By
Bhushan Akolkar
April 25th, 2024
TikTok generated more than $350 million from IAPs in the fourth quarter.
With the global economy still straining companies around the world, many social media platforms like TikTok are generating such revenue that seems to be forming the basis for other players in the micro-messaging and social media world. According to a recent Forbes report, TikTok raised $205 million more than the combined In-App Purchases (IAP) from Facebook, Instagram, Twitter, and Snapchat.
Besides the receding global economy, the privacy policy that was instituted by Apple Inc (NASDAQ: AAPL) back in 2021 reduced the access of social media platforms to clients’ data. This data is what these firms rely on for targeted ads which form the bulk of their revenue prior to this time.
With this avenue now strained, many are exploring new ways to get users to pay directly for some optimized products and services. While this IAP will still be subjected to at least a 10% cut from Apple or Google, it creates a new path to cushion the shortfall in their respective ad revenues.
“Facebook, Instagram, TikTok, Twitter and Snapchat are still without paywalls but they now all offer products/services for charge via an in-app purchase (IAP), which Apple and Google get a cut of,” says Adam Blacker, a vice-president at mobile metrics company Apptopia. “TikTok, Facebook, Instagram, Snapchat, Twitter combined have grown quarterly IAP revenue 91% since Apple introduced ATT.”
IAP is new for some companies like Meta Platforms Inc (NASDAQ: META) which introduced payments for verification of official badges on profiles. The feature costs $12 if purchased on the Web and $15 when purchased in-app. The subscription will also open access to other features including enhanced visibility and better account security across the board.
For its IAP over the course of the past fiscal year, Facebook has generated a meager $56 million.
TikTok Leading the Revenue Charge
Besides Facebook, other American-based entities including Snapchat and Twitter also require a subscription from users. Per the data from Apptopia, Instagram generated about $1 million while Twitter raked in about $900,000. Snapchat has been offering IAP for a longer period of time and it currently rakes in an average of $125,000 per day.
While these figures serve as the start of something that may eventually prove to be sustainable for these firms, they are all lagging behind TikTok which generated more than $350 million from IAPs in the previous fourth quarter.
“TikTok has had IAPs [in-app purchases] since its very beginning and its app revenue last year was a whopping $1.5 billion,” Blacker says. “Its IAPs are similar to Facebook’s in that users pay for coins which can be used to tip and pay for things from their favorite creators.”
The business ecosystem for these firms is changing and with the successes of TikTok with respect to IAPs, there remain big promises for these giants in this regard moving forward.