Are you looking to elevate your brand’s social media presence and engage with a younger audience? Look no further than TikTok. With its powerful advertising capabilities, TikTok presents a unique opportunity for brands to connect with their target audience. Whether you’re a small business or a large corporation, TikTok ads can help you reach new audiences and grow your brand. So, to all your questions about ‘How does TikTok make money?‘, this is your answer! Let’s dive into the world of TikTok Ads!
Table of Contents
TikTok Advertising Statistics in 2023
TikTok’s ad revenue in 2023 was estimated to be around $18 billion, a significant increase from $11 billion in 2022, which represents a year-over-year growth of about 64%. TikTok ads also show the potential to reach a massive audience, with an estimated global reach of 885 million people.
According to Datareportal, TikTok has achieved a massive number of users, particularly in Saudi Arabia, with almost 35 million active users above 18. What’s more intriguing is the percentage of the adult population that TikTok advertising can reach in Asia.
TikTok advertising has a fantastic reach if you sell to an international audience. So, who should spend money on TikTok advertising? It would be a perfect fit because:
- The targeted audience is from 18 to 34.
- Average engagement rate of around 10%, more than Instagram (5%) and Facebook (2%).
- Brands can offer consumer products such as cosmetics, jewelry, and clothing,… and sell directly through TikTok Shop.
- TikTok offers a wide range of ad formats and specs tailored for branding and e-commerce purposes.
- Sellers can target worldwide audiences, with 17.9% of all internet users aged 18 and over.
Considering TikTok for advertising? TikTok is a robust advertising platform known for its precise user targeting based on behaviors and interests. Advertisers can effectively reach potential users interested in specific subjects, such as products or engaging content.
While concerns about TikTok’s privacy policy emerged in April 2023, with rumors of data leaks to the Chinese company Bytedance causing a temporary dip in user numbers, TikTok has taken substantial steps to address these issues. The platform has implemented dedicated data centers for specific regions, such as the U.S. or the Europe, emphasizing a commitment to user privacy.
These strategic initiatives address past concerns and underscore TikTok’s dedication to providing a secure advertising platform. TikTok holds significant potential for advertisers seeking a platform with exceptional targeting options and access to a growing user base.
>>> Read More: TikTok Age Demographics in 2024: Insights From TikTok Partner
So, what is TikTok Advertising?
TikTok Ads is a paid TikTok marketing tool that helps brands and sellers reach potential audiences on this platform. Advertisers can manage and set up an advertising campaign on TikTok through TikTok Ads Managers. Besides, the most premium aspect of TikTok ads is that its management tool is powerful and precise when you target based on behaviors or interests.
Despite the diverse types of TikTok Advertising formats, a basic ad account can only access the In-feed ads. Advertisers must contact TikTok or its partner, Mega Digital, to book or upgrade to a TikTok ad agency account to use all ad types.
How much do TikTok ads cost?
TikTok advertising works on a bidding system and can be influenced by many factors.
- Bidding methods:
- CPM (Cost per Mille): This refers to the cost per 1,000 impressions of your ad. The average CPM for TikTok ads ranges from $5 to $30, with a global average of $9.16 as of November 2023.
- CPC (Cost per Click): This refers to the cost each time someone clicks on your ad. The average CPC for TikTok ads ranges from $0.20 to $2.00, with an average of $0.50 to $1.00.
- Ad format: Different ad formats on TikTok have varying costs. For example, Brand Takeovers, which appear at the top of users’ feeds for a day, can cost upwards of $40,000 per day.
- Targeting: The more specific your target audience, the higher the cost per impression or click might be.
- Competition: You can expect to pay more for ad space if you’re targeting a competitive niche.
- Seasonality: Ad costs can fluctuate depending on the time of year and current trends.
Campaign and ad group expenditures may be managed using daily and lifetime budgets. The minimum budgets for TikTok Ads that you have to pay are:
Campaign
- Daily budget is $50
- Lifetime budget is $500
TikTok requires a minimum campaign spend of $500. You’ll also need to set daily budgets for your campaigns and ad groups, with minimums of $50 and $20, respectively.
Ad group
- Daily budget is $20
- Lifetime Budget is calculated by multiplying the daily budget by the number of days scheduled.
TikTok is tight-lipped on ad pricing. However, they do share the following advice and insights:
- If you’re using a Bid Cap or Cost Cap bidding approach (CPA), set your initial campaign level budget to No Limit and the daily ad group budget to at least 20x your goal cost per action.
