There’s no such thing as a free lunch, and that can be applied to social media marketing. Advertising on TikTok is no exception. To get your brand in front of the 1 billion monthly active users, you’ll have to open your piggy bank. Advertising on TikTok costs money, but most businesses can find a way to make it work within their budget.
Before you get started, you might still like to know how much you can expect to spend on TikTok advertising. After all, budgeting is an important part of any marketing campaign. The answer, like many things in life, is “it depends.” You can advertise on TikTok through a self-serve ad platform, an influencer, or one of the best TikTok marketing agencies (like us). The cost of your ad campaign will depend on various factors. This includes but isn’t limited to the type of campaign you’re running and the objectives you’re trying to achieve.
Let’s take a closer look at each of these factors. It’ll give you a better idea of what you can expect to spend on TikTok advertising.
What Factors Impact the Performance of Your TikTok Campaign?
We can’t talk about campaign costs without talking about campaign performance. After all, the whole point of advertising is to generate results for your business. The cost of your campaign will ultimately be determined by how well it performs. Even if your ad spend is small, you won’t achieve good ROI if your campaign isn’t generating any results. But if you drop $10,000 on a TikTok ad campaign that generates $100,000 in sales, you’re enjoying a 10X ROAS.
However, not everyone will experience a wildly successful campaign that generates this type of incredible ROI. Most businesses will see a more modest return, somewhere in the range of 1.5-2.5 ROAS. So, if your campaign generates such a ROAS, it could still be considered successful. But what determines success? How can we predict how well a campaign will perform? Advertising on TikTok costs money, and you want to be sure that your campaign is generating results that justify the spend. The number of influencing factors is vast, but here are some of the most important ones.
The Demographics of Your Audience
When we talk about demographics, we’re referring to the characteristics of your target audience. This includes factors like age, gender, location, interests, and more. If you’re targeting teenagers with your ad campaign, expect to see different results compared to targeting middle-aged adults. This is because different groups of people respond to different types of content differently.
For example, you’re selling a new type of phone case that can charge your phone wirelessly. You might assume that teenagers would be the most interested in this product. However, this is a big assumption. How do you know that men in their 40s are not the biggest group of people buying wireless phone chargers? This demographic might have a smaller presence on TikTok, but targeting them could also deliver greater ROI for your campaign. If you get your target audience wrong, your campaign can fall completely flat. The size of the audience and country you’re targeting can make all the difference.
We can’t emphasise enough the importance of performing some kind of market research before you launch your ad campaign. You need to target your campaigns with precision, toward the people who are going to actually buy your product or use your service. Failing to do this can result in a bloated ad spend with little to show for it.
“For example, countries like the United States and the United Kingdom have a higher CPC rate than countries like India and Pakistan — sometimes 100X higher. At House of Marketers, we managed to achieve a CPC rate as low as $0.02 for one of our Pakistan traffic campaigns, which shows the huge difference in costs. Targeting countries with more affluent populations costs more.”
Location, Location, location
Campaign performance and cost are tightly linked to the location of your target audience. Certain countries are always going to present a higher Cost-Per-Click (CPC) rate than others. This is due to a number of factors, including the average income of the country, the cost of living, and the level of competition.
For example, countries like the United States and the United Kingdom have a higher CPC rate than countries like India and Pakistan — sometimes 100X higher. At House of Marketers, we managed to achieve a CPC rate as low as $0.02 for one of our Pakistan traffic campaigns, which is pretty incredible. This huge difference in CPC between locations can be explained pretty simply. The average person in the US or UK has more disposable income than someone in the latter two countries. As such, they present more opportunities for ROI. This means that advertisers are willing to pay more for clicks from these countries, which pushes up the CPC rate.
Size of Your Audience
The size of your audience is going to have a direct impact on the performance of your ad campaign. If you’re targeting a very small niche audience, you can expect that fewer people will see your ads. This is going to result in a lower number of clicks and, ultimately, more modest returns. Conversely, if you’re targeting a large audience, you can expect to see a higher number of clicks.
However, this doesn’t necessarily mean you’ll see a higher ROI. Remember, it’s not just about the number of clicks that you get — it’s also about the quality of those clicks. Just because you’re getting a lot of clicks, doesn’t mean they’re all going to convert into customers or leads.
The duration of your ad campaign is also going to have an impact on performance. If you’re running a short campaign, you might not give yourself enough time to see results. This can lead to a short, expensive campaign with little to show for it. On the other hand, if you run a long campaign, you might end up overspending and not seeing the results you want. So, it’s important to find a balance. The campaign duration should fit your budget but also give you enough time to reach enough people to generate ROI.
