In our earlier blog, we discussed that Meta is considering introducing paid, ad-free subscriptions on Facebook and Instagram in response to the EU's Digital Services Act. Now TikTok is following suit by even testing an ad-free subscription service, and for as little as $4.99 per month.
Availability of Ad-free Subscriptions
This ad-free subscription service is currently being tested in the United States, as Android Authority noted. Not all users in the U.S. currently seem to have access to this subscription. During the testing phase, the price of the subscription is set at $4.99, which converts to about €4.75. However, it remains unclear if and when this ad-free subscription will become officially available and whether it will be available in the Netherlands.
Impact on TikTok users and advertisers.
An analysis of the code within the social platform suggests that the service will be available soon. This begs the question: what does this mean for businesses and organizations that rely on TikTok for their ad reach? If the new subscription service proves popular, it could have a significant impact on advertisers' reach on the platform, which in turn could reduce the value of the product for these advertisers. It is important to note that influencer marketing campaigns and one-offs will indeed appear in the paid version of the app. Only the ads served by TikTok will be excluded.
Why is TikTok taking this step now?
The answer lies in the numbers. TikTok generated most of its profits from ad revenue, which reached a whopping $9.4 billion in 2022. This amount is expected to quadruple by 2026. To mitigate financial risk, the platform's executives are exploring the possibility of diversifying revenue streams, with the introduction of paid subscriptions seen as a logical step.