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tiktok on mobile

How Much Do TikTok Ads Cost?

tiktok on mobile

Are you ready to explore advertising on a social ads platform outside of Facebook and Instagram? Now is the time for your company to test out TikTok, one of the fastest-growing social channels in the game. Two months ago, TikTok hit a major milestone in which the platform reported that it now has 1 billion active users on the app making it the 7th most used social ads platform.

However, there are a few things to consider when thinking about advertising on TikTok. First and foremost, it’s important to know if your target audience is even on the platform and if they are, if you’ll be able to successfully target them. Another important component of TikTok ads is creative. For this platform, having engaging video content is imperative for a successful campaign. 

As a TikTok Ads Agency, we start by asking yourself the following questions: 

  1. Does your target audience skew toward younger adults? 
  2. Do you have a robust library of short-form, great, and effective videos?
  3. Do you have a large, broad audience that you can reach with broad targeting? 

If you’ve checked all of the boxes to the questions above then you’re ready to start building your first TikTok campaign. In this article, we’re breaking down what it takes to run a successful ad campaign on TikTok and how TikTok ads compare in costs to other social ad platforms. 

TikTok Ads: Is It Worth It? 

Before you start thinking about an advertising budget for TikTok, you might wonder if TikTok is even worth testing. While TikTok might be known for its virality and trends from organic videos, its advertising opportunities have been proven extremely beneficial for companies in almost every industry, especially eCommerce. 

At Tuff, we’ve tested TikTok campaigns with a wide range of our partners, some in the eCommerce space and even some in the higher educations space. (Check out How we achieved a 12x ROAS on TikTok with $7K in ad spend for our client Sabio––an online coding bootcamp!) If you’re able to find pockets of success on TikTok, it’s a very scalable channel that can help bring in more revenue for your business.

How Do TikTok Ads Work? 

TikTok ads are less obvious to spot to the average user since they come off in a more organic nature compared to other channels like Facebook and Instagram. As typical with online advertising, TikTok Ads cost different amounts and exist in different forms. A user can view your ad in different places, which impacts the costs of your ad. If you decide to advertise on this platform, you can choose between a variety of different ways to run your self-serve newsfeed ads including Image ads, Video ads, Spark Ads, or Collection Ads which will determine where your ad is placed. 

Image Ads

Image ads run through TikTok’s newsfeed umbrella apps (BuzzVideo, TopBuzz, and Babe) and will include an image, brand or app name, and ad text.

Video Ads

Video ads will run through the platform’s newsfeed and/or the newsfeed of apps that fall under TikTok’s umbrella (again BuzzVideo, TopBuzz, and Babe). These are the most common type of format for self-serve ads as they will show up in your target audiences’ FYP (for you page). Video ads can be 5-60 seconds and can include a video, display image, brand name and ad text. 

Spark Ads

Spark ads is a newer feature that allows you to use a code and run the ad directly from your TikTok page or a partner/content creators’ page. This type of format is very similar to boosting a Facebook/Instagram post.

At Tuff, we’ve seen a lot of success with spark ads. For a few of our partners, we’ve run spark ads through a content creator or influencers page using the spark ad code and we’ve seen a significantly higher CTR, engagement rate and lower CPA. For example, in the table below, you can see a much better performance on TikTok once we started running spark ads in August vs when we were running regular video ads in April. 

Collection Ads

When using collection ads, someone taps an interactive element of your ad and it will lead to an Instant Gallery Page, where visitors can browse a curated gallery of product cards. You can either handpick the products to feature in your Instant Gallery Page or let TikTok Ads Manager dynamically display the most relevant products for each visitor. From the Instant Gallery Page, people can browse your catalog of products and then head to your website to complete their purchase journey.

How much do TikTok ads cost? 

Similar to other social ad platforms, you can customize the amount you spend and bid on ads. This means that TikTok ads cost different amounts from campaign to campaign. Typically, advertisers on TikTok pay a median price of $1.00 for every click and a CPM (cost per 1,000 impressions) of $6.06. Keep in mind that this number is generated through a blended analysis of all advertisers, so this cost is not the case for every business. TikTok requires a minimum budget of $50/day at the campaign level and $20/day at the ad group level. However, there are four components that heavily impact the costs of your TikTok ads including your campaign objective, audience segmentation, budget & bid amount and CTR.

Campaign Objective 

Choosing the right objective is really important when setting up ad campaigns on TikTok. TikTok recommends starting by choosing an objective that will get at least 50 events during the first 7 days, which will allow TikTok to have enough data to get your ad out of the learning phase. Similar to other platforms, you will see lower CPCs and CPMs when optimizing for an objective that’s higher in the funnel (traffic, page view) vs. optimizing for a lower-funnel event (Checkout, complete payment), but the CVR will be higher when optimizing for the lower-funnel events.

Audience Segmentation 

TikTok’s algorithm is one of the best out there, so most of the time you’ll see lower costs when your audience is large and broad. In fact, TikTok recommends consolidating your audiences as much as possible and either putting all of your interests into one audience or running the ad group with no interest targeting and letting the TikTok algorithm do its thing and serve the ad to the user who will likely take the action you’re optimizing for. 

However, for some companies, audience segmentation is important and they need to focus in on a specific niche (EX: age or location parameters). If this is the case, you can expect to see a little bit higher of CPCs and CPMs than campaigns targeting large, broad audiences.

Budget & Bid Amount 

TikTok allows you to set a daily or lifetime budget at both the campaign level and the ad group level. When setting the budget at the ad group level, you can either use a cost cap or the lowest-cost bid. The cost cap will ensure that you will never pay higher than your bid amount for the particular action you’re optimizing for. However, if the cost cap is too low for the conversion cost, you might not spend your daily or lifetime ad budget. 

CTR & Creative

Last but not least, the most important factor to achieving low costs on TikTok is the ad creative. While TikTok users are typically more engaged in the video ad than users of any other social ad platform, the average CTR on TikTok is typically a little lower than the CTR on other social ad platforms. In order to maintain a healthy CPA, you’ll want the video CTR to be higher than 1% on your ad. Once the CTR starts to drop lower than 1%, your costs will increase, which is how you know it’s time to rotate in new creative.

How Do TikTok Ads Compare to Other Platforms? 

It’s always hard to get an apples-to-apples comparison on social ad platform costs since there are a lot of factors that go into the average, but when looking at CPCs and CPMS, TikTok is pretty comparable to Facebook and Instagram. 

Platform CPC CPM
TikTok $1.00 $6.06
Facebook $0.97 $12.57
Instagram $3.56 $7.91
LinkedIn $5.00 $6.59
Twitter $0.38 $6.46
Pinterest $0.70 $5.00

However, throughout all of the campaigns that we’ve run on TikTok at Tuff for a variety of our partners, we typically see a lower CVR from TikTok ads compared to Facebook and Instagram. So what does this mean you? If your target audience is on TikTok and you have the budget and creative needed to test on this channel, then it’s 100% worth the test and could be a very successful channel for your business. Looking for more tips on how to set up a successful TikTok campaign? Check out this article!