It’s also important to note that slightly longer campaigns will generate more data. This will give you a chance to tweak and optimise your ads for better results. You can also use this data to inform future ad campaigns, giving you a significant advantage.
Date & Time of Your Campaign
Something that’s often ignored when people are planning their ad campaigns is the time and date that they launch them. These aspects can actually have a pretty big impact on your results. If you’re targeting people who are more likely to be online during the daytime, launch your campaign accordingly. Launching it in the middle of the night instead, is unlikely to deliver the intended results. The same can be said for the day of the week. Some businesses get great results by running their ad campaigns on weekends. Others find that weekday mornings work best. It really depends on your target audience and when they’re most likely to be online.
Additionally, there are some times of the year when people are more likely to spend money than others. However, the patterns are not always as obvious as you might think. For example, you might assume that people are more likely to spend money around Christmas time. This isn’t necessarily the case though. Sure, if you’re in the business of selling Christmas turkeys, you’re probably going to do quite well in December. But apart from a few niche businesses, January is actually the biggest spending month of the year.
It’s the month of new beginnings and this doesn’t just apply to gym memberships. People take up new hobbies, they start new jobs, they move to new houses, and they buy new things. Advertising during this time can be extremely effective if you know what you’re doing.
Likewise, if you’re looking to run your ads during Black Friday, you can expect more competition and heightened costs because of it.
Your Advertising Budget
Yes, that’s right, your campaign is likely to perform better the more you spend on it – because the algorithm will favour you and value as a big spender on the platform. Shocking, I know. If you can afford to pay for the likes of Charli D’Amelio to shill your skincare products for you, whilst spending $500K+ per month on ads, then you’re probably in a great position. But for the rest of us, we need to be a bit more strategic. We all know that advertising on TikTok costs money, but how much should you actually be spending?
The key is to spend enough to reach your target audience but not so much that you’re overspending and not seeing a return. You have to find the balance on TikTok. Identify what the optimum spend and KPI is for you as a company. There are a lot of factors that go into this. As such, it’s very important to track your results and adjust your budget accordingly. It’s not just about spending a lot — it’s about spending wisely. If you have a smaller budget, you need to ensure every dollar counts. Less waste means more ROI. Test small, adjust, and scale-up.
What About Other Factors? (Outside the TikTok Algorithm)
We can tweak our target audience and budget all we want, but TikTok’s algorithm can only get us so far. A bad product is not going to sell, no matter how good your ad is. Likewise, if your ad itself is creatively lacking, you can’t expect exceptional results. Let’s break down some of the other factors that influence ad performance beyond the TikTok algorithm:
- Your website is subpar. This is a deal breaker. If you’re expecting people to buy something from you, it helps to have an excellent website that’s easy to use. A website that’s hard to navigate or takes forever to load is not going to convert visitors into customers. Or, even worse — a website link that doesn’t open. Invest in an exceptional web developer that knows the inner-details that makes someone purchase instead of leaving your website because it takes too long to load, or too difficult to navigate.
- Your brand doesn’t represent any value. “Brand equity” is a bit of a buzzword but it’s important nonetheless. If you’re selling products or services that nobody wants, then your campaigns will struggle. Your brand needs to stand for something that people actually care about. So ensure you have a USP (unique selling proposition). Stand for something and position your brand and products uniquely in your industry.
- Nobody has heard of your brand. If you’re starting from scratch, you must be prepared to spend a lot of time and money on building awareness. TikTok advertising is not like waving a magic wand. You need to be active on social media. You need to guest post on relevant platforms. You need to do whatever you can to get your name out there. Advertising is just one piece of the puzzle.
- Your product isn’t great. Even wildly popular brands have launched products that have flopped. It happens. If you’re selling products that aren’t up to scratch, then it doesn’t matter how much money you spend on advertising. People are just not going to buy it.
- Your app is full of bugs. Are you trying to launch an app or encourage in-app activity of some kind? Ensure your app is actually usable. If it’s full of bugs or if it doesn’t work properly, people are going to delete it. What’s more, you could have lost them forever. Get your app working correctly, before you spend on ads – even if it’s a prototype.
Breaking Down Advertising Costs Per Campaign Type
Most campaigns that we run for client brands, fall into a few main categories. Depending on your business goals, one type of campaign might be more suitable than another. As part of our work, we help companies determine the ideal social media marketing strategy for their brand, and then allocate budget accordingly. Each type of campaign has different associated costs, so it’s important to understand the differences.
