TikTok CPM: Understanding Rates, Costs & How to Optimize

You’ve put a lot into your TikTok ad campaign, but when you check TikTok Ads Manager, the CPM is higher than expected. High CPMs are a common challenge for TikTok advertisers, raising concerns about budget and campaign success. What if there’s a way to reduce your TikTok CPM and maximize your ad budget? This article will show you simple techniques to optimize your TikTok CPM, ensuring you reach your target audience without spending more than necessary. And don’t forget to see our successful case studies at the final!

What is TikTok CPM?

TikTok CPM, which stands for Cost Per Mille (or Cost Per Thousand), is a way to measure the cost of TikTok ads for every 1,000 views. The minimum TikTok CPM is set at $0.50, and you can establish your maximum CPM for your campaigns. Notably, TikTok’s CPM is usually lower than what you’d find on other platforms like Facebook and Instagram.

Imagine you’re running an ad on the internet. CPM, or Cost Per Mille, is like a measure of how much it costs you to show your ad to a thousand people.

• Low CPM: If your CPM is low, it means you’re getting a good deal. You’re able to show your ad to a lot of people without spending much money. It’s like getting a lot of bang for your buck.
• High CPM: If your CPM is high, it means you’re paying more to reach a thousand people. This could happen for various reasons, like if there’s a lot of competition for ad space, if you’re targeting a very specific group of people, if your ad is in a prime location, or if your audience is unique and harder to reach.

Breaking down TikTok ad costs, different sources offer varying insights. TuffGrowth notes a cost of $6.06 for 1,000 ad views, JungleTopp suggests a CPM as low as $1.82, and Digiday reports a 2020 CPM of $1.00.

Why does TikTok CPM is important?

Support predict bidding cost to run ads

If you’re planning to launch TikTok bidding ads like In-feeds or Spark ads, it’s important to understand how TikTok uses CPM for bidding. When setting up your campaign, you have the option to set a daily budget or skip it, but we recommend that small businesses should input their budget. Here are some key budget requirements to keep in mind before running ads:

• Campaign level minimum budget: Ensure your daily and total budgets meet the minimum requirement of $50.
• Ad group level minimum budget: The daily budget for ad groups should be over $20.

When creating your ad group, TikTok will suggest a CPM based on your budget. This automatically fills in, optimizing your ad’s delivery to reach as many people in your target audience as possible.

Measuring Ad Reach and Exposure

TikTok CPM serves as a vital metric, offering a clear gauge of how far your ad resonates with the target audience and the cost incurred for that exposure. Monitoring CPM empowers you to make informed decisions, ensuring their ad spending aligns with your desired reach and engagement.

Evaluate campaign cost-effectiveness with CPM analysis

Once your ad is live, considering its cost-effectiveness becomes crucial. CPM analysis is a powerful tool that enables you to gauge their campaigns’ efficiency. By comparing CPM rates, you can identify options that yield the maximum impressions at the lowest cost, allowing for optimized allocation of advertising budgets and resources.

So, when you look at your CPM, you can decide if your advertising is cost-effective. If it’s low, great! You’re reaching a lot of people without spending too much. If it’s high, you might want to figure out why and see if there are ways to make your advertising more efficient.

Negotiating ad rates

With documented CPM data and industry benchmarks in hand, you’re ready to negotiate ad rates with TikTok. This strategic approach ensures you secure fair rates that strike the right balance between cost and the visibility you want.

Optimizing ad spend

Managing TikTok CPM wisely allows you to stretch your ad budgets and get the most out of your investment. By smartly targeting audiences, choosing effective ad formats, and bidding carefully, you can lower CPM and make your ad reach more efficient.

>>> Learn more: How To Optimize TikTok Ads: Guideline From TikTok Agency

How to calculate TikTok CPM?

To calculate TikTok CPM, you can use the following formula:

Explain: 

• “Total Cost” is the money you’ve spent on your TikTok ad campaign.
• “Total Impressions” is how many times users have seen your ad.

For instance, if you’ve spent $500 on your campaign and your ad has been seen 10,000 times, your CPM would be:

• CPM = (500 / 10,000) * 1,000 = $50

This means you’re paying $50 for every 1,000 views of your ad.

How much does TikTok CPM cost?

