Understanding TikTok Money Making Strategy as a Source of Income and How to Calculate the Traffic

In the era of popular social media, almost everyone has the habit of watching short videos, which has attracted more and more people to join the creation ranks. Want to start running TikTok, but don’t know where TikTok’s income comes from? This article will introduce the calculation method of Douyin's traffic income, TikTok's income sources, and share 6 TikTok monetization tips to tell you how to make money on Douyin. Whether you are a full-time or a sideline creator, you can quickly understand the TikTok income calculation method and successfully monetize your traffic!

TikTok creators' income sources can be divided into two categories: "TikTok official" and "private business":

TikTok income source 1: TikTok official

The income from TikTok can be further divided into the following three sources:

Advertising revenue: Creators can place advertisements in their videos, and TikTok officials will calculate the advertising revenue share for creators based on factors such as the exposure, click volume, and commission ratio of the ads.

Gift Rewards: Creators can use the gift reward function of live broadcasts to receive gifts from fans. Gifts can be converted into cash and can be withdrawn when the amount reaches the withdrawal threshold.

Creator Market Rewards: Joining the Creator Market will not only give you more opportunities to interact with partners, but TikTok will also hold events from time to time to reward creators who meet the qualifications and participate in the events.

In addition, if you want to join the Creator Market, you must meet the following 6 conditions:

•Aged 18 or above

•Have a TikTok account

•The number of fans is more than 10,000

•More than 3 videos have been released in the last 28 days

•Videos posted in the last 28 days have received more than 100,000 likes

•Live in a country listed in TikTok's brand terms of service

From the above, we can see that the threshold for joining the Creator Market is high, which is not very friendly to TikTok novices. Therefore, most creators who are just starting out usually earn their income from advertising revenue and gift rewards. The income calculation methods of these two will also be introduced in the later section to give everyone a further understanding.

TikTok revenue source 2: Private business

• Take on sponsorship: Creators can make short videos to help promote the products of cooperating manufacturers, help increase brand exposure and product conversion rates, and thereby obtain sponsorship fees paid by manufacturers. Common marketing methods include providing discount codes, gifts for purchases over a certain amount, special offers during certain periods, etc.

• Selling their own products: Some creators will also design peripheral products related to themselves, such as T-shirts, mobile phone cases, etc., or the creators themselves are also brand founders. They can use the advantages of operating TikTok to promote and sell their own products on TikTok live broadcasts to earn extra income.

• Direct traffic to other self-media: Directing TikTok viewers to other self-media can increase one's own exposure channels, which can not only enhance the willingness of manufacturers to cooperate, but also obtain rewards and advertising revenue provided by multiple self-media platforms, thereby broadening the source of income.

As mentioned in the previous paragraph, the income of novice operators of TikTok mostly comes from "advertising income" and "gift rewards". Next, we will introduce to you how to calculate these two types of Tiktok income:

How to calculate TikTok advertising revenue? 4 major influencing factors

TikTok has not yet announced a clear calculation formula for advertising revenue sharing for creators, but according to the sharing of various creators, it can be found that advertising revenue is mainly related to the following factors:

• Ad views: The higher the views, the higher the ad revenue. For example, creators who join Creator Fund can earn $0.02 to $0.04 for every 1,000 views, according to a TikTok creator survey.

• Ad interaction rate: Interaction signals such as likes and comments will also affect ad revenue.

• Advertiser budget: The amount of advertising budget placed by advertisers is an important factor affecting the advertising revenue of creators. The more budget placed, the higher the advertising revenue of the creators.

• Advertising commission ratio: TikTok will give creators part of the advertising revenue in the form of commission. According to the Pulse plan released by TikTok in May last year, they will share 50% of the advertising profits with high-influence creators. 

In addition to the above factors, the number of followers of the creator, the type of video and audio, the location, and the authenticity of the account will also affect advertising revenue. The above only shares the influencing factors that most creators are more aware of. It is still recommended to observe the actual individual income situation for more accuracy.

Introduction to TikTok gift reward calculation method

Compared with advertising income, the calculation method of gift rewards is simpler and clearer. Basically, the more gifts you receive, the more you earn. Creators can exchange the gifts received during live broadcasts for cash. The detailed withdrawal steps are as follows:

• Fans buy tokens and then use the tokens to purchase virtual gifts for creators.

• Creators receive virtual gifts from fans during live broadcasts.

• Exchange virtual gifts for diamonds, and the value of one diamond is equivalent to one token.

• Diamonds can be exchanged for cash at a half-price ratio. For example, if a fan purchases tokens for $20 and buys a virtual gift for the creator, and the creator exchanges the virtual gift for diamonds of equal value, the final amount of cash that can be exchanged is $10.

The account cash must reach at least $100 to be withdrawn.

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