Reach Campaigns for Reach and Impressions
What is a reach campaign? Reach campaigns are designed to get your ad in front of as many people as possible. The focus is on exposure rather than engagement. However, TikTok has features that allow you to target people who’re likely to be interested in your product or service. The Cost Per Mile (CPM) of this campaign type can vary widely depending on many of the factors mentioned above. Cost per mile refers to how much it costs to achieve 1000 impressions. For example, $1 CPM equates to $1 per every 1000 impressions achieved.
Typical cost: $0.75 – $6 CPM
Traffic Campaigns for Clicks
Traffic campaigns are designed to generate clicks and, ultimately, conversions. The key difference here is that you’re paying for each click rather than each impression. The Cost Per Click (CPC) is usually lower than the CPM, however this can differ. You can work out the CPC by dividing the amount spent by the amount of clicks you’ve achieved. For example, if you spent $5,000 and achieved 3,000 clicks, your CPC would be $1.67 ($5,000/3,000 = $1.67).
Typical cost: $0.01 – $3 CPC
Conversion Campaigns for Sales
Conversion campaigns are, as the name suggests, all about conversions. The focus is on getting people to take a specific action. This could be making a website purchase, increasing website checkouts, signing up for a newsletter, or subscribing to a service within an app and lots more. TikTok uses conversion tracking to help you to measure the results of your campaigns and optimise accordingly. The cost of this campaign type varies depending on many factors, including your conversion rate and the value of your product or service. The costs associated will be highly dependent on factors such as brand awareness, your strategy, and the product itself.
Are you selling something that people might purchase immediately (such as clothes or cosmetics)? Or are you selling something that people need to think about before buying (such as a holiday)? If it’s the latter, you may need to also consider a retargeting campaign to recapture people who didn’t convert immediately.
Typical cost: $2 – $200 Cost-per-Acquisition (CPA)
App Install Campaigns for Driving Installs
App install campaigns are designed to get people to download and install your app. From our personal experience at House of Marketers, we’ve seen a significant correlation between budget size, available audience size, and the amount of time required to fulfil the campaign. It’s also important to note that iOS campaigns tend to be 40-60% cheaper than Android campaigns, in most cases.
Typical cost: $0.50-$5 Cost-per-Install (CPI)
You can check out 9 of the best app install campaigns from 2022, here.
App Install Campaigns for Driving In-app Engagement & In-app Purchases
This campaign type is designed to get people to install your app but you can also use it to optimise towards in-app purchases. The focus is on in-app engagement and, ultimately, ROI. There are many variables to consider here. Will you be using a retargeting strategy? Targeting people who’ve already downloaded the app will have a different result than a campaign that aims to increase installs and engagement in tandem. Also, what are the costs of in-app purchases? What is the user journey like within the app? Do you have a notification strategy? All of these factors will affect your costs.
Typical cost: $0.01 – $30 CPA
Video View Campaigns for Video Views
You may have guessed it — video view campaigns are designed to increase the number of views for your videos. The focus is generally on increasing exposure and brand awareness. The cost varies depending largely on the length of your video, the quality of your video, and your targeting strategy.
Big Industry Insight: We’ve actually noticed that using reach campaigns instead of video view campaigns can actually deliver you more video views. That’s one reason we tend to avoid video view campaigns. In our experience, we’ve noticed that the algorithm is not as powerful for this campaign type. Maybe by the time you read this, TikTok may have fixed this, however.
Typical cost: $0.75 – $6 per 1,000 video views
Managing Advertising On TikTok Costs With a TikTok Marketing Agency
As a team that’s been in influencer marketing since 2015, we’ll always recommend working with a TikTok marketing agency (shameless self-promotion, I know). The reason for this is simple — we know what we’re doing, and can help you skip the hurdles most entrepreneurs and intrapreneur – Not only that you have the peace of mind knowing that someone is going to run your campaigns to a high level for the long-term. We offer a full-service solution that includes everything from creative concept development, influencer management and video production to campaign management and reporting. We also have a team of experts in each field, on each platform who can help you optimise your campaigns for maximum ROI. If this sounds like something you’re interested in, please feel free to get in touch.
House of Marketers (HOM) is a leading TikTok Marketing Agency. Our global agency was built by early TikTok Employees & TikTok Partners, which gives us the insider knowledge to help leading brands, like Redbull, Playtika, Badoo, and HelloFresh win on TikTok. Want us to convert more of Gen Z and Millennials with TikTok? Get in touch with our friendly team, here.