How Much Do TikTok Ads Cost?
Author’s Note: This post was updated on March 13, 2023 with new links, data, insights, and resources.
Are you ready to explore advertising on a social ads platform outside of Meta (Facebook and Instagram)? Now is the time for your company to test out TikTok, one of the most prominent social media channels today. The platform has over 1.53 billion active users and has generated over 3 billion downloads since it originated. It’s also been reported that 40% of TikTok users aren’t on Facebook and that TikTok is used by 30.25% of the world’s total internet users which further emphasizes how important of a channel it is to explore to reach an audience that may not be present on other platforms.
One of the biggest barriers to entry onto a new platform is the cost. Many elements of a campaign have the ability to impact cost, like the creative assets you use and the audiences you target. Having engaging video content is absolutely imperative for a successful campaign on TikTok as 93% of TikTok users spend time on the platform with sound on. While there are 600 million users of the app daily, this opens the door to a ton of eyeballs but continues to increase the need to position your product or service stand out.
Before launching campaigns on TikTok, start by asking yourself the following questions:
- Do you have a library of lofi, attention-grabbing videos?
- Have you defined the audience you want to reach?
- Last but not least, do you have a product or service that could be promoted in these videos to get the message across to said audience?
If you have “yes” to all of the aforementioned questions then you are 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, from eCommerce companies, to higher education organizations, to B2B brands. (Check out the performance our TikTok campaigns generated after spending $100k in a 30-day period and the benchmarks we pulled as a result of that test!) If you are able to find pockets of success on TikTok, it is a very scalable channel that can help not only engage existing demand but also create new paths for 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 or 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 TikTok, you can choose from a variety of different ad formats, such as:
- Image Ads
- Carousel Ads
- Video Ads
- Spark Ads
- Collection Ads
- Playable Ads
Image ads run through TikTok’s newsfeed partner placements, such as the Global App Bundle and Pangle, and will include an image, brand or app name, and ad text.
Carousel ads are a newer ad format that are supported on the newsfeed app series, BuzzVideo. You can highlight up to 10 images and unique captions in one single ad, shown from left to right in an order that you can specify. You can also point to one landing page URL or a unique URL for each image, which makes this format helpful in showcasing several products.
Video ads will run through the platform’s newsfeed and/or the newsfeed of apps that fall under TikTok’s newsfeed partner placements again (Global App Bundle and Pangle). These are the most common type of format for self-serve ads as they will show up in your target audiences’ For You Page (FYP).
Video ads can be 5-60 seconds and can include a video, display image, brand name and ad text. TikTok (and our social team here at Tuff) recommend shorter videos that can keep the attention of your audience. TikTok reports, “1 in 4 top-performing videos have a duration between 21 and 34 seconds and see, on average, a 1.6% lift in impressions.”
Spark ads allow you to leverage existing organic TikTok posts by generating a code that lets you run the video as an ad directly from your TikTok page or a partner/content creators’ page. If you are familiar with boosting posts on Facebook or Instagram, this ad type is very similar. Additionally, spark ads incorporate more ways to interact, engage with and ultimately convert via your ad.
Because the videos look more native than ordinary video ads, we’ve seen a lot of success with spark ads at Tuff. For a few of our partners, we have run spark ads through a content creator’s or influencer’s page using the code and have seen a significantly higher CTR, engagement rate and lower CPA. In the table below, we analyzed regular videos vs. spark ads to understand the difference in users to the site, pages/session, time on site, last click conversion volume and the average cost per acquisition. 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.
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.
Playable ads allow you to display an interactive preview of your app ahead of downloading it. The idea is that you are able to give your audience a fully-immersive experience ahead of the commitment of downloading a new app.
How much do TikTok ads cost?
Similar to other social ad platforms, you can customize the amount you spend and personalize your bid strategy. Typically, advertisers on TikTok pay a median price of $1.00 for every click and a CPM (cost per 1,000 impressions) of $10. 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 has two different minimum daily spends, depending on where you set the budget:
- If you set your budget at the campaign level, there is a minimum daily budget of $50
- If you set your budget at the ad set level, there is a minimum daily budget of $20
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.
TikTok’s algorithm is one of the best out there so most of the time you will see lower costs when your audience is broad and therefore large. In fact, TikTok recommends consolidating your audiences as much as possible and either putting all of your interests into one “super” 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 are optimizing for (better known as Automatic Targeting). If you want to read more about this, check out this blog where we outline Tuff’s recommendations for prospecting campaigns that convert!
Budget & Bid Amount
TikTok allows you to set a daily or lifetime budget at both the campaign level and the ad set level. When setting the budget at the ad set level, you can use:
- Bid caps for more manual control over the bid used in the auction by putting a limit on the cost per result
- Cost caps for a more goal-based cost per result as you will never pay higher the bid amount set but you might not spend your entire budget
- Lowest cost for the maximum number of results
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. That is why we like to look at a TikTok-specific metric called ad hook rate which can also be considered as the “thumb stop rate.” This metric reports on if an ad has caused people to stop scrolling past the video and watch it. It is calculated by 2-second video views divided by impressions and is helpful in indicating if a video has captured your audience’s attention, or if it hasn’t, and it is time to pivot by testing something else in line with TikTok’s creative best practices.
Here at Tuff, our performance creative team prioritizes producing creative assets that are designed for each individual platform. We are always analyzing metrics not only against our own previous campaign’s performance but also across social platforms to understand what elements of the ad creative are the most important to highlight. Looking at internal benchmarks we pulled across the campaigns we run, the cost per (video) view on TikTok is 1¢ compared to Facebook and Instagram at $1.06.
Gone are the days of strictly repurposing content from Facebook to use on TikTok. People notice when assets are designed to appear natively in-platform and ultimately watch for longer (more engaged!) which typically leads to lower costs across the board (cheaper clicks! more revenue!).
How Do TikTok Ads Compare to Other Platforms?
Data is great but without context, it does not have a lot of impact. It is 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 more cost efficient than Facebook, Instagram and LinkedIn.
Take a look at some benchmarks our social team pulled at the beginning of 2023 that span across industries, objectives and creative types:
What does this mean for 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 has the potential to be a very successful and scalable channel for your business.
Looking for more tips on how to set up a successful TikTok campaign? Check out this article!