More and more brands are jumping into TikTok Auction Ads due to the platform’s high engagement rates, typically between 2.5 % and 4 %. If you start seeing competitors using them but feel unsure how to start, this guide explains how the auction works and shares 6 tips to help you win placements!
Quick Summary
- TikTok Auction Ads let you bid in real time for placements based on bid, user intent, and ad quality, offering flexible budgets and full control over targeting and performance.
- How It Works: TikTok runs a mini auction every time a user scrolls. The ad with the highest value score wins the placement.
- Campaign Setup: In Ads Manager, choose Auction buying type, set a clear bid strategy, define targeting, and upload multiple creatives for better testing.
- Best Practices: Keep a clean ad structure, start with broad targeting, test bidding strategies, refresh creatives often, and scale gradually.
- Mistakes to Avoid: Don’t change bids or budgets too often, avoid using only one creative, and delay manual placements until you have enough data.
What Are TikTok Auction Ads?
TikTok Auction Ads are a common way for brands to run ads on TikTok. Instead of paying a fixed price, you join an auction where you set a bid. You will fill in how much you’re willing to pay for results like views, clicks, or sales. TikTok then compares your ad with others and picks the best one to show, based on both the bid and how good the ad is.
TikTok Auction Ads include formats like TopView Ads, In-Feed Ads, Search Ads, and more, each designed to fit different campaign goals.
Key Differences between TikTok Auction Ads vs Reservation Ads
TikTok Auction Ads are different from Reservation Ads, where you pay a set price to guarantee your ad appears in top spots. To make it clearer, here’s a quick comparison:
| Feature | Auction Ads | Reservation Ads |
| Pricing | Changes depending on your bid | Fixed, higher price |
| Budget Flexibility | Works for small or big budgets | Better for large campaigns |
| Ad Placement | Not guaranteed | Guaranteed |
| Best For | Performance campaigns, testing, scaling | High-reach brand campaigns (e.g., TopView, Branded Hashtag) requires bigger budgets |
>>> Read more: TikTok Auction vs Reservation Ads: Fundamentals for Advertisers
Why Use TikTok Auction Ads?
TikTok Auction Ads are a smart choice if you want more control, flexibility, and better use of your budget. Here’s why many advertisers prefer them:
- Flexible for any budget: Auction Ads work on a dynamic bidding system, so you can start with as little as $20/day per ad group. You don’t need a large upfront budget, and you can scale up as you test and optimize.
- Only pay for results: You choose what goal you want, like views, clicks, or conversions, and TikTok only charges you when that goal is achieved. TikTok Auction Ads support CPC, CPM, and oCPM bidding, helping you align spend with your exact campaign goals.
- Real-time optimization: TikTok’s system watches how your ad is doing and adjusts delivery to show it to the people most likely to engage, helping improve your results over time.
- More control and flexibility: Unlike Reservation Ads (which require fixed spend and upfront deals), Auction Ads let you control audience targeting, creative testing, and budget pacing. You can pause or adjust anytime, no lock-ins.
How TikTok’s Auction System Works
TikTok Auction Ads offer flexibility and performance, but to make the most of them, you need to understand how the system works. Let’s break down what happens behind the scenes every time your ad enters an auction.
1. Auction Trigger
Every time a user opens TikTok or scrolls through their For You Page, it creates an ad opportunity. This is when the platform starts looking for eligible ads to show, based on who the user is, their behavior, and what they’re likely to engage with.
2. Eligible Ads Enter the Pool
TikTok then pulls all ads from advertisers whose targeting settings match that user. For example, if your ad is targeting 18–24-year-old users in the U.S. who are interested in fashion, and the user fits that profile, your ad enters the auction pool.
3. Value Score Calculation
Now comes the actual auction. TikTok uses a specific formula to calculate the total value of each ad:
These three variables in the formula are key determinants in how TikTok selects the winning ad in each auction. Here’s what they mean:
- Bid: The amount you’re willing to pay per result. This can be CPM, CPC, or oCPM (optimized CPM for conversions).
- Estimated Action Rate: TikTok predicts how likely the user is to take your desired action (like watching the video, clicking, or converting).
