TikTok sales in Europe have increased almost six-fold in 2021

TikTok grew its European sales nearly six-fold in 2021, but its losses widened by a third as the fast-growing social media platform expanded its advertiser offering and hired thousands more employees worldwide.

The Chinese-owned network reported revenue of more than $990 million for the calendar year ended December 31, 2021, compared to $172 million a year earlier, according to filings from Britain’s Companies House.

Pretax losses were $896 million, up more than a third, mainly due to higher personnel expenses.

The growth was fueled by TikTok’s thriving user base, estimated at billions, increased ad spend, as well as improved targeting of ads aimed at users of the short video platform.

TikTok is owned by Beijing-based ByteDance, which has raised $5 billion at a $180 billion valuation as of December 2020. The filing relates to TikTok operations for users in Europe, including the UK. These now have a monthly average of 4,396 employees, more than 3,000 more than in 2020.

Sales and marketing expenses increased nearly 90 percent to $666 million, while administrative expenses increased nearly 30 percent to $212 million.

Revenue was mostly generated in the EU at US$532 million and the UK at US$279 million. The year before, it was $114 million and $52 million, respectively.

Advertising is a key revenue driver for TikTok, much like social media rivals Meta and Twitter, and accounted for more than $802 million of annual revenue, a five-fold increase from last year. The company said it has expanded its sales and account teams to provide “adequate support for advertisers.”

TikTok has been experimenting with e-commerce for the past year as an additional revenue stream through on-screen shoppable links. But the TikTok Shop feature has been hit by internal and external difficulties in the UK after multiple Financial Times investigations uncovered a brain drain. Brands and influencers also left the program as it didn’t resonate with consumers.

On Saturday, the FT announced that the company plans to expand TikTok Shop into North America for the holiday season and outsource its live shopping technology to an LA-based company, according to people familiar with the plans.

TikTok Shop is currently available in UK, Thailand, Malaysia, Vietnam, Singapore, Philippines and Indonesia.

“The size of TikTok’s user base and user engagement is critical to our business, which continues to be largely driven by our ability to retain our existing users, engage them and attract new users in a cost-effective manner, and our ability to attract creators of Acquiring, cultivating and retaining content to contribute content,” the company said in the filing.

One way to reward influencers who create content for the app is through virtual gifts, which the company also earns revenue from.

During live broadcasts, influencers can obtain items like digital roses, hearts and pandas – and convert them into diamonds, a TikTok currency, which can then be exchanged for real money. According to the platform’s developers, TikTok earns a 50 percent commission on money spent on virtual gifts. The company does not disclose the financial breakdown of video gifts.

https://www.ft.com/content/d8dea314-7984-4ee0-8dda-3fdb4dbbd3ee TikTok sales in Europe have increased almost six-fold in 2021

Adam Bradshaw

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