Bytedance, the holding company of TikTok, has overtaken Chinese search giant Baidu (NASDAQ: BIDU) and gaming/social media dominator Tencent (OTC: TCEHY), to hold the second largest share of China's digital ad market during the first half of 2019, according to CNBC.
Based on a report by consultancy R3, TikTok is taking 23% of all digital media spend in the first half of the year, equivalent to 50 billion yuan ($7 billion).
By comparison, the No.1 on the list, Alibaba (NYSE: BABA), still led the market with a 33% share, or 72.1 billion yuan ($10.3 billion), in ad revenue during that period. However, ByteDance's ad revenue surged significantly with a 113% annual growth rate and propelled it to second place with a 23% share.
Baidu made up 17%, or 36.9 billion of digital media spend for the first half of 2019, followed by Tencent, with 14% or 29.8 billion yuan.
Baidu and Tencent are working to counter ByteDance with new apps and investments. Baidu launched a short video app called Haokan, and Tencent relaunched a similar app called Weishi, but both apps reach fewer users than Bytedance's TikTok. In the curated news market, Tencent launched Tencent News and backed the news aggregator platform Qutoutiao -- but neither app holds a candle to ByteDance's Toutiao.
Digital media is set to make up 63% of Chinese ad spend for the whole of 2019, a 2.2 percentage point increase on 2018, quoted CNBC. By comparison, digital media is expected to make up 52.7% of global ad spend this year, per a May estimate by WARC. TV ad spend in China is set to go down to 23% this year, from 25% in 2018.
ByteDance was founded in 2012, but the company's portfolio of apps now reaches over 1.5 billion monthly active users (MAUs) and 700 million daily active users (DAUs).
Bytedance has been building an advertising ecosystem to streamline ad creation, deployment, and management across its content platforms.The company also launched two ad-creation tools in September 2019, with one targeting the domestic market and the other intended for ads on short video app TikTok. Prior to the ad-creation tools, Bytedance also released two apps that track advertising and marketing campaign performance.
Bytedance's biggest app is TikTok, also known as Douyin in China, which surpassed 500 million MAUs last year. Its other apps include the popular news aggregator app Toutiao, the video apps Vigo and Huoshan, the mobile messaging app Flipchat, the video chat service Duoshan, and the enterprise collaboration platform Lark.
TikTok, the global mobile app phenomenon, has over one billion users, which has helped propel ByteDance's valuation to top CB Insights unicorn list at $75 billion while also attracting scrutiny from U.S. lawmakers concerned about potential spying and the security risks of user data stored in China.