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TikTok plans to provide services "for you"

On March 4th, 2025, news website Axios shared that TikTok plans an “expansion of its local services business to the U.S.”. Several job postings hinted at the company’s plans to “connect local merchants and vendors with TikTok creators and users” according to Axios. As the Chinese version of TikTok Douyin is already doing, TikTok attempts to grow its in-app services to increase revenue. Since launching TikTok shop in 2023, and adding livestream shopping, sales revenue has been increasing for the app. It was projected that “TikTok Live would generate $77 billion in sales revenue globally by 2027” according to Bloomberg. 

Douyin invites third-party developers to integrate simplified versions of their app, called Mini Programs, into its app. Social Media Today explains that Mini Programs include services such as “ordering food, ride-hailing, buying tickets, etc.” and introducing this onto TikTok is an opportunity to push in-app purchases. Sensor Tower’s “Digital Market Index” from 2024 shows a growth in in-App purchases for TikTok even compared to other apps worldwide (Chart 1). The report writes, “Consumers spent a staggering $6 billion on in-app purchases in TikTok (including Douyin in China), up from $4.4 billion in 2023” (Sensor Tower). 

Chart 1

Based on Douyin’s gross merchandising volume (GMV) in 2024, which was roughly $490 billion (USD), TikTok shop’s GMV was around $30 billion (USD) in 2024. However, as the chart below (Chart 2) shows, the GMV of TikTok shops worldwide has been on a steady rise since 2021. Capitalizing on users’ interests to shop in the app, can present opportunities for TikTok to increase revenue. 

Chart 2

Accoding to a press release by TikTok shop, sales during Black Friday reached $100 million (USD) showing the extent of TikTok users in the U.S. that rely on vendors on TikTok shop. It also mentions that the number of people purchasing from TikTok shop each month has roughly tripled. Globally, the U.S. is the largest market of TikTok shop with a GMV of 9 billion (USD) in 2024 (Chart 3). Therefore, the expansion of in-app services could be predicted to be successful. While TikTok struggles from the uncertainty of the ban, it is making efforts to stay on the market by expanding its e-commerce in other regions. The expansion of local services business to the U.S. is another effort to keep TikTok on the U.S. market. 

Chart 3

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X releases AI tools for advertisers

X has released two AI features to help advertisers in X Ads Manager reach their advertising goals. This follows the launch of the Grok 3 AI Model, which outperforms computing power from its competing AI offerings such as Gemini-2 Pro, DeepSeek-V3, and Claude 3.5 Sonnet as the chart presented by X shows (Chart 1). Using its high-performing AI tool, X guides advertisers using two features – ‘Prefill with Grok’ and ‘Analyze Campaign with Grok’. 

Chart 1 

X explains the function of the first new offering as “Simply input your website URL, and Grok will generate ad copy, imagery, and a call-to-action (CTA) headline tailored to your brand”. ‘Prefill with Grok’ produces an ad campaign with one ingredient, a website URL, with the help of Grok AI. Advertisers can make tweaks if needed such as editing the copy or switching images. 

The second feature uses AI data to analyze an ad campaign, “empowering you to refine your targeting, adjust your creative, and maximize your impact” according to X’s post. 

Previously, updates on AI generation tools for advertising has been released on many platforms including Snap, Tiktok, Meta, and Pinterest. These tools remove the need for media agencies and help reduce budgets. Roughly 44% of marketers used generative AI in the US in March 2023 as the chart below shows (Chart 2). This is a significant amount and supports X and other platform’s decisions in implementing genreative AI features. 

Chart 2

Since Elon Musk’s acquisition of X (formerly Twitter) in October of 2022, many advertisers left the platform due to content moderation concerns. As a result, Advertising Revenue for X has declined since and is expected to continue declining to 2.7 Billion USD by 2027 (Chart 3). 

Chart 3 

With that, perhaps X is attempting to re-attract the lost advertising revenue through these two new AI tools. Using Grok 3 AI as a boost against its competitors, it can be predicted X will bring significant output for advertisers. (327 words)

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Dangerous or Profitable?

Snapchat has quietly launched a new subscription tier that costs more than five times the price of a regular Snapchat + subscription. Costing a whopping $14.99 USD per month, the ‘Platinum’ tier offers an almost ad-free experience to Snapchat users. This means, as Snap notes: users “may still see sponsored places and My AI responses”. Regardless, with this update, users will have the ability to opt out of most advertisements which would surely improve their story-viewing experience. 

Perhaps why Snapchat has kept its excitement private is because it is following Meta’s misfired efforts on its own ad-free subscription deal. In compliance with EU’s privacy laws, Meta launched a new subscription package in 2023 that offered an ad-free experience for a price. This was seen as unethical by the European Commission as it forces users to give up their personal data or pay up. This resulted in Meta potentially facing fines, making Snapchat vulnerable by following the same course of action as Meta. 

With these two significant tech companies introducing an ad-free service, it makes me wonder – for what is this for? Clearly, there are benefits for users’ privacy and in-app experience, but how does Snapchat benefit from this? 

Based on Snap Inc.’s financial metrics from 2024, the Average Revenue per User (ARPU) in Q4 2024 was $3.44 USD as the chart below shows. This is significantly lower than the price of a Platinum package, suggesting that the app could make significant revenue from giving users an interuption-free option.

This is relevant if users were to pay $14.99 to opt out of ads. Looking at the chart below, the number of Snapchat Plus subscribers results in 14 million in late 2024, and shows an upward trend. This shows users are willing to pay for an improved experience on Snapchat. However, having many users opt out of ads may also lead to a loss in revenue for Snap, especially as Snap’s advertising revenue accounted for approximately 96% of total revenue according to their 2024 annual report. The question is whether these people are willing to pay significantly more (over $10 USD) for no ads. 

It is unlikely that many would pay the great difference between the regular and platinum subscription packages, but for those that do, it would boost Snap’s revenue. Possibly with the cost of negative backlash as Meta has shown us. (394 words)

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My Sector is Social Media

My sector is social media and I will be following Social Media Today, The Verge, and Vox