ByteDance has overtaken Baidu to become the second-largest digital ad player in China, taking 23% of all digital media spend in the first half of the year, equivalent to 50 billion yuan ($7 billion), according to a report by consultancy R3. The consultancy described this as "extraordinary growth."
Alibaba took 33% of digital media spend for the first half of the year, or 72.1 billion yuan.
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.
Ad revenue for ByteDance grew 113% for the first half of the year, compared to the same period last year, with most of the growth coming from from TikTok's Chinese equivalent Douyin and ByteDance-owned news app Jinri 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, R3 estimated. 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.
R3 expects Douyin and Toutiao as well as Sohu News to see inflation in their digital media rate cards of 10% in 2020 — a rate card refers to the advertised price a media outlet charges for ad placements on their site or app and is usually used as a starting point for price negotiations. It expects Tencent News to see an 8% inflation. This contrasts with an average inflation rate in China of just over 2.5% currently.
TikTok is popular with American teens, but it is in the early stages of making money from ads. Globally, ByteDance's apps have 1.5 billion monthly active users, the company said in July.
ByteDance was founded in 2012 by entrepreneur Zhang Yiming and is now reportedly worth $75 billion, making most of its money via advertising. It was loss-making in the first half of the year, but turned a profit in June, according to a Reuters report.