How TikTok Makes Money From Creators and Advertisers

TikTok has millions of Canadian users, and the platform is testing new ways to make money from creators and brands in that market, according to the company's 2024 year-end report. The social media platform, owned by ByteDance, opened a physical location in Toronto in 2024—a rare offline presence for a predominantly digital company—to strengthen its focus on the Canadian market and test features that may later roll out to the rest of North America.

How TikTok Pays Creators

For years, TikTok was largely a free platform for creators. But that's changing. The company introduced TikTok Pulse, a program that shares advertising revenue directly with creators. When brands buy ads that appear alongside a creator's video, that creator gets a cut of what the brand paid.

This is similar to how YouTube's Partner Program works. But TikTok's version is tailored to short-form videos and the way TikTok's algorithm—the system that decides which videos show up in your feed—promotes content. To join Pulse, creators need to meet a minimum follower count and content performance standards. Payments are based on how many times an ad actually appears next to their video, a metric known as cost per thousand impressions, or CPM.

TikTok also gave creators a Q&A feature (launched in March 2021) that lets them respond to viewer questions in video form, deepening their connection with audiences beyond traditional comments.

How Brands Advertise on TikTok

Brands have multiple ways to reach TikTok's audience. TikTok For Business, launched in June 2020, offers several advertising options: full-screen brand takeovers, ads that blend into your regular feed, and augmented reality (AR) ads—interactive filters and effects that users can apply and share.

The AR ads are technically complex. They require real-time rendering and face-tracking algorithms that run smoothly on smartphones. These tools let brands create interactive experiences; when users apply and share them, the brand gets free additional exposure.

In August 2024, TikTok partnered with Warner Bros. to let users discover movies and TV shows within the app. The integration connects TikTok's recommendation system with Warner Bros.' catalog, creating a path from a short clip to watching a full film or show. This is one way TikTok is testing commerce features—blending entertainment with buying opportunities.

Why This Matters

The Canadian market serves as a testing ground. Features that debut in Canada often move to the United States and other countries later. TikTok's approach here—building a large user base first, then layering monetization and creator tools—follows a familiar pattern in the social media industry. Facebook did something similar in the mid-2010s, expanding from pure social networking into advertising and commerce infrastructure.

The broader context here is that social platforms are evolving into something more than just places to share content. They're becoming integrated ecosystems where creators earn money, brands advertise, and commerce happens inside the app. TikTok's investments in its recommendation algorithm, AR advertising, and creator payment tools suggest the company sees this as the future of the platform as it matures beyond its initial identity as a viral video app.

How TikTok's Algorithm Works Differently

TikTok's algorithm doesn't show you videos based on chronological order or only from accounts you follow. Instead, it optimizes for completion rates—whether you watch a video all the way through—and engagement, including replays and shares. This approach can make a video from an unknown creator go viral quickly if the algorithm thinks others will engage with it.

For brands, this means traditional approaches—relying heavily on follower counts—matter less than they might on Instagram or Facebook. A brand's video can reach millions if it resonates with TikTok's algorithmic system, even with a small starting audience.

The Economics of Creator Monetization

Revenue sharing through programs like Pulse doesn't require creators to negotiate with individual brands. Instead, payments flow programmatically—automatically, based on ad impressions. But creators can still pursue direct sponsorships from brands, where a company pays them directly for promotional content.

The Q&A feature and other creator tools serve a dual purpose: they deepen audience relationships and give TikTok richer data about what content and questions resonate, which feeds back into the recommendation algorithm.

TikTok's Canadian user base—numbering in the millions—provides enough scale to test and refine these features while remaining small enough for the company to manage localized moderation and support. As the platform continues to mature, expect more monetization tools and deeper integration of commerce, advertising, and creator payment systems into the core app.