By 2027 TikTok video ad revenue will surpass Meta and YouTube combined: Omdia

New research from Omdia projects that TikTok’s popularity among short-form video apps is poised to propel the company’s ad revenue over the next few years, exceeding that of Meta and YouTube’s video ad revenues combined by 2027.

According to the firm, TikTok’s ad revenue is expected to climb from $13 billion 2022 to $44 billion by 2027, while TikTok Douyin (the app in China) will soar from $28 billion this year to $76 billion in 2027.  Together that means TikTok will account for 37%, or around $120 billion, of the total $331 billion estimated to be generated in online video advertising in 2027. It’s significantly greater than YouTube and Meta which together are expected to make up 24%, or roughly $77 billion of total online video ad revenue at that time.

TikTok’s projected advertising revenue share in 2027 marks an increase from the 22% of the total $189 billion in online video advertising revenue it accounts for in 2022. And while YouTube’s video ad revenue is projected to increase from $28 billion in 2022 to $38 billion by the forecast period, and Meta’s from $30 billion to $39 billion by 2027, their current respective revenue shares of 15% and 16% in 2022 will shrink to 12% each.

Omdia TikTok ad revenue
(Omdia TikTok ad revenue)

"Advertisers are beginning to move away from META and YouTube and towards TikTok to reach their vast follower base," said Maria Rua Aguete Senior Director in Omdia's Media and Entertainment practice group, in a statement.

Omdia research showed that TikTok last month surpassed Netflix to become the second most popular app in the U.S., only behind YouTube which held on to the number one position for under 35 seconds viewing.

“In the USA, TikTok has overtake other social media platforms to become the most popular place to watch videos,” Augete continued. “Our trackers for social media viewing time show that consumers spent more than half an hour on TikTok in 2022.”

One of the draws for advertisers on TikTok, according to Omdia, is its popularity among the young consumer market which has historically been hard to reach through mediums like traditional linear TV. It also expects the platform to try to replicate success it has had in China with ecommerce integrations, and anticipates those efforts to continue in other regions across APAC through partnerships with regional ecommerce companies.

"TikTok's journey has been very interesting and it's clear that their model works,” Aguete stated. “This is a platform which offers a huge audience reach and potential to advertisers which cannot be ignored."

For Meta, the research firm suggested it has been hurt by privacy restrictions Apple put in place last year, and a loss in effectiveness resulted in many brands shifting ad budgets to other platforms or channels. Separately, a Wall Street Journal report this fall cited an internal Meta research document showing bleak uptake of the company’s Instagram Reels, short-form videos that launched about two years ago in an effort to challenge TikTok.

Google parent Alphabet, meanwhile, in the third quarter reported the first-ever quarterly ad revenue decline for the YouTube platform, but executives talked up opportunities for Shorts monetization.

Shorts were recently optimized for viewing on TV screens, shifting from mobile to the home’s largest screen. TikTok’s been growing its presence on smart and connected TVs since fall of 2021 with a handful of smart TV app integrations. This summer a partnership with Vizio marked TikTok’s latest integration.

As for Netflix, the streaming giant just introduced its first SVOD plan with ads earlier this month. Omdia expects Netflix will generate $7.4 billion in ad revenues in 2027, accounting for 2% of the online video advertising market at that time.

Still, while TikTok – which is owned by Chinese company ByteDance - has gained outsized attention from U.S. consumers, it’s getting less positive interest from federal U.S. officials. On Tuesday, Christopher Wray, head of the FBI, told a House Homeland Security Committee hearing that the bureau has national security concerns about TikTok’s U.S. operations. According to NPR, the FBI director warned that the Chinese government could potentially use the video app to control data collection on millions of users or the recommendation algorithm, possibly influencing American users, or control their devices.

The testimony came about a week after Republican lawmakers introduced a bill that looks to ban the TikTok app in the U.S.

TikTok in September told the New York Times it was confident that the company was on its way to satisfy U.S. national security concerns, as it continued talks with the U.S. Department of Justice over potential changes to its data security policy to enable the app to continue operating in the U.S.