In 2023, the TikTok CPM average is around $9.50. However, this can vary based on factors like your TikTok ads target audience, the type of ad you’re using, and the time of year. For instance, CPMs tend to rise during busy advertising periods like holidays.

Here’s a breakdown of average TikTok CPMs based on different ad formats:

• In-feed video ads: $6.00 – $10.00
• TopFeed ads: $10.00 – $15.00
• TopView ads: $15.00 – $20.00

Factors affecting TikTok CPM

In addition to the factors mentioned above, several other factors can affect TikTok CPM, including:

• Target audience: The more specific your target audience, the costlier it might be.
• Type of ad: Different ad types have different costs—videos in feeds ads and TikTok Topview ads can vary.
• How much you bid: Higher bids can mean more views but at a higher cost.
• Seasonal: CPM can change during peak seasons, like holidays.
• Quality of ad: Good, relevant ads get better placements at lower costs.
• Competition: More competition for ad space can drive up costs.
• Geographic location: Costs can differ based on where your audience is located.
• Ad placement: Specific ad placements within TikTok can impact costs.

How to optimize TikTok CPM

Reducing TikTok CPM

Creating a fantastic TikTok ad is only part of the equation; when you share it matters too. Think of it like choosing the right moment to showcase your masterpiece. Here’s a breakdown of how timing can impact your TikTok ad performance, especially in terms of CPM.

• Know when your audience is active: Take a peek into TikTok analytics or other tools to find out when your audience is most active. Knowing their peak engagement times is key to getting your ad seen.
• Experiment with different days and times: Mix it up! Try different days and times to figure out when your audience is most receptive. People’s TikTok habits can vary, so testing different slots helps you find the sweet spot.

>>> Learn more: When is the best time to post on TikTok in 2024?

• Use TikTok analytics to your advantage: TikTok provides handy analytics tools. Keep an eye on when your content gets the most likes, views, shares, and comments. This data helps you understand what’s working and when.
• Consider time zones: If your audience spans different time zones, factor that in. Make sure your ad schedule aligns with peak hours in various regions, maximizing your reach.
• Aim for peak engagement: The golden rule is to run ads when engagement is soaring. More activity can mean more eyes on your ad, more interactions, and possibly a friendlier CPM.
• Check performance metrics: After trying different times, check the numbers. Look for trends in engagement, TikTok click-through rates, and any changes in CPM. This helps you fine-tune your posting schedule.

Enhance ad relevance

Relevance is crucial for keeping your audience interested in your ads. People won’t watch an ad that doesn’t connect with their needs. So, create engaging ads that address your audience’s problems and offer solutions. Make sure your ad is visually and audibly appealing with high-quality and authentic content. This content can boost user engagement, which is good for your CPM.

>>> Read more: Unfold the top 11 TikTok Video Ideas to captivate your audience

Check on ad performance frequently

To enhance the effectiveness of your TikTok advertising campaign, it’s vital to know how it’s performing in real-world situations. Installing TikTok Ads Manager early in your campaign creation process is key. This tool helps you identify the best audiences and strategies based on your goals, providing essential KPIs in return.

Before optimizing your campaign, focus on three essential tools offered by TikTok Ads Manager:

#1 Dashboard Page: A Quick Overview

This page gives you a summarized view of your campaign’s performance metrics across various ads. It helps you spot patterns and trends, guiding your content and strategy decisions.

#2 Campaign Page: Dive into Details

Move to the Campaign page to analyze specific details of each ad. Customize the metrics displayed by the Ads Manager, allowing you to explore areas of interest. Pay attention to the audience analysis, using specific dates and times for deeper insights.

#3 Reporting Page: Customize Your Insights

Save or print useful data and charts for further analysis. The reporting page in TikTok Ads Manager lets you tailor spreadsheets to your needs. Choose templates, create custom reports, and organize data for your team’s insights. Options include rows (campaign, ad groups, ads) and columns (CPM, CPC, CTR, etc.), along with time range, data order, and automated reports.

Pro tip: Use additional tools like TikTok Pixel or the TikTok Reach & Frequency ad buying method to enhance your analysis. With these insights, you can refine your strategy to better engage your audience, taking your campaign optimization to the next level.

Strategically plan ads planning

Planning your TikTok ads strategically is like creating a roadmap to make the most out of your budget. It affects deciding who you want to target, creating eye-catching ads, setting the right bidding strategy, and making adjustments as your campaign runs.