- Ad Quality: Based on the creative’s past performance, things like watch time, engagement, relevance to the audience, and even landing page experience.
This formula means it’s not just about spending more money. But TikTok also rewards ads that are engaging and relevant.
4. Winning Ad Gets the Placement
After scoring all eligible ads, TikTok selects the one with the highest total value score to show to the user. This means the winning ad is the one that balances smart bidding, strong creative, and high engagement potential.
So even if your bid is lower than another advertiser’s, your ad can still win if it’s expected to perform better or has a higher quality score. This system is designed to balance performance and user experience, showing users ads they’re more likely to engage with, while still helping advertisers control cost.
5. Continuous Learning and Optimization
TikTok’s auction system doesn’t stop after one impression. It constantly monitors ad performance and adjusts delivery in real time. If your ad performs well, like getting high engagement or conversion rates, TikTok may optimize delivery to similar audiences, helping you reach more of the right people at a lower cost.
This is why creative testing and data-backed targeting matter. The more TikTok learns from your ad’s performance, the more efficiently it can deliver results through the auction.
How to Set Up an Auction Ad in TikTok Ads Manager
While TikTok offers different ad buying types, Auction is the default and most flexible option. Here’s how to get started, with special attention to the auction-specific choices you’ll need to make:
Step 1: Start a New Campaign
- Go to TikTok Ads Manager and click “Create”.
- Select your campaign objective (e.g., Traffic, Conversions, App Installs).
- Under “Buying Type,” make sure Auction is selected. This is usually pre-selected for most objectives.
Step 2: Configure Your Ad Group
This is the most important part for auction-based ads. Here’s what to focus on:
In the Bidding & Optimization section, choose your optimization goal (e.g., Click, Conversion, Reach). This determines how TikTok will spend your bid. Then, choose your bidding strategy:
- Cost Cap: aims to keep your average cost per action close to a set target.
- Maximum Delivery: focuses on spending your full budget to get as many results as possible, with no strict cost target.
As for Budget & Schedule, set a daily or lifetime budget. TikTok requires a minimum of $20/day per ad group for Auction campaigns.
Then, you must choose your Targeting Options based on location, age, gender, interest, device, and behavior.
Step 3: Upload Your Ad Creative
This step is similar across buying types, but remember, your ad’s creative quality is one of the 3 key determinants in winning auctions. So, make sure to:
- Use a vertical 9:16 video that looks native to TikTok.
- Add a strong CTA (e.g., “Shop Now,” “Learn More”).
- Include your landing page link.
- Depending on your goal, you can choose formats like Carousel Ads or Collection Ads, which let users explore multiple products or swipe through visuals.
Step 4: Launch and Monitor Performance
Once submitted, your ad will go through TikTok’s review process. After approval:
- Your ad enters real-time auctions whenever a matching user scrolls.
- Use the Ads Manager dashboard to track key Auction metrics: cost per result, CTR, conversions, and delivery trends.
- Adjust your bids, creatives, or targeting to improve auction performance over time.
Best Practices to Win TikTok Auction Ads
Because winning in TikTok’s auction system isn’t just about bidding higher, you need smart, strategic choices across setup, targeting, and creative. Below are key practices that can help you improve performance and gain an edge in the auction:
1. Nurture a Well-Structured Ad Account
TikTok suggests setting up your campaign with around 3 to 5 ad groups. Each ad group should have about 2 to 5 different ads. This setup helps the system learn faster and decide which ads perform best without wasting your budget.
When your account is too messy, your ad groups might end up going against each other in the same auction. That can push up your costs and make your campaign less effective.
For example, if you’re selling 10 products, don’t create 10 separate campaigns. You can put them all in one campaign and split them into ad groups. This makes it easier to manage and helps you win more auctions.
2. Start Broad and Refine Later
TikTok’s algorithm learns by showing your ad to different types of users and tracking who responds best. Consequently, too narrow targeting ads might not get enough reach to even enter auctions or collect data.
Hence, at the beginning of a campaign, it’s better to keep your targeting broad. This gives TikTok more room to test and find the people who are most likely to take action.
