TikTok dominates in-app spending, per report

TikTok made them buy it, but Apple and Google got a piece.

The short-form video app was the leader of in-app purchases in the US, posting about $780 million in app-store revenue in 2022, according to a report from Data.ai.

While TikTok is a free app, users can buy products on TikTok using the credit-card information already stored in app stores (as opposed to inputting payment information directly into the app to make a purchase). Those kinds of purchases made TikTok the leader in the category, according to the report, ahead of subscription platforms like YouTube, HBO Max (now rebranded to Max), Disney+, and games like Candy Crush and Roblox.

• Overall, app-store spend accounted for about 33.2% of the $500 billion mobile app market, Data.ai found.

Cashing in: TikTok’s in-app revenue comes from TikTok Coins, the platform’s virtual currency, which users can use to do things like send virtual gifts to influencers on the platform, Lexi Sydow, head of insights and analytics at Data.ai, said. TikTok also makes a lot of money from advertising, bringing in an estimated $6 billion last year, according to Insider Intelligence.

A separate report from Data.ai found that TikTok surpassed $1 billion in global consumer spend through in-app purchases in the first quarter of 2023, the first app to ever clear that benchmark.

The cost of business: Apple and Google take around 30% (for developers making $1 million or more in app-store revenue) of that sweet, sweet app-store money, as each gets a cut of purchases made through their respective app stores. (Some companies, including Netflix, have attempted to get around that by directing users to sign up on their own websites.)

Data.ai also found a rise in users treating app stores as a way to manage subscriptions. For instance, subscriptions accounted for almost a third of in-app spend on iOS in the first quarter of 2023, up from 27.6% year over year.

App stores are becoming a “one-stop shop” for subscriptions, Sydow said, and consumers are “subscribing increasingly on their phone, just because it's easier and simpler.”