Sunday Series - Eastern Tech, Western Audiences
If you look at the US App Store, the number one spot is currently held by the app Zynn.
Zynn is a short-video app, basically a TikTok clone. To get more users, Zynn has created very generous financial rewards for users who refer friends to download the app. The company's marketing expense comes from basically paying users.
Zynn is owned by Kuaishou, one of China's largest tech companies and rival to Douyin, the Chinese version of TikTok. Kuaishou received a $2 billion round of investment in December from Tencent, with the express purpose to compete more aggressively with Bytedance, the owner of Douyin.
In China, Douyin and Kuaishou have major differences. Kuaishou caters more to 'grassroots' audiences outside of 1st-tier Chinese cities, is more reliant on a social graph to distribute content, and has a bigger focus on revenue from livestreaming rather than advertising. They are fierce competitors.
It's the first time I've ever seen two Chinese consumer tech giants compete so explicitly for US audiences. China's tech influence has truly arrived in the US--and the competition will likely get even more intense.
How are Western tech companies adapting to the new competition? The biggest Chinese mobile app that has found success in the West is TikTok, owned by Bytedance. In the US, the biggest competitor to TikTok is likely Instagram.
Last week, Instagram announced new features to support creators.
Fans will now be able to purchase unique badges from creators that they can sell during livestreams. The badges allow you to unlock special fan features and stand out in the comments.
Creators will now receive a revenue share from ads on Instagram TV. So when someone watches an ad while they are watching creator content on IGTV, the creator will get a percentage of the ad revenue—much like what happens on Youtube.
And Instagram will also be expanding live shopping, allowing creators and brands to tag products in their livestreams and allow creators to sell their own merchandise.
Side note: Almost all of these features have already been available on Chinese apps for a long time.
What does this all mean?
1 - The Importance of Creators:
Instagram recognises that an increasingly huge percentage of the app's engagement comes from creators. This applies to all social media, which makes competition to keep influencers happy more fierce.
TikTok lured Dave Dobrik away from YouTube. Spotify lured Joe Rogan away from Youtube/Apple.
Apart from paying influencers for exclusivity, what you can do is create more reasons for them to stay on your platform, i.e. build products for them, show you care, give them more ways to make money.
2 - The Importance of Livestreaming
Livestreaming is the next big distribution channel, not just because of the growth in China, but now Western tech companies are seeing it too. Instagram saw a 70% increase in live video views from February to March.
3 - More Monetisation for Creators
Based on my own experience working at Facebook/Instagram, I would think sales teams are now pitching to advertisers the idea of branded virtual badges with creators, live shopping collabs, and more. This now allows creators to get taken a lot more seriously by big brands and have new monetisation opportunities.
When I worked at Facebook, influencer marketing and the idea of creators was not taken that seriously. Now it seems like influencer marketing has become the hottest form of marketing in the world. And when it comes to influencer marketing, China has a leg up on the West.
Austin Li is one of the biggest beauty influencers in China, also known as the 'Lipstick King.'
He has 40 million fans on Douyin (the Chinese version of TikTok) and on Singles Day (China's largest shopping holiday), Austin sold 1 Billion RMB / $145 Million USD (!) worth of cosmetic products in one day. He made all these sales through a livestream on Taobao that 36 million people watched. He's 27 years old and has only been a livestreamer since 2017.
Austin Li is someone who was already a famous influencer before the coronavirus hit, but the recent increase in e-commerce livestreaming makes his influence reach new orders of magnitude. On Taobao alone, the number of merchants has increased 719% over the last few months. It's interesting to me that livestreaming has taken off massively in China, but is gaining traction in the West slowly.
However, some very smart, big Western influencers realise this. Last year, Alibaba-owned Tmall Global started a new Wall of Fame program that allowed Western celebrities to join livestreaming sessions with Chinese influencers. Rihanna, Miranda Kerr, and Kim Kardashian all used this to promote their products to a Chinese audience.
If we can learn from the Chinese, I expect that more Austin Lis of the West are coming soon as livestreaming becomes an even more important way to reach your customers. China tech is reaching brand new levels of influence and success, despite a lot of criticism.
Last month, TikTok/Douyin generated $78 Million in user spend, moving ahead of YouTube to become the world's highest earning non-game app.
There has been a lot of hype around TikTok, and some skepticism about its long term potential. I've had several former colleagues at Facebook/Instagram ask for my feedback on how legit TikTok is.
When people usually talk about hype though, they cite things like user growth rather than revenue. This makes the fact that TikTok generating $78 million even more impressive, because it’s not about user numbers. It's harder to argue that TikTok is all hype when you have data points around monetisation rather than just demographics.
This is a big difference between TikTok and other hyped social apps over the last decade (Vine, Tumblr, Snap, and many more). For reference, TikTok parent company Bytedance had 2019 revenue 5x the revenue of Twitter and 10x that of Snap.
Of course, continued success is not guaranteed and I see government regulation as Bytedance’s biggest challenge. But I think the company brings much more than hype.
And taking a step back to look at the big picture, what I’m seeing is the increasing influence of Chinese tech on Western culture, commerce, and behaviour. And that’s definitely much more than hype.
I’m always looking to meet and work with like-minded people from around the world. You can find me on Twitter and Linkedin — come say hi!