- For App Event Optimization, set an initial budget of at least $100 or 20x your objective (CPA), whichever is larger.
- Set a beginning budget of at least $100 or 20x your objective (CPA) for Conversions campaigns using the Lowest Cost bid technique.
By understanding the factors that influence TikTok ad costs and following these tips, you can create effective ad campaigns that fit your budget.
>>> Read More: How To Optimize TikTok Ads: Guideline From TikTok Agency
What types of TikTok ads are there?
11 TikTok ad types with different placements, prices, and advertising objectives can be tailored to suit your campaigns. With varying methods of buying, TikTok divides its formats into 3 categories, including how much TikTok ads cost to fit your campaigns.
- Reservation (Booking) types: TopView, Branded Hashtag Challange, Branded Effect
- Bidding types: In-Feed, TikTok Shopping, Deeplink, Collection, Dynamic Showcase
- Reach & Frequency type: Top Feed
Let’s check out the 4 most used ads that have shown significant performance!
>>> Read more: 11 TikTok Ad Types you need to know [Update 2024]
In-feed Ads
As its name suggests, in-feed ads appear right in the middle of the For You feed as users scroll through, allowing a seamless viewing experience. This ad type can be up to 60 seconds long, although we suggest keeping it optimally somewhere around 10 – 15 seconds. In-feed ads are unique because they also come with a call-to-action button that can direct users to your profile or a landing page.
>>>> Read more: TikTok in-feed ads: Agency’s guide from set-up to optimize
Top View Ads
Top View ads (previously called Brand Takeover) are one of the most premium formats TikTok offers, as they provide the most coverage than any other type of ad. When users open TikTok, they are immediately greeted by a full-sized, featured video from 5 to 60 seconds, instantly attracting their attention. TopView uses TikTok’s ad placement to highlight your brand, giving a one-of-a-kind viewing experience with no competing content.
>>> Read more: TikTok TopView Ads: The Best Branding Advertising Solution
Branded Hashtag Challenges
Since the Internet exploded, user-generated content (UGC) has become an essential part of the online community for brands and consumers. In recent years, businesses have become more invested in UGC to promote their products. In the social media context, hashtags help users find content that is relevant to them.
TikTok’s Branded Hashtag Challenge (HTC) allows you to create hashtag campaigns that can turn any users into your brand ambassadors. It is the best way to raise awareness and drive engagement toward your brand.
>>> Read more: What is a Branded Hashtag Challenge? 6 tips to use it effectively
Branded Effects
What makes TikTok such a joyful platform for content creators is its expansive effects. From typical color grading to interactive minigames and AR filters, the TikTok community is dedicated to creating thousands of new effects daily. With Branded Effects, you can offer users a way to engage with your brand through what they love doing the most: Creating.
>>>> Read more: TikTok Branded Effect: Place your brand into customers’ hands
Note that TikTok ad formats and specs are among the most essential criteria when running campaigns. It can affect the outcome of ads or even lead to the issues of getting your TikTok ads account suspended or TikTok ads not delivering if the sizes are incorrect.
How to create a TikTok Ads Manager account?
If you haven’t created an account, you can sign up by following our guide:
- Step 1: Register an account on TikTok Ads Manager. Choose your preferred method of signup: either by email address, phone number, or directly with your TikTok account.
- Step 2: Fill in business information, including business name, telephone number, time zone, and preferred currency.
- Step 3: Set up your account with the account name, industry, and a brief description of your business.
- Step 4: Complete detailed business information
- Company website: Enter the URL of your website, ensuring it follows the format https://www.tiktok.com/.
- Company address: Provide the full address of your business, including street address, city, state/province, and postal code.
- Business type: Choose the category that best describes your business.
- Legal name: Enter the official legal name of your business.
- Tax information: Depending on your location, you may need to provide your tax ID or VAT number.
- Step 5: Select Payment Method, choose your preferred currency, and enter your billing information.
After you’ve logged in to your Ads account, you can begin creating your first campaign. You don’t need an Ads Manager account if you merely want to boost current content. You may instead try TikTok Promote. We will discuss more details in the below sections.
How to run TikTok Ads?
TikTok Ads is easy; you only have to take 8 basic steps to start advertising on this platform. Let’s take a look at how to run TikTok Ads in the section below.
- Access TikTok Ads Manager to set up your campaign.
- Determine your goal, whether it focuses on conversions, consideration, or awareness.
