ByteDance, the world’s most valuable venture capital–backed startup, is on a collision course with Facebook.

I predict that the Chinese upstart will start competing head-to-head with Facebook for ad dollars in India and Southeast Asia, and will start nibbling even in the U.S., as it makes inroads with the app formerly known as Musical.ly.

Still largely unknown outside of China, ByteDance has created a string of blockbuster apps in China that use sophisticated modeling and machine learning to deliver a stream of tailored content to its users, including jokes, news articles and short, silly video clips. With Musical.ly, the U.S. lip-sync video app ByteDance acquired last year, the Chinese media firm has taken the formula overseas.

China’s ByteDance will begin to compete with Facebook for advertising revenue next year in India and Southeast Asia, The Information’s Shai Oster predicts. Think of it as Facebook’s newsfeed, or Instagram, minus the social network or messaging.

Like Facebook, ByteDance makes money selling advertising. And like Facebook, what makes it valuable is the ability to carefully target audiences so that advertising dollars get converted into sales.

One investor who looked at ByteDance said advertisers in China found returns on investment three to four times higher from ads on ByteDance’s most popular platforms the newsfeed Jinri Toutiao and Douyin, a user-generated short video app than from other internet platforms in China, where Facebook remains blocked. (Musical.ly has been incorporated into another app, TikTok, which is ByteDance’s international version of Douyin.)

All this is happening as Facebook user growth has flattened in the U.S. after a string of scandals involving the social media company’s handling of user data and political meddling.

ByteDance is on track to earn some $8 billion in ad revenue this year, on par with Facebook’s Instagram, justifying a valuation of $75 billion. That’s still far below Facebook’s total annual revenue, but is coming from mostly ad sales within China.

ByteDance already is making major headway overseas. TikTok is now the No. 1 downloaded app in the Google Play store in the U.S., according to App Annie. It’s in eighth place in iOS.

In India, TikTok is in first place on Google Play, and is strong in Vietnam, Indonesia and Thailand. It is performing well in Europe, too.
This is a stunning breakout for a Chinese tech company. While Chinese hardware makers such as Huawei have built truly global brands, there hasn’t really been a Chinese brand that has gone global.

Tencent’s WeChat social network dominates China, but has hardly any international footprint outside the overseas Chinese community. (It’s the world’s largest games publisher, but arguably only because it made smart investments in foreign gaming studios.) Alibaba also has an overseas presence, but through acquisitions and largely limited to Southeast Asia and India.

ByteDance’s formula for making addictive content and for savvy marketing with things like celebrity videos is making it a global phenomenon that will soon have it vying for Facebook’s ad dollars.

Source:  Theinformation

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