High Costs on TikTok Ads? Tips and Tricks Explained

To assist numerous international advertisers in addressing this situation, we’re here to delve into TikTok advertising bidding. Whether you are a seasoned marketing professional or a newcomer exploring this field, hope this article can find you well!

Part One: The Importance of TikTok Advertising Bidding

Each cost setting in TikTok advertising goes through a meticulous bidding process, where only higher bids compared to competitors can secure ad display opportunities and gain a favorable market position. However, it’s important to note that excessively high bids may lead to over-competition, potentially risking budget overruns.

On the other hand, if your bid is lower compared to similar ads in the market, your TikTok ads may struggle to attract sufficient attention amidst the vast amount of information. This can weaken ad visibility and potentially decrease user engagement and interaction.

Choosing a bidding strategy is essentially communicating your marketing vision to TikTok and guiding the platform to optimize ad performance based on your specific goals. Ensuring that every dollar spent yields the maximum return is crucial. Therefore, for effective TikTok advertising, your bidding strategy needs to be both precise and reasonable, as it is a key step in achieving your business objectives.

Part Two: Four TikTok Advertising Bidding Methods
  • CPM (Cost Per Thousand Impressions): Your bid determines the total amount you are willing to pay for 1,000 ad impressions.
  • OCPM (Optimized Cost Per Thousand Impressions): Your bid is set for every 1,000 impressions optimized to reach users most likely to convert into your target audience.
  • CPV (Cost Per View): In CPV bidding, you pay when a viewer either watches at least 6 seconds of your video (or the full length if it’s under 30 seconds) or interacts with the video (such as clicks, comments, etc.) before that point.
  • CPC (Cost Per Click): Your bid represents the amount you are willing to pay each time your ad is clicked.
Part Three: Two Major TikTok Advertising Bidding Strategies

In TikTok advertising, bidding strategies play a decisive role in guiding the platform on how to optimize resource allocation for your account during the bidding process.

Strategy 1: Cost Cap Bidding

This is an efficient method for optimizing advertising performance by precisely controlling the cost per conversion through a cost cap mechanism. TikTok adjusts the bidding strategy based on your advertising goals to ensure that the average cost per conversion aligns closely with your ideal value. Although the cost per conversion may fluctuate in the short term, it will stabilize over time, meeting your expected goals in the long run.

The cost cap bidding strategy is particularly suited for campaigns aimed at increasing app installations, boosting conversion rates, or generating leads. It helps advertisers maintain stable costs across different market environments and is a critical component of market strategy. TikTok uses intelligent algorithms to dynamically adjust bids based on conversion potential, ensuring that the ad budget is utilized to its maximum effect.

When setting a cost cap, advertisers should carefully consider and define the maximum acceptable cost per conversion or the expected return on ad spend (ROAS). To optimize ad performance, it is generally recommended to set the daily budget at 5 to 10 times the cost cap.

Strategy 2: Maximum Delivery Bidding

Unlike the cost cap strategy, maximum delivery bidding focuses on budget utilization with the primary goal of driving the highest number of target actions within the budget. In this strategy, there is no need to set a specific bid; TikTok will automatically optimize to maximize your ad’s impact within your budget limits. In essence, the platform will continue to deliver ads until the budget is exhausted, regardless of the ad performance.

The maximum delivery bidding strategy is suitable for various campaign objectives on the TikTok platform. To enable this mode, simply leave the fields for “Cost Cap,” “Bid Cap,” or “Target Cost Per Action” blank in the “Bidding and Optimization” configuration, and the system will default to the maximum delivery bidding mode.

TikTok suggests a daily budget that supports at least 50 conversions as a guideline, but this is not a strict requirement. In practice, you should adjust the budget flexibly based on needs and ad performance to maintain the continuity and effectiveness of your campaign. If the maximum delivery strategy proves effective and you plan to scale up, it is recommended to do so gradually to avoid drastic budget fluctuations that could impact ad performance.

Part Four: Best Practices for TikTok Advertising Bidding

Mastering the best practices for TikTok advertising bidding is the key first step in optimizing ad performance and enhancing ROI. Amid this backdrop, this article aims to help you achieve precise targeting and efficiently reach your desired audience:

1. Smart Bid Recommendations

One of the core highlights of TikTok’s ad management tools is its intelligent optimization suite, with the smart bid recommendation feature playing a crucial role. Utilizing advanced machine learning algorithms, it customizes optimization plans for ad campaigns. Whether the goal is to expand audience reach, increase views, or enhance conversion efficiency through OCPC (Optimized Cost Per Click), this feature is invaluable.

The system analyzes ad configurations (category, objective, bidding strategy, targeting) and historical performance (CPA, CTR, CVR) to generate personalized bid recommendations. These recommendations are precisely tailored to match your ad needs, thereby maximizing the effectiveness and ROI of your ad groups.

2. Strategy Guidance at the Initial Stage

When selecting a bidding strategy, it’s essential to thoroughly consider common advertising scenarios to ensure the strategy effectively helps you achieve advertising goals within the established budget framework. Particularly when using bid cap or cost cap strategies, adjusting your bids closely around the target cost per action (CPA) can help you maximize cost efficiency.

Additionally, for campaigns focused on app installations and further optimizing specific in-app user behaviors, the App Event Optimization (AEO) strategy is an ideal choice. In this strategy, your bids should target the desired cost per conversion, ensuring that the ad campaign precisely aligns with optimization goals, thereby enhancing the return on investment (ROI).

3. Optimization Tips

To expedite budget spending without increasing overall costs, you can select the “Accelerated” mode. However, if the daily conversion cost consistently falls below the bid, it may indicate that the current audience’s value does not meet expectations. In such cases, consider increasing the budget to reach higher-value potential customers.

4. Budget Setting Strategy

When setting a reasonable daily budget for ad group, an effective approach is to base it on the estimated cost per action. If you aim for the ad group to successfully pass the learning phase and achieve 50 conversions, you can scientifically calculate the budget requirement using the formula:

Daily Budget = 50 Conversions × Target Cost Per Action (CPA)

Additionally, your budget allocation strategy should be flexibly adjusted based on your specific optimization goals (such as different strategies for in-app behavior or web traffic). This ensures that resources are optimally allocated, thereby better achieving your advertising objectives.

5. Tips for the TikTok Ad Learning Phase

When launching TikTok ads for the first time, the recommended bid might not be precise due to insufficient data accumulation. As the ad campaign progresses, you may need to adjust your bidding strategy multiple times to find the most suitable approach. This process, known as the TikTok learning phase, provides an opportunity to calculate and fine-tune bids to meet your desired outcomes.

It should be noted that when adjusting the budget to avoid significant fluctuations in cost per action, the increase should not exceed 50% at a time. Achieving 50 conversions is a critical milestone in the learning phase. Once you reach the stabilization phase, you can allow the system to optimize ad performance as it gains a deeper understanding of your ads and audience.

An effective bidding strategy is key to unlocking the potential of TikTok advertising and achieving your marketing goals. Throughout this process, precise bidding, strategic planning, and continuous trial and error adjustments are essential steps toward success.

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