- Set up Campaign name and Budget
- Name your TikTok ad group and choose placements
- Select whether to turn on Automated Creative Optimization.
- Target your viewers.
- Schedule and set up a budget for your ad group.
- Create a bidding strategy and optimize it.
- Finalize your Campaign.
Determine your goal for this TikTok Ads campaign
Once you are inside your TikTok Ads Manager dashboard, select the Campaign to get started. TikTok has 7 advertising goals that are divided into three stages:
#1 Awareness
- Reach: Show your ad to as many people as possible (in beta).
#2 Consideration
- Traffic: Drive traffic to a specific website.
- App Downloads: Encourage people to download your app.
- Video views: Increase the number of times a video ad is played (in beta).
- Lead Generation: Collect leads using a pre-populated Instant Form.
#3 Conversions
- Conversions: Encourage certain behaviors on your site, such as purchasing or subscribing.
- Catalog Sales: Dynamic advertisements based on your product catalog (In beta, only individuals with a managed ad account in supported locations can participate).
Source: TikTok
Set up Campaign Name and Budget
Give your campaign a name that everyone on your team will remember. It has a maximum length of 512 characters.
You can put No Limit on your campaign budget if you have unlimited funds or wish to establish budget restrictions for individual ad groups rather than the whole campaign. Otherwise, decide whether your campaign will have a daily or lifetime budget (more on that below).
Source: TikTok
The Lowest-cost bidding approach can also be used to optimize campaign budgets for the App Installs and Conversions goals.
TikTok is beta testing a function that provides a proposed price for optimized Cost-per-click targets.
Name your TikTok ad group and choose placements
There are one to 999 ad groups in each campaign. The name of each ad group can be up to 512 characters long.
For each ad group, you may select alternative placements. Some positions are not accessible in all locations:
- TikTok Placement: Advertisements in the For You stream.
- News Feed App Placement: Ads that show in other TikTok App such as BuzzVideo, TopBuzz, NewsRepublic, and Babe.
- Pangle placement: Show to all the TikTok Audiences.
- Automatic placement: TikTok may maximize ad distribution automatically.
Source: TikTok
Select whether to turn on Automated Creative Optimization
You won’t be able to publish your creative until you’ve finished developing individual adverts. However, for the time being, you can allow TikTok to create combinations of your images, videos, and ad text on its own. Only the best-performing ads will be shown by the ad system.
Note: TikTok advises new marketers to enable this feature.
Target your viewers
TikTok, like other social ads, allows you to tailor your adverts to a specific demographic. You can utilize a lookalike or custom audience, or you can target your advertising using the following criteria:
Source: TikTok
Schedule and set up a budget for your ad group
Your overall campaign budget has already been determined. Now is the time to set the ad group’s budget and the timetable for when it will run.
Select a daily or lifetime budget for your ad group, then start and stop hours. You may also select to run your ad at specified periods throughout the day using Dayparting (based on your account time zone).
Create a bidding strategy and optimize it
First, decide if you want to optimize for conversions, clicks, or reach. Your campaign objective may determine this aim.
You can choose TikTok bidding strategy from the following options:
- Bid Cap: Maximum amount paid per click (CPC), per view (CPV), or per 1,000 impressions (CPM).
- Cost Cap: An optimized CPM’s average cost per result. The price will vary above and below the bid amount, but it will eventually average out at the specified bid.
- Lowest Cost: The ad system uses the ad group budget to provide the most significant number of results at the lowest cost per result.
Source: TikTok
Finally, decide if you want Standard or Accelerated delivery. Standard allocates your spending evenly across the campaign’s scheduled days, whereas Accelerated delivery spends it as quickly as possible.
Source: TikTok
Finalize your Campaign
Each ad group can include up to 20 advertisements. Each ad name is limited to 512 characters and is only used internally (it does not appear on the ad itself).
To begin, select an ad format: Image, Video, or Spark ad. You can only utilize Video or Spark ads if you stick to TikTok platform (rather than the TikTok family of applications).
Add images or videos, or use Ads Manager’s video template or creation tools to make content. According to a TikTok study, utilizing the TikTok video editor can reduce cost per action by up to 46%.
Select from the available thumbnails or add your own. After that, add your text and link. View a preview of your ad on the right side of the page, then add any relevant tracking links (if you have one) and click Submit.
Source: TikTok
Before going live, your ad will go through a review procedure.
To utilize Spark Ads, you must first contact the producers of the material you wish to use and get an access code. You can check the whole Spark Ad instructions from TikTok.
