Why bidding matters

Introduction to Bidding

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. In order to help you better navigate the world of auction ads, we've come up with the following guide to help set up your campaigns for success, choose an optimal bidding strategy and maximize campaign efficiency. 

Why does bidding matter?

Bidding ensures that you’re keeping your cost per acquisition in check. If you bid higher than your competitors, then of course you’ll be in a great position to win that ad inventory, but you can run into the trap of bidding too much and risk overspending. 

Of course this is just a simplified example of why bidding is important. On TikTok, you have the option