How TikTok drives sales for CPG brands
The CPG industry is changing, with increased fragmentation and reduced loyalty impacting product discovery and sales. But with 83% of users turning to TikTok for product reviews, TikTok is at the forefront of this discovery shift.¹
That's because TikTok is all about surfacing content that is relevant to each user, which helps individuals find products they're more likely to engage with and share. And that engagement drives better ad performance and continued discovery.
We know that everyday household brands can feel at home on TikTok and connect with their audience in a meaningful way, but we wanted to better understand the impact our platform has on driving sales for CPG brands. Using Marketing Mix Modelling (MMx), an industry-leading modelled approach to measure multi-media ROAS and optimise spend, we collaborated with Nielsen to understand and measure the impact of TikTok campaigns on offline sales in France, Germany, Italy, Spain and the United Kingdom for food & beverage and beauty brands.
TikTok provides a measurable and significant impact on brand sales
The study found that paid TikTok ROAS ($1.73) is positive and outperforms other digital media (x1.9) and traditional media (x3.5)². In other words, advertisers that spend $1 on TikTok had a return on ad spend of $1.73. Result!
Digging deeper into each vertical, the paid TikTok ROAS ($2.10) for food & beverage brands is also positive and outperforms other digital media (x2.3) and traditional media (x3.8). Similarly, paid TikTok ROAS for beauty brands ($1.50) is positive and outperforms other digital media (x1.6) and traditional media (x3.2).
Despite TikTok achieving a higher ROAS, the study also found that CPG and beauty brands only spent around 1-6% of their media budget on average on TikTok. Thus, brands should more fully integrate TikTok into their marketing strategies to see higher impact with less spend and drive improved campaign performance.
The study also found that while reservation and auction formats are both consistent at driving sales, reservation ads drive higher effectiveness on TikTok and auction ads drive a higher overall ROAS. (For this study, effectiveness is defined as incremental value ($) driven by each format per 1000 impressions.)
Key learnings
The study showed that TikTok drives higher impact with less spend for food & beverage and beauty brands when compared with other digital and traditional media. When planning campaigns on TikTok, keep in mind that:
Our auction format increases ROAS
Our reservation formats increase ad effectiveness
Both paid and organic activity on TikTok increases ROAS
To use TikTok data in your own Media Mix Modelling, please contact your TikTok rep to get started, or dive into the TikTok for Business blog to learn more about our robust measurement solutions.
👉 Click here to learn more about the CPG opportunity on TikTok.
Sources
1. TikTok Marketing Science EU Understand the role of TikTok across CPG 2020, conducted by research and Insights
2. TikTok Marketing Science, CPG F&B and Beauty Media Mix Model meta-analysis, EU5, conducted by Nielsen, 2021