Otherwise, you can check out the TikTok Creator Marketplace if you’d like to collaborate with a TikTok creator on a custom campaign.
Tip: Using TikTok Promote to boost existing content
Anyone above the age of 18 can use TikTok Promote to promote current content. It’s TikTok’s version of Facebook Boost.
Here’s how to make TikTok more popular:
- Select the three-line icon for settings on your TikTok profile, then tap Creator tools.
- Select Promote.
- Tap the video you’d like to promote.
- Select your advertising objective: more video views, website traffic, or followers.
- Choose your target audience, budget, and length, then tap Next.
- Select Start Promotion after entering your payment information.
>>> Read more: How to promote TikTok Videos: Detailed Explanation from A to Z
All about TikTok ads requirements
In this section, we’ll concentrate on advertising that appears on TikTok rather than the TikTok news apps.
TikTok video ads requirements
- Ratio: 9:16, 1:1, or 16:9 aspect ratio Videos or a vertical 9:16 aspect ratio perform best.
- Minimum Resolutions: 540 x 960 pixels or 640 x 640 pixels. The greatest videos are those with a resolution of 720 pixels.
- File Formats: mp4,.mov,.mpeg,.3gp, or.avi
- Duration: 5-60 seconds in length. For best results, TikTok suggests 21-34 seconds.
- Maximum size: 500 MB
- Image format: Square picture of less than 50 KB
- App or brand name: 2-20 characters or 4-40 characters (app) (brand)
- Ad Description: no emojis, 1-100 characters
Spark ads requirements
- Aspect ratio: Not Required
- Minimum resolution: Not Required
- Duration: Not Required
- Caption: Free to mention other accounts or add emojis
- Must display content and name from the original post.
Note: Character counts are determined using Latin characters. For Asian characters, the character count is usually halved.
>>> Read more: TikTok Ad Formats and Specs: Important Notes for Beginners
TikTok Ads Best Practices 2024
Combine and contrast your unique styles
Switch up your style instead of employing the same or comparable types of creatives. To combat audience fatigue, TikTok recommends refreshing your creative every seven days.
Change it up inside each video as well. TikTok suggests using a B-roll or transition footage to create a variety of situations.
Straight to the point
Although video advertising can last up to 60 seconds, TikTok suggests limiting them between 21 and 34 seconds.
To prevent losing viewers, make the opening 3 to 10 seconds very eye-catching and exciting. Within the first three seconds, the best-performing TikTok advertisements stress the core message or product.
Don’t forget to use sound and caption
Audio is included in 93% of top-performing TikTok videos, and 73% of TikTok users stated they would stop and listen to advertising with audio. Fast songs with more than 120 beats per minute have the greatest view-through rate.
However, captions and text are equally vital. Use words to emphasize your call to action in particular. TikTok discovered that text overlays appear in 40% of auction advertisements with the greatest view-through rate.
Stay honest and positive
According to TikTok, videos should be “positive, honest, and motivating.” This isn’t the place to try out your dark and dismal stuff or to make a hard sell. You also don’t want your video to appear overly “manufactured.”
To keep your adverts genuinely authentic, try incorporating user-generated material. One in every three of the top auction advertisements, for example, features a person interacting with the audience while looking directly at the camera.
Royal Essence, an Australian company, employed a similar method to get 2.2 million impressions and 50,000 clicks.
Best TikTok Ads Examples
Penningtons: Partner with creators
Penningtons, a Canadian apparel retailer, collaborated with Alicia Mccarvell to develop in-feed video advertising that received 53% more comments, 18% more likes, and 55% more views than the firm’s other content.
The secret to success was collaborating with a well-known producer (a.k.a. influencer) who knew how to create genuine TikTok content that promoted the business without being too salesy.
Little Caesars: In-Feed Ads
For their #GoCrazy campaign, Little Caesars employed Spark Ads to amplify content from 13 different producers.
The secret to success was giving the designers unlimited creative control while also learning a few things. They discovered that TikToks with families had the best click-through rates for their campaign.
Wet n Wild: Branded Hashtag Challenge
To promote their new Big Poppa mascara, Wet n Wild launched a branded hashtag challenge. With 1.5 million user videos and 2.6 billion cumulative views, their #BiggerIsBetter challenge was a huge success.
The secret success of Wet N Wild is by combining a branded hashtag challenge with a bespoke sound, creative collaborations, and Top View advertisements. Each component amplified the effects of the others, culminating in tremendous reach.
