TikTok ads bidding: everything you need to know

TikTok Ads, as well as other advertising platforms like Facebook and Google, are extensive fields that demand marketers to consistently learn and improve their expertise. Creating a successful campaign involves multiple factors such as target audience selection, budget planning, bidding strategy, creative content, and more. In this article, Ecomdy offers valuable insights into TikTok Ads bidding. It covers definitions, various bidding methods, strategy approaches, and crucial tips for beginners venturing into TikTok Ads campaign setup.

1. What is TikTok ads bidding?

TikTok Ads Bidding is the process of determining the amount you are willing to pay for each click, conversion, or 1000 impressions. TikTok's algorithm then distributes your ads based on this bidding price.

So, why is TikTok Ad Bidding important?

It is crucial to pay attention to TikTok Ad Bidding because the bidding price reflects the level of competition in auctions to achieve your desired results. If you set the bidding price too low, your ads may not reach the desired distribution. On the other hand, if you set the bidding price too high, your ads will be distributed as intended, but it might exceed your advertising budget.

Moreover, TikTok offers various bidding strategies to cater to the optimization needs of different advertisers. Therefore, it is essential to select the most suitable strategy for your industry, brand, and products.

2. TikTok ads bidding method

TikTok offers various bidding methods, allowing advertisers to choose the most suitable one based on their strategies and goals.

CPM - cost per mille

CPM refers to the amount you pay for every one thousand times your ad is shown to viewers. TikTok's algorithm will strategically distribute your ads to reach the maximum number of potential customers while staying within your specified budget.

This advertising method is particularly beneficial for prominent brands in the FnB (Food and Beverage) and FMCG (Fast-Moving Consumer Goods) industries when they aim to launch new product campaigns and achieve the highest possible level of brand awareness.

Formula: CPM = (Total cost/Total impressions) x 1000

When the object of an advertising campaign is to reach a broader audience and maximize the number of people who see the ad, CPM becomes a crucial metric to consider.

CPV - cost per thousand views

CPV refers to the amount you pay for every one thousand views or predetermined interactions on your video ad. TikTok's algorithm strategically distributes your ad to maximize the number of views within your specified budget.

CPV is commonly chosen by brands for brand advertising campaigns or campaigns that emphasize user engagement, such as hashtag challenges.

To calculate CPV, you divide the total cost of the campaign by the total number of views and then multiply it by 1000. This gives you the cost per one thousand views.

The main object of using CPV in advertising is to generate a high number of views on the ad, ensuring maximum exposure and visibility for your content.

CPC - Cost per click

CPC is the price you pay for each click on your ad, including actions like video likes, profile views, or link clicks. TikTok's algorithm distributes your ad to users who are likely to engage and click on your ad, aiming to keep the cost close to your specified bid.

CPC is highly suitable for advertising campaigns focused on generating traffic, such as driving website or app visits, gaining followers, or promoting TikTok profile views.

The primary advertising object for using CPC include generating website/app traffic, increasing app installations, and driving conversions.

Formula: CPC = Total cost/Total clicks

Advertising object: Shop Purchases, Product Sales, Traffic, App Installs, Conversion, Community Interaction (Profile Visits)

oCPM - optimized cost per mille

oCPM is a bidding method used for advertising objectives focused on conversions and app installs.

With oCPM, you pay for every one thousand ad impressions. TikTok's algorithm distributes your ads to users who are likely to install your app or are potential customers, within the bidding price you have set.

oCPM is particularly suitable for advertising campaigns aiming to drive conversions, app installations, and generate potential customers.

Formula: oCPM = Total cost /Total impressions

Advertising object: Shop Purchases, Product Sales, Conversions, App Install, Lead Generation, Community Interaction (Follows).

3. TikTok ads bidding strategy

When setting up a TikTok ad campaign, one crucial step that marketers carefully consider is selecting the appropriate TikTok Ads bidding strategy. Each bidding strategy operates in a unique way and produces different outcomes.

So, which TikTok Ads bidding strategy is the right fit for you? Let's explore the following strategies:

Bid Cap: This strategy focuses on controlling the cost per conversion on a daily basis. However, it may lead to fluctuations in daily spending and the risk of not fully utilizing your allocated budget due to higher bids from competitors.

Cost Cap: The objective of this strategy is to maintain the average cost at or below the bidding price, regardless of the budget. While daily spending may fluctuate, the cost per result remains stable around the set bidding level.

Lowest Cap: This strategy aims to maximize results by efficiently utilizing the daily budget. With the Lowest Cap strategy, daily spending becomes more consistent, saving time on bid adjustments.

Each bidding strategy has its own advantages and considerations. Therefore, it is crucial to carefully select the strategy that aligns with your campaign objectives and budget.

4. Tips for optimizing the effectiveness of TikTok ads bidding

After choosing the right TikTok Ads Bidding strategy for your campaign, the next crucial step is to optimize its effectiveness. For detailed guidance on configuring your bidding settings, you can consult the TikTok Ads Bidding Guide. Below, Ecomdy will suggest some tips to optimize the effectiveness of TikTok Ads Bidding for you.

Maximizing effectiveness with Bid Cap and Cost Cap strategies

Here are some clear suggestions for optimizing the effectiveness of your TikTok Ads Bidding strategy:

• Choose an unlimited budget when setting up your campaign. This allows for flexibility in spending and ensures that your ads can reach a wider audience without budget constraints.
• Allocate a budget for your ad groups that is at least 50 times higher than the bidding cost. This provides sufficient funds to support the bidding strategy and increases the likelihood of achieving desired results.
• Monitor the daily cost per acquisition (CPA) closely. If you consistently observe a lower CPA than your bidding price, it indicates that there may be a smaller user base willing to pay the amount you have set. In such cases, consider expanding this bidding strategy to reach a larger audience and maximize your campaign's effectiveness.

Maximizing effectiveness with Lowest Cost strategy

• When setting up a campaign, it is recommended to choose an unlimited budget option. This provides more flexibility in spending and allows your ads to reach a wider audience without budget constraints.
• Avoid making frequent changes to the bidding price. It is advisable to make adjustments no more than once per day, and the changes should not exceed 30%. This approach ensures stability in your bidding strategy and prevents unnecessary fluctuations.
• If you opt for manual bidding, it is suggested to set a daily budget that can accommodate at least 50 conversion events based on historical data. After the learning period, you can gradually increase the budget for your ad groups by 30% to 50% at a time. However, keep in mind that increasing the budget will also result in higher costs per conversion.

Conclusion

In conclusion, bidding is a crucial element in the TikTok ad campaign strategy. Ecomdy's blog post provides valuable insights into bidding, covering its definition, methods, strategies, and important tips for optimizing bidding on TikTok Ads. We believe that this information has equipped you with a strong basis for your advertising efforts. If you require further in-depth insights or expert advice customized to your specific requirements, please feel free to reach out to ECOMDY. We are readily available to address any questions or concerns you may have.