TikTok. Yet, the company's investment portfolio's recent changes reveal that ByteDance is now interested in expanding its ecosystem across different sectors. ByteDance has diversified its bets in varied industries since the beginning of 2021. Its newly included portfolio companies operate their businesses in industries such as real estate, semiconductors and financial services. And there is much more. From the analysis ByteDance used diversification method (starting up or buying businesses beyond its current products and markets). Short video industry, which is both focused by ByteDance and XiaoHongShu, is experiencing rapid growth in recent years. As shown below, the number of users in the short video industry in China reached 501 million in 2018, a 107% increase from 2017; the fast growing user based create more demand in the market, pushing market size to 11.69 billion CNY in 2018, a 109.5% increase from the 5.58 billion in 2017. ByteDance Revenue, Market Share, and Growth In 2020, the short video market in China reached CNY 205 billion (approximately USD 32 billion). Among the country's total population of 1.40 billion, 873 million people were short video app users that year. Among participants, ByteDance and Hong Kong-listed Kuaishou have occupied the majority of the market. ByteDance's revenue hit CNY 237 billion in 2020 – that is around 50% of Tencent's figure. Nonetheless, while the latter has been profitable for a while, the operating loss of the former was CNY 15 billion. ByteDance's nemesis Kuaishou couldn't profit from the traffic-driven industry either, recording CNY 10 billion in operating loss. While the two giants are involved in money-burning marketing campaigns, Metcalfe's law makes it harder for smaller players to survive in this saturated market. As the user base is approaching its apex, the growth of the entire industry has slowed down. At the end of 2020, the number of China's short video users grew by only 6.7% year on year. The margin is naturally decreasing, while also facing systemic risks, such as new regulations and policies. ByteDance, the owner of short video app TikTok, saw its total revenue grow by 70% year-onyear to around $58 billion in 2021, according to two people familiar with the matter, slower growth than a year earlier as China tightens its grip on big tech companies. The figures were disclosed to a small group of employees at an internal meeting this week, according to the people. In 2020, the Beijing-based company's total revenue grew by over 100% to $34.3 billion, Reuters has reported.The social media giant retained its second-ranked position in China's online advertising market last year, with a market share of 21%, according to a recent report published by researcher Interactive Marketing Lab Zhongguancun. The overall growth of online ad sales in China declined to 9.3% in 2021 from 13.8% a year earlier, the report says. Tech news website The Information last November reported that ByteDance's 2021 revenue was on track to rise about 60% to 400 billion yuan ($63.07 billion). ByteDance is one of the world's biggest private tech companies with recent trades in the private-equity secondary market valuing it at about $300 billion, Reuters has reported. A breakdown of TikTok's total revenue last year wasn't available. Besides TikTok, ByteDance's other apps include its Chinese equivalent Douyin, news aggregator Jinri Toutiao and videostreaming platform Xigua. In 2021, users spent approximately $2.3 billion last year in TikTok and the iOS version of its Chinese version Douyin, a 77% jump year-over-year, according to app tracker Sensor Tower. ByteDance TikTok Strategies - - - The main type of advertisement on traditional video platforms are pre-roll adverts. Preroll advertisements are sponsored video clips that are automatically displayed before the actual video content. As short videos on TikTok are limited to a 15-second time constraints and means of interaction is limited to comments, TikTok now also supports live streaming. It is widely used by key opinion leaders (KOL), who in turn monetize by virtual gifts sent by their followers. Users purchase virtual gifts with virtual currency developed by TikTok, which can be loaded by and converted from real money. E-commerce platform, a shopping cart icon is displayed at top right corner of the video, showing the items used or mentioned in the respective video. Marketing Mix Strategies Product: - Content - Features - Quality - Variety e-commerce product Promotion: - In-feed ads load - Factor of CPM (cost per mille), is a paid advertising option where companies pay a price for every 1,000 impressions an ad receives. - KOL Price: - List Price - Discounts Place: - Account Channel From this we can conclude that TikTok used Customer Value-Driven Marketing Strategy to improve customer satisfactions and KOL (Key Opinion Leader). As ByteDance is a privately held company and does not publish or announce any of its income, we estimated its revenue on grounds of the main components. In order obtain a fair estimation, it is important to look at Douyin’s pricing list, and the company’s regime of charging on the placements of advertisements. Table below describes and summarizes the most recent official pricing list published by Douyin. Key Findings and Strategic Implication As the social media battlefield gets increasingly fierce, platforms are looking for new business and content models to grow their stagnant traffic pools. But they are not necessarily succeeding. In the west, Instagram’s latest move to transform itself into a recommendation-based shortvideo app like TikTok has sparked a hot debate among users and top influencers, including Kylie Jenner. Now, the Meta-owned platform seems to have temporarily backtracked from the plan. At just 10 years old, ByteDance, the most valuable startup in the world, has shattered records for growth. In 2021, with 1.9 billion monthly active users in 150 countries, and an employee base of over 110,000, the company recorded an astonishing $58 billion in revenues. Most users know the company only by its hit short-video app TikTok, which has been downloaded over 3 billion times globally, a feat only exceeded by Meta and its family of apps. Bytedance uses its SSP platform differently from most companies. The company’s product teams or units don’t control their own operating resources. Instead, many common business, technology, and operating functions (among them HR and legal) are centralized and organized into corresponding teams. The teams are highly specialized, so that the right people can be found and flexibly deployed as needed to each new venture. Cloud and shared operational tools, some of which have been developed in house, allow ByteDance to maintain this seemingly complex organizational setup. Product and related teams still focus on serving customer needs, but they rely on different SSP teams to accelerate development and growth. For example, when ByteDance tasks a new venture team with investigating user needs and market opportunities, the team can go to the user-research specialists at the SSP for data support, saving time on market analysis. In other companies, these tasks are undertaken by the product team, which is rarely best equipped for such information gathering. Subsequently, when a use case has been identified that justifies developing a new app or product feature, the product team is paired with engineers at the SSP level to develop the new product or feature. In some cases, product teams customize existing technologies that have already been developed by the SSP. Algorithms are a case in point. Product teams at ByteDance work with SSP algorithm engineers to fine-tune their enormously powerful recommendation engines. The SSP has also brought together other important teams: user-growth teams, which help identify and acquire desired users; content teams, which establish partnerships to acquire new content; analytics teams, which help to develop deeper user insights; and sales teams, which drive monetization. References https://ethz.ch/content/dam/ethz/special-interest/mtec/chair-of-entrepreneurial-risksdam/documents/dissertation/master%20thesis/MasterThesis_Shi.pdf https://www.enlybee.com/the-best-douyin-marketing-guide-in-2021/ https://www.reuters.com/technology/tiktok-maker-bytedance-takes-aim-lifestyle-leaderxiaohongshu-with-new-app-2022-07-14/ https://www.insiderintelligence.com/content/tiktok-parent-bytedance-extends-its-dominancewith-new-social-recommendation-app
