While TikTok’s ad revenue is growing at a 300% compound annual growth rate, ByteDance’s advertising revenue in China has stagnated, despite recent growth in TikTok’s e-commerce business.
Why it matters
Chinese Internet companies, represented by ByteDance, have seen their advertising income decline over the last year. ByteDance’s full-year revenue growth in 2021 was driven by its e-commerce business in China and TikTok overseas. 36Kr reported in February this year that TikTok’s gross merchandise volume (GMV) for e-commerce in 2021 topped out at about $6 billion (38.05 billion yuan), with 70% or more coming from Indonesia and less than 30% from the U.K.
ByteDance’s domestic advertising revenue has reported zero monthly growth after July 2021. Its domestic revenue increased slightly for the whole year, owing to growth in its e-commerce business, but when the e-commerce business is excluded, the revenue scarcely increased YoY.
Traditional advertising is losing market share to digital advertising on a worldwide scale. According to Dentsu’s Global Advertising Spend Forecast report, traditional advertising is expected to account for 26.5% of worldwide advertising spending in 2022, dropping 3.5% from 2021. Meanwhile, digital advertising is expected to account for 55.5% of worldwide advertising spending in 2022, rising to 59.4% by 2024. The decline in traditional advertising is mainly due to the increasing public interest in connected TV and video on demand (VOD), the report said.