The big race for TikTok in India: What's in it for the buyer?

As per experts, whoever gets to sign the deal with ByteDance gets a ready-made mix of access & reach to monetize from

e4m by Tasmayee Laha Roy
Updated: Sep 15, 2020 9:26 AM

In the US, TikTok might be on the last legs of negotiation to find itself an American buyer but the big race is on In India. While several names like Microsoft, Twitter,  Reliance Jio and now Oracle have come to the forefront as possible suitors for TikTok’s largest market India, jury is still out on who makes the cut for the best buyer in India. Experts believe that whoever gets to sign the deal with ByteDance, gets a readymade mix of access and reach to monetize from.

Even with a host of Indian alternatives that popped up post the ban imposed by the government, the entire User Generated Content (UGC) ecosystem await the return of TikTok. No wonder top tech giants in India and abroad are looking at buying the brand in India. After all, with 200 million registered users in the country, India is one of the largest markets for the Chinese app.

 Alongside the user base, what else does TikTok have to offer to its buyer in India?

 “TikTok promises two strategic advantages to its suitors – access (penetration to mass India) and attention (as the hottest community creation tool for high-density micro-entertainment),” said Shambhavi Ramanathan, Strategy Director, Dentsu Webchutney.

Will buyers of TikTok in the US be also looking at the India market? Does it make sense for them to buy the India outfit for what analysts estimate as a $2.5 billion - $5 billion deal?

“For Microsoft, TikTok offers the missing ‘economy of recognition’ within India’s productivity suite,” said Ramanathan.

 What TikTok offered to brands?

Until June this year, TikTok was working with a host of brands across finance, eCommerce, internet, FMCG, BFSI, education, automobile, fashion and more. Brands including the likes of Pepsi, Kaya, Emami, Oreo, Lifebuoy, Apple and Dettol leveraged TikTok to drive their campaigns.

“For marketers, TikTok was an inexpensive one-stop-shop. All you have to do is drop a video and let the platform do the rest,” said Sandeep Sreekumar, Managing Director at digital marketing agency Media Moments. “Brands are on the constant lookout for not just mass reach but also targeted reach and TikTok provided both,” Sreekumar said.

In addition to offering them, a diverse user base spread across the country including Tier II and Tier III cities, their brand-based ads and performance-based solutions gave marketers an inroad to access untapped customers.

Ad formats offered by TikTok includes ‘Brand Takeovers’ which was a gateway for digital traffic and with the full-screen vertical display, helped advertisers take a dominant visual position to achieve brand exposure. Then there were others lie ‘In-feed Native Video’ that allowed an immersive, original, and interactive format for ads. Other formats included premium unit spot ‘top view’ and customized brand effects.

 The strongest contender for TikTok in India

Most analysts would bet their money on Reliance Jio as the most eligible suitor for TikTok in India.

 According to Sanchit Vir Gogia, chief analyst & CEO, Greyhound Research, for a brand to acquire TikTok in the Indian mainland, it should not only be an India company of repute but should also have solid India investments in infrastructure.

“The brand should also have the money to invest for a while and stay invested for ROI over course of time. It needs a dedicated user base that will find this valuable. The buyer should essentially have the ability to work the system to ensure policy fitment and certainly have a portfolio of internet based products or services that can be cross-leveraged,” he said.

“Most of the criteria rules out the American names that are doing the rounds as prospective suitors for TikTok in India and makes the pitch stronger for Reliance Jio,” he added.

Talks of whether Oracle, who is allegedly closest to inking deal with ByteDance for TikTok’s operations in the US, could also look at India have been rubbished by experts.

Besides the issue of data theft and misuse impacting national security, the ban of Chinese apps in India is also closely linked to the geo-political affairs and the recent battle that ensued on the India-China border. “Hence, Oracle won’t cut the demands of the government,” Gogia said.

Will Facebook’s investment in Reliance Jio be a roadblock for the brand if they look at acquiring TikTok in India? Perhaps not said, experts.  “Facebook is just an investor in Reliance Jio and having both Reels and TikTok in their bucket would literally mean owning the market making it a lucrative investment for RIL,” said another expert.

"For RIL, TikTok could be the most powerful arrow yet, in its quiver of ad-tech prowess,” said Ramanathan.

Interestingly, TikTok also has investments from two private equity companies General Atlantic and KKR, both of them have also invested in Jio platforms.

TikTok buyout negotiations are seemingly drawing to a close in the US; In India, it will be worthwhile to see which tech giant will emerge as a worthy suitor for the much-coveted short video format app.

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