Also, strategic planning helps you bid wisely. Bidding too low might mean fewer people see your ads while bidding too high could waste your money. By aligning your target audience, creative content, and budget, you can set an optimal bid for better results.

Keep an eye on metrics like CPM, impressions, clicks, and conversions. This data helps you identify what’s working and where you can make improvements, making your ad campaign more effective over time.

>>> Read more: TikTok Ads Strategy 2024: Your Key to Marketing Success

Experiment with various TikTok ad formats

To optimize your CPM, you can experiment with different ad formats in the following ways:

• Test audience engagement: Try out various ad formats like In-feed video ads or Top-view ads to see which one resonates best with your audience. Different formats have different visual appeals and engagement levels.
• Understand format strengths and weaknesses: Each ad format has unique strengths and weaknesses. For example, in-feed video ads seamlessly blend into the user’s feed, while top-view ads have high visibility. Knowing these pros and cons helps you choose the right format for your campaign objectives.
• Adapt to user preferences and trends: TikTok’s user preferences and trends evolve.  Experimenting with different ad formats allows you to stay current, ensuring your ads remain engaging and effective in the ever-changing landscape.
• Identify cost-effective options: Different ad formats can have varying CPM rates. Experimenting helps you identify cost-effective options to reach your target audience without compromising engagement or conversions.

Choosing the best ad type depends on your goals:

• Brand awareness: Top-view ads is effective for high visibility and reaching a broad audience quickly.
• Driving traffic: In-feed video ads and top-view ads work well for directing traffic to your website, providing a clear call to action and a direct link.
• Generating leads: In-feed video ads can be effective for lead generation, incorporating forms or calls to action for user engagement.
• Increasing conversions: Both in-feed video ads and top-view ads can boost conversions by including compelling TikTok calls to action and persuasive messaging.

Explore our comprehensive ebook guide to navigate the overwhelming array of ad types on the platform and discover the right strategy for your business!

Experimentation is key. Use our e-book with TikTok’s analytics tools to monitor CPM, impressions, clicks, and conversions for each ad format. This data will guide you in identifying the most effective format for your specific goals.

Not all ad types work with personal ad accounts—you need an agency ad account for certain types of ads like Spark ads, TopView ads, Dynamic Showcase Ads,… It’s a simple way to get more advertising options and use specialized formats that might be restricted otherwise. Upgrading to a TikTok Agency account offers more than just optimizing your ad campaign and unlocking various ad formats. It’s a solution to tackle audience targeting issues and helps cut down on competitive budgets compared to personal accounts. Don’t miss out—consider making the switch now.

Case studies of businesses that have successfully optimized TikTok CPM

#1 From Facebook to TikTok: A Digital Marketing Odyssey with Mega Digital

• Industry: Retail & E-commerce (Healthcare and Fashion focus)
• Objectives: Drive sales for Max’s brands, and aid advertisers transitioning from Facebook Ads to TikTok Ads.
• Mega Digital’s Solutions: Tips and case studies, Whitelisted Features utilization.
• Achievements: $35,000 monthly ad spend per account, $1.66 CPA, $2.58 CPM.

>>> Read more about this case here.

Sailing to Success: Mega Digital’s Case with Mr. S

Case Overview

Meet Mr. S, a TED Talk speaker and seasoned entrepreneur with almost a decade of experience running his Marketing company. After working with MD and Fleur for just one year, he’s transformed his business into one of the top marketing companies in Iraq.

• Industry: Professional Services (Website Development, Digital Marketing)
• Objectives: Deliver cyber solutions efficiently on TikTok.
• Mega Digital’s Solutions: Workflow optimization, Business Continuity Planning, Survival Kits Template.
• Achievements: $10,000 monthly ad spend per account, $5.1K cost management, $1.65 CPM, $1.23 CPA, 4,100 conversions

>>> See more details about this case here.

Final word

TikTok CPM is an essential metric for measuring the cost-effectiveness of advertising on TikTok. By understanding how TikTok uses CPM, you can optimize your campaigns to reach your target audience at the lowest possible cost. But that’s not all. For complete direction tailored to your industry, business, and specific goals, reach out to Mega Digital. We provide expert advice to optimize your TikTok advertising and ensure maximum effectiveness for your campaigns. Your success is our priority. Contact us today for personalized insights and strategies.