TikTok is one of the fastest-growing social media platforms, attracting billions of users worldwide, especially Gen Z – a dynamic and extremely “willing to spend” group. With its strong appeal, TikTok has become a fertile ground for businesses to promote their products and services. So, how much does it cost to advertise on TikTok? In this article, Ecomobi will analyze the factors that affect TikTok advertising costs, with step-by-step instructions to help you optimize your campaign.
TikTok advertising cost statistics
By 2024, TikTok will have over 1.5 billion monthly active users worldwide, making it the fifth most popular social network by user count. With a large and diverse user base, especially the strong growth of the Gen Z user base – TikTok is a “gold mine” for brands. However, it does not come without a price.
Here are some important statistics about TikTok advertising costs that every brand should know:
- The average cost per click (CPC) for TikTok ads is $1;
- The average cost per thousand impressions (CPM) is $10.
- The average engagement rate is 2.6%.
- According to information provided by TikTok, in North America and EMEA (Europe, Middle East, Africa), the recommended amount is $30/day, while in APAC (Asia-Pacific) it is $20/day.
- Gen Z users interact with brands on TikTok to shop 1.2 times more than other social media platforms.
- Nearly 50% of Gen Z users use the platform for social commerce. Millennials make up 36% and Gen X makes up 23%.
- TikTok reports revenue of $16.1 billion in fiscal year 2023.
See more information at TikTok Ads Insight.
5 factors that affect TikTok advertising costs
TikTok advertising costs are the amount of money an advertiser needs to pay to launch an advertising campaign on the platform. The above figures are only estimates, meaning they can vary depending on various factors:
Campaign objectives
Your advertising objective is the most important factor that affects the cost of running ads on TikTok. First, you need to clearly define what you want to achieve through your ads, such as: increasing brand awareness, driving conversions, increasing app installs, video views, website traffic, or generating leads.
Each objective will require a specific strategy. For example:
- If your goal is to drive e-commerce sales, you should focus your ads on your TikTok store and encourage in-app purchases.
- If you want to generate leads, you can promote your website so users can learn about your products/services and convert them into customers.
Goals such as increasing video views, interactions, or conversions all have different TikTok advertising costs. For example, the goal of increasing sales often has a higher TikTok advertising cost because it requires conversion from users.
Budget and bid amount
Budget
The campaign budget is the second most important factor that affects TikTok advertising costs. You need to set an appropriate budget that is enough to run the number of ads that meet your goals while staying within your overall spending limit. This will help you determine whether you need to adjust your budget up or down. TikTok offers two budget options:
- Daily Budget: is the maximum amount of money you allow the system to use each day to maintain and operate the ad, ensuring the campaign operates stably without exceeding the set daily budget. According to information provided by Tiktok, the recommended amount in the APAC region (Asia-Pacific) is 20 USD/day.
- Lifetime Budget: is the maximum amount of spending you expect to spend on the entire campaign within a specific time frame. This option is suitable for those who want to plan long-term.
Bid Amount
Another factor that affects the cost of TikTok ads is the amount you bid. A high bid can help you increase the reach of your ads, as well as maximize the number of conversions you plan to drive on TikTok. TikTok Ads Manager offers four bidding options:
- CPM (Cost Per Mille – Cost per 1,000 impressions): Cost per thousand impressions, about 2 USD.
- oCPM (Optimized Cost per Mille): Optimized CPM, targeting users who are likely to take a specific action. TikTok will deliver to audiences with a higher conversion rate, becoming potential customers or interested in similar products.
- CPC (Cost Per Click – Cost per click): You only pay when users click on the ad, ranging from 0.10 USD – 1.50 USD.
- CPV (Cost per view): Cost for each view of 6 seconds or more or with interaction in the early stages of the ad. About 0.01 USD – 0.02 USD/view.
Note:
- You can set a minimum budget as required by TikTok (TikTok will automatically calculate the specific number), but for best results, it should be based on business goals and market characteristics.
