Like every other social media platform, TikTok generates the majority of its revenue through advertisements on the app. But they are trying to diversify their streams of revenue as its “American growth is already stalling.” In September 2023, Tiktok launched Tiktok shops and allowed live shopping where brands could live stream and link their products so users could directly check out. This attempt is to mimic Douyin’s growth trajectory in China, where its biggest revenue driver is shopping live-streams. 

According to The Information, TikTok is working on a new feature that would let brands use virtual influencers. It’s unclear if Western audiences will embrace these AI-generated influencers, who can promote and sell products via videos and live-streams on the app.

This feature would create a video ad script based on the advertiser’s input and generate an AI influencer to feature in the video. Additionally, TikTok Shop merchants could utilize this AI influencer tool to promote their products. The effectiveness of this feature has already been observed on Douyin, where it has seen significant success due to its cost-effectiveness. “These simulated characters are able to stream 24/7, sometimes selling thousands of dollars worth of goods every day.”

Since 2022, numerous Chinese startups and tech companies have been providing a service to create deepfake avatars for e-commerce live streaming. By providing a brief sample video and investing around $1,000, brands can replicate a human streamer that operates around the clock. All brands have to do is input the name and price of the product being sold and proofread the generated script before the AI influencer goes live. These influencers can interact with the audience and modify their scripts in response to real-time situations.

While TikTok users demonstrate a willingness to spend within the app, the majority of these transactions are directed towards creator donations rather than purchases from the TikTok Shop or its shopping streams. Although there are indications of potential growth in this area, TikTok’s shopping activity lags significantly behind that of Douyin. In 2023, TikTok recorded approximately $3.8 billion in consumer spending, compared to $270 billion on Douyin. Despite efforts from ByteDance to stimulate interest through different approaches, TikTok’s adoption of shopping features has been notably slower than Douyin. Therefore, virtual influencers could be the catalyst that propels TikTok’s commerce streams to the next level.