May 8, 2021

Is it time for brands to look into TikTok ads?

With over 2 million downloads and 800 million active users per month,  Tik Tok has grown to become one of the most popular apps in the world. It exploded over the last couple of months — especially during the Covid-19 pandemic. Celebs and people of all ages alike joined in on the lip-syncing, scene recreation phenomenon.

As the app is growing rapidly with a massive follower base of audiences across 150 countries around the worldmany companies are tapping into Tik Tok to increase brand awareness. Perhaps it’s time for you to do the same. Here’s a quick overview of TikTok, how ads will work on the platform and what a brand can gain from it.


What is TikTok? 

TikTok is a video-sharing social network that allows its users to create, share, and discover short videos. It is often referred to as a “lip-syncing” app, but as it evolves, it is now more known for its act-out memes backed with music and other sound clips. 

The platform allows users to create and consume fun and engaging video content through its various video editing features — making it easy for everyone to participate. It’s no wonder that consumers are now creating new and innovative content more frequently on TikTok. Brands, on the other hand, are jumping on the bandwagon to reach a large community of users who have a liking for entertainment. 

Who uses TikTok?

The audience on TikTok is generally a lot younger compared to other social media platforms with 41% of them aged between 16 and 24. So if you’re looking to engage with a younger audience, TikTok is the place to be. Furthermore, with people spending almost 52 minutes a day on the app, your brand has a better chance of getting noticed. To compare, U.S. Android users spend 53 minutes on Instagram, 58 minutes on Facebook, and 49,5 minutes on Snapchat.

Even though the app is still more popular among teens, the older population on TikTok is also growing rapidly. In less than 18 months, the number of US adult TikTok users grew 5.5 times. So it is definitely important to present content that can fit everyone when you are planning your TikTok strategy. 

Like all other social media platforms, TikTok has a very global outlook with 39 different languages. It has become very popular in Asian countries especially China. India is also a very highly engaged country with 119 million active users. Besides these two countries, it is especially loved in Cambodia, Indonesia, Japan, Malaysia, Thailand, and Vietnam. 

How do ads work on TikTok? 

One of the most important factors when advertising on TikTok is to create engaging ads and continuously optimise them to avoid creative fatigue due to how the content is consumed on the platform. This helps to keep the CPM as low as possible. 

However, TikTok has been ahead of the curve by offering a Video Creation Kit that allows you to easily create engaging videos with a variety of video templates. So there is no need to hire an expensive professional video editor as you can easily do it yourself. 

You may be thinking that it may seem like a lot of work! But don’t worry, TikTok has also found a way to make it a lot easier for you. They have created a system called the Automated Creative Optimisation that finds high-performing combinations of your creative assets. So all you have to do is find a few videos or images, write a couple of ad copies and choose your CTA (Call to Action). TikTok will then automatically create a few different ad variations. However, to avoid ad fatigue and the decrease of the ad engagement we’d advise marketers to refresh their ad assets once in a while with new creatives.


How does TikTok rank my ads?

Every ad platform employs an algorithm to determine what ad gets shown to each specific user. TikTok is of course no different. 

To determine ad deliverability TikTok uses a metric called Ad Rank. This is a combination of the click-through rate, the conversion rate, and your bid price. So, to put it in another way, TikTok looks at the quality of your ads and the likelihood of people interacting with your ad (ad relevance) in combination with how much you are willing to pay.

However, compared to other advertising platforms TikTok also includes other parameters such as engagement rate and watch time. In the end, an ad that keeps the consumer engaged and allows them to stay on the app will most likely get prioritised.  


But what about the money?

One of the cons of advertising with TikTok is the relatively high budget you need to allocate before being able to advertise on the platform. While bigger brands may not find this a problem, it can be a high barrier of entry for smaller businesses to use this app as an advertising platform. 


There are two ways of setting up your budget; lifetime or daily. You can change it anytime during the campaign period, and TikTok will only spend as much as you set your budget at. The minimum budget at the campaign level is $500 while the daily budget on the campaign level also has to exceed $50. This is to ensure you have a sufficient budget for your campaign.


For the ad group level, the total minimum budget is $50 while the daily minimum budget has to exceed $20 per ad set. This does not give you a lot of room to optimise without having a big budget. So if you only want to spend $50 a day to test the platform, that would mean that you can only create 2 ad sets, targeting 2 different audiences. 


What can we gain from TikTok ads?

In general, advertising on TikTok is a lot cheaper compared to other platforms. With a CPM (cost-per-thousand-impressions) of almost $1, it is a lot lower than Facebook that has an average CPM of almost $4. This can be great if you are looking to increase awareness of your brand as more people will be able to see your ad at a very competitive price. 


However, the CTR (click-through rates) is much lower due to the way the content is set up and consumed. With people scrolling down the home page, the focus of being on this app is mainly watching funny videos and not leaving the app to purchase products. This makes it more expensive for advertisers to drive conversions further down the funnel. So if you are looking to increase conversions, advertising on TikTok can turn out to be a very expensive affair. 


As advertising on TikTok is still relatively new, it can be difficult to figure out what is up and down. If you are interested in getting started send us an email at [email protected] and we can help you to navigate this new platform!

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