- Once the ad is approved, you CANNOT change the budget type or ad group level.
Advertising object
The next factor that affects the cost of TikTok advertising. Targeting a specific audience, such as users in a certain geographic area or age group, can increase costs due to high competition.
Time to run ads
Campaigns during major shopping seasons or holidays often cost more due to competition from other advertisers.
Ad Formats
Formats such as Brand Takeover (full screen when opening the app) or Top View (first display) are often more expensive than in-stream video ads. To choose the right ad format that suits your goals and budget, read more in the article 6-step guide to running effective Tiktok Ads, get orders right away
Ways to buy Tiktok ads
The system works on an auction basis, where advertisers set a daily budget and bid for each objective. TikTok automatically optimizes ads to achieve the best performance within the budget. This is a good option for businesses that want to control costs and adjust campaigns based on actual performance.
Bidding
The system works on an auction basis, where advertisers set a daily budget and bid for each objective. TikTok automatically optimizes ads to achieve the best performance within the budget. This is a good option for businesses who want to control costs and adjust campaigns based on actual performance.
Booking Ads
These are fixed ad packages where businesses pay to secure a specific spot on TikTok for a set period of time. They are suitable for large campaigns or events that require high attention, such as new product launches.
According to TikTok, 90% of businesses that run branded hashtag challenges achieve a ROAS of up to 250%.
To calculate ROAS, you just need to do the calculation: (Ad revenue / Total advertising spend) * 100 and you can know you are losing money if ROAS < 100%.
Ad formats
- TopView ads: These are the first ads that appear when users open the TikTok app. (There is only 1 TopView ad per day – so brands will need to pre-order the ad.)
- In-feed Ads: Appear naturally between videos that users scroll through in the “For You” tab. Videos are 9 to 15 seconds long and can include a CTA (Call to Action) like “Shop Now”, or “Learn More”.
- Brand Takeovers: These are full-screen ads that appear as soon as users open TikTok within the first few seconds. They combine TopView, In-Feed, and a branded hashtag, which is why they are quite expensive. A good example of a brand that uses brand takeover ads is Guess, which has attracted over 12,000 new followers and an engagement rate of 14.3%.
- Branded Hashtag Challenge: Create a hashtag challenge to encourage users to create related content. Appears in the “Discover” tab for 3-6 days. Branded Effects: Brands create exclusive filters, effects, or stickers that users can use in their videos.
Advice for beginners running TikTok ads
Choose daily budget
If you are new to advertising on TikTok, you should choose Daily Budget. The overall budget can be a “bomb” that causes serious damage to your finances if you do not know how to optimize your advertising strategy – which is very likely to happen with initial advertising. After measuring the effectiveness, you can gradually increase the daily budget.
Understand the forms of advertising on TikTok
One way to save on Tiktok advertising costs is to choose the right type of ad that best suits your advertising goals.
Optimize advertising content
- To optimize your TikTok video ads for the best results, focus on creating creative, engaging content in the first 3-6 seconds, incorporating trending music and effects. The story in the video needs to be intimate, authentic, and personalized to connect emotionally with the audience.
- Make sure the ad video meets TikTok’s algorithms and does not violate content policies. Note: Avoid cropping or reusing formats from other platforms as this may result in poor resolution on your design or size issues.
- Use short video formats (under 15 seconds) with clear Call-to-Action (CTA) to encourage action. Regularly analyze data, A/B test, and update trends to adjust the content.
- Take advantage of advertising features like Spark Ads and influencer marketing campaigns to increase engagement and spread your message.
- Test multiple campaigns: Start with a small budget and track the performance of each campaign. Then, increase TikTok advertising spending on campaigns that perform well.
- Track and optimize regularly: Use TikTok’s analytics to see which campaigns are performing best and adjust your budget or bidding strategy accordingly.
Through the above article, readers have more important information to know about TikTok advertising costs. Hopefully, this information will support the process of running ads on TikTok for the business to become most effective and optimal.
