TikTok ads have become one of the most powerful tools for businesses to expand their reach, particularly with the younger generation. As there are already over 1 billion active users, this platform presents a unique opportunity for any brand to reach an enormously active and engaged audience. However, one question stands above all for most businesses: how much budget do you need to assign to TikTok ads? In this detailed article, we will review how much budget you should allocate, which factors influence the costs of advertising, and how to optimize your expenses for the highest return on investment.
Understanding TikTok Ad Types
To understand how much $200 will help promote a brand on TikTok, it is necessary to be aware of the types of TikTok ads first. Moreover, each of them has a cost structure, which directly influences the budget.
1. In-feed ads
In-feed ads are typical ads we see on Instagram and Facebook. They normally take the viewers to the landing page where the call-to-action buttons are presented. These ads are also skippable and can be up to 60 seconds long. This type of ad is the cheapest because of its unoriginality the structure of the ad and general characteristics, which makes it the best choice for small budget promotions.
2. Branded Hashtag Challenge
The Branded Hashtag Challenge is one of TikTok’s most engaging ad formats. It involves asking users to join a challenge by creating their content based on a particular hashtag. As user-generated content, these campaigns are among the most expensive.
3. TopView Ads
These ads are the first to be seen when users open the app. They are premium placements and are sometimes a bit more expensive but guarantee the largest reach.
4. Brand Takeover
Brand Takeover is a full-screen ad type that appears after a user opens the app. The ad can be a static image, a GIF, or a video, but it offers an immersive experience. The biggest drawback is that it is also one of the most expensive options.
TikTok Ad Costs
There is no standard answer to how much you will need to budget for one ad on TikTok. The overall cost will depend on several factors, and knowing them should help you allocate the budget effectively.
1. Target Audience
If you want to attract younger people to your ads, for example, focusing on the 18-24 audience will need a greater budget as they are TikTok’s largest group of users. Simultaneously, targeting the more passive 30-39 portions will reduce costs, but the chances of getting to them may be low.
2. Ad Format
As described earlier, the type of ad format selected is another driver that affects the cost of your ad. In-feed is generally cheaper, while Branded Hashtag Challenges and TopViews are the most costly. At first, it may be a better idea for companies with closely tied budgets to start with the cheapest option and gradually switch to more expensive models.
3. Objectives of the Campaign
What affects your brand’s campaign budget is the objective of the campaign. Whether you want brand awareness, lead generation, or just sales, campaigns that aim at getting conversions are costlier than those that intend to bring in traffic to your website. This is because the platform will optimize conversion campaigns to deliver the ad to higher-intent users; thus, it will cost more.
4. Placements and devices
First, your advertisement will depend on whom it is targeting and where you are going to place it. For instance, a video ad will cost more than an image ad, and paid iOS app user acquisition will also cost more than on Android due to its superior quality audience. Second, there is the right-hand column placement that costs less than the newsfeed, so you will be saving if you go for it.
5. Bid Strategy
TikTok provides different bid strategies, including CPC, CPM, and CPV. Each of them calculates the cost in a specific way, so the chosen strategy will affect the amount the user will spend. For example, CPM ads are less about driving performance and more about maximizing reach, which affects the final cost.
How Much Should You Budget for TikTok Ads?
Now that we have covered the different factors influencing TikTok ad cost, let us break down the typical budget allocation for businesses of different sizes.
1. Small Businesses
For small businesses that are just starting on TikTok, the recommended budget can vary between $50 and $500 per campaign. As a small business, it is recommended they focus on in-feed ads and test different creatives to figure out what works best for them. Because the platform has a very low minimum spend requirement of $20 per day, one can afford to start small and scale up once they start seeing results.
2. Medium-Sized Businesses
Medium-sized businesses have a slightly higher level of budget flexibility, ranging from $1,000 to $10,000 per month. In this case, a combination of in-feed ads, branded hashtag challenges, and maybe TopView ads will be the best solution. It will ensure greater reach and greater impact from branding a certain product.
3. Large Enterprises
Large enterprises with gigantic budgets can reach $10,000 and more per month. Here it seems reasonable to use premium ad formats, including brand takeovers and branded hashtag challenges, to ensure dominance over other companies. At the same time, such companies can resort to long-term strategies and incorporation of ads running on TikTok in their general digital marketing mix.
Optimizing Your TikTok Ad Spend
To get the most out of your TikTok ad budget, consider implementing the following strategies:
1. A/B Testing
Carry out a variety of ad formats to see what drives the best results. Testing different creatives, messaging, and calls to action will enable you to refine your campaigns and increase your return on ad spend.
2. Retargeting Campaigns
Use your pixel to create retargeting campaigns and display your ads to people who have previously interacted with your brand but haven’t converted yet. This will enable you to capitalize on high-intent users.
3. Influencer Collaborations
One option for your friends to interact with the TikTok community could be partnering with influencers, who can help them raise awareness of the products or services. Influencers may trigger the followers to genuinely engage with the ads and potentially make a purchase if the influencer’s profile resonates positively with your brand’s values. This will require a certain budget, but a good influencer will provide a higher engagement rate.
4. Monitor performance metrics
Use TikTok’s extensive range of analytic tools to check if the ad is being the right investment. Among the most useful metrics are CPM, CPC, and an engagement rate long with assessing how much money your campaign is spending.
Conclusion
The proper budget for TikTok ads should depend on numerous factors, such as business size, ad goal, and target audience. Carefully consider each of these elements to optimize your ad spend through better results that A/B testing, retargeting, and cooperation with influencers may bring. The best way to start is with a smaller budget to test different strategies and, in case of success, increase the investment.