For example, instead of only targeting the 18 to 24 age group, you can begin by targeting all users aged 18 to 34, then later focus on the segment that clicks or converts the most.
3. Choose the Right Bidding Strategy
Your bidding strategy plays a big role in whether your ad wins auctions or not. On TikTok, you can choose from 2 options:
- Cost Cap: a goal-based strategy where you set a target cost per action (CPA), and TikTok will try to deliver results close to that cost. It’s ideal when you want more predictability in how much each result costs.
- Maximum Delivery: focuses on spending your full budget to get the most conversions possible. It doesn’t try to stick to a specific CPA, so you might see more variation in cost per result. This strategy works well when your goal is volume and you’re less concerned about individual result costs.
There’s no one perfect strategy for everyone. If you’re not sure, start with Lowest Cost and see how it performs. Once you have more data, you can try Cost Cap to balance performance and budget better.
>>> Read more: TikTok Bidding Strategy: The Key to Winning The Auction
4. Refresh Creatives Regularly
To stay competitive in TikTok’s auction system, it’s important to update your ad creatives regularly. TikTok suggests adding around two to five video variations in each ad group so the system has more content to test and can figure out which one works best. A good habit is to refresh your creatives every week or two.
If you’re working with limited time or budget, TikTok Symphony can help. It lets you quickly repurpose existing videos, create new versions, add voiceovers, or tweak content to suit different audiences, all in one place.
5. Use Automated Placements
When setting up your ad group, TikTok gives you the option to choose where your ads will appear. Instead of picking manually, it’s better to go with automated placements. This allows TikTok to show your ad across all available channels, like the TikTok app, Pangle, and other partner apps, based on where it performs best.
Letting the system decide helps you reach more people at a lower cost. It also gives your ad more chances to enter auctions and win placements where competition might be lower. If you limit placements too early, you might miss out on high-performing inventory.
>>> Read more: Unlocking Success Advertising Campaign with TikTok Ad Placements
6. Analyze and Scale Carefully
Once your campaign starts running, don’t rush to make changes. TikTok’s system needs time to learn what’s working. If you adjust things too early, you might interrupt the learning process and slow down performance. You should wait until your ad group has enough data, usually after about 50 conversions, before making any big decisions.
When it’s time to scale, go step by step. Increase your budget gradually, about 20 to 30 percent at a time, and give the system a day or two to adjust. Sudden jumps can throw off delivery and make your results unpredictable.
Common Mistakes to Avoid When Using TikTok Auction Ads
Even small mistakes can hurt your ad performance or make you lose auctions on TikTok. To help you get better results, here are some common errors to watch out for and how to avoid them.
1. Changing Bids or Budgets Too Often
It’s tempting to adjust your bid or budget as soon as you see a dip in performance, but doing it too often can hurt more than help. TikTok’s system needs time to learn and optimize your delivery. If you keep making changes, it resets that learning process and makes your results unstable.
Try to wait until your ad group has around 50 conversions before making big adjustments. When you do change something, go slowly and give the system time to adapt.
2. Skipping Creative Testing
Relying on just one ad is a common mistake. Even if it works at first, performance can drop quickly as users see it over and over. Without testing different creatives, you won’t know what drives results.
Use at least two to five variations in each ad group. You don’t have to change too much. Just try changing the hook, visual style, or message.
3. Manually Controlling Placements Too Early
Choosing where your ads appear might sound like a good way to stay in control, but it can limit your performance. If you manually select placements too early, you reduce the system’s ability to test and learn. This can lead to higher costs and missed opportunities.
It’s better to start with automatic placements and let TikTok figure out where your ads perform best. Once you have enough data, you can review the results and make smarter placement decisions later.
Wrap Up
TikTok Auction Ads give you the flexibility to control your budget, reach the right audience, and improve performance in real time, but only if you understand how the system works and set things up strategically. By following the tips in this guide and avoiding common mistakes, you’ll be in a much better position to win auctions, lower your costs, and get more out of every campaign.
If you need further expert help, you can explore Mega Digital’s TikTok advertising services to launch smarter campaigns and scale with confidence!
