Why bidding matters—and how to get it right

With so many options available, it's important to choose the optimal bidding strategy for your TikTok auction ads. Your bid, among other factors, represents how competitive you want to be in the auction to get your desired outcome.

To help you better navigate the world of auction ads, this article provides an overview of bidding on TikTok and equips you with the information that you need to make effective bidding decisions based on your marketing goals.

Why does bidding matter?

TikTok's auction ranks ads based on user relevance and bid price. A strong bid can help you increase reach for your ads and maximize the volume of conversions you intend to drive on TikTok. TikTok provides a range of optimization goals which help our system understand the desired actions that you want to drive, and bidding strategies which guide our system on how to bid for these actions.

Keep in mind, different types of brands will pursue different approaches to bidding. The most important thing to remember is that your bid strategy should align with your campaign goals. For example, app developers who want to maximize app installs within their budget will want to optimize their campaigns for App Install as an objective and use the Maximum Delivery bid strategy.

On the other hand, advertisers looking to maximize upper-funnel impact using Reach, video views or community interaction objectives should aim to maximize budget utilization and exert fine-grained control over their costs — which is why we strongly recommend they use Cost Cap bid strategy.

Bid strategies: Cost Cap vs. Maximum Delivery

Bidding strategies act as guidelines informing our system how to bid for you in the ad auction—by managing parameters like cost per result and budget utilization.

Think of bidding strategies as the "autopilot" guiding how the system bids within each campaign created by an advertiser.

Cost Cap

Cost Cap bidding is a spend-based bid strategy that allows advertisers to maximize results while maintaining control over their average cost per action over the campaign. TikTok's systems will then optimize delivery in a manner where the average CPA over the campaign is equal or close to the target CPA. This bid strategy helps cost-sensitive advertisers achieve predictable CPA outcomes on our platform, especially during competitive periods like the Holidays, Black Friday, Mother's Day and Father's Day when costs tend to be higher.

Cost cap bidding allows you to:

• Achieve efficency goals: Optimize towards a target CPA while maximizing budget utilization.

• Optimize for actions: Prioritize customers most likely to take an intended action.

• Set budget and target CPA: CPA may fluctuate day-to-day, especially during high volatility seasons, but the average CPA will be equal or close to the target CPA.

Maximum Delivery

Maximum Delivery is a spend-based bid strategy that allows advertisers to maximize conversions within their defined budget. This bid strategy does not require advertisers to set a target CPA and is ideal for those who prioritize volume of conversions as opposed to managing cost per result.

Maximum Delivery bidding allows you to:

• Achieve volume goals: Maximize volume of conversions within a defined budget.

• Optimize for spend: Prioritize all customers in your target audience to maximize budget utilization.

• Set budget only: CPA may fluctuate day-to-day due to auction competitiveness, but you will obtain the maximum volume of conversions within the set budget.

Choosing a bid strategy

Here are some questions to help you choose the approach that fits your goals.

• Are you prioritizing upper-funnel objectives (reach or video views)?

  • If yes, we suggest using Cost Cap with the suggested bid

• Are you prioritizing conversion volume over controlling the average cost per result?

  • If yes, we suggest using Maximum Delivery

  • If no, we suggest using Cost Cap and setting your bid as your target CPA.

Bidding options

While setting a bidding strategy tells TikTok whether it should pay more attention to each dollar spent or to maximize the volume of conversions, not every advertiser has the same marketing goal. Some want to maximize brand awareness, while others simply want to drive new app installs. Bidding options are designed to further tune a TikTok advertising campaign to best fit your marketing goals.

CPM (cost per mille or cost per thousand impressions) tells you how much you'll spend per thousand impressions or times that your ad is shown. This bidding option is a favorite among larger brands like food & beverage or automobile companies that seek to maximize top-of-funnel awareness for their consumer products.

CPV (cost per view) will charge an advertiser for every view on a video or predefined interaction. This is often used by brands that want to promote their videos. For example, a CPV can optimize your ad campaign around the cost of a single video view.

CPC (cost per click) is well suited for ad campaigns on TikTok that seek to drive traffic to a landing page outside of TikTok, whether a brand site or an e-commerce page. Using a CPC bidding option, TikTok optimizes for each click as a goal. So for every counted click on an ad, the advertiser is charged.

oCPM (optimized cost per mille) will get you the best price per conversion. If you're an app advertiser looking to acquire new users, you'll want to run oCPM campaigns.

Pro tips to keep in mind

Align your bid strategy with your business objectives. Cost Cap bidding is effective in generating conversions while ensuring stable and predictable CPA outcomes. Maximum Delivery is effective in maximizing conversions within your defined budget.

Use Hybrid Bidding to switch bid strategies for active ad accounts. Hybrid Bidding allows you to align your bid strategy to seasonal priorities without launching new ad groups, saving effort and time. For example, you can switch from Cost Cap to Maximum Delivery during peak sales events when maximizing the volume of conversions is a priority and from Maximum Delivery to Cost Cap during business-as-usual periods when you need to prioritize efficiency.

Test and learn! Your business is unique — invest time in experimentation to see what works best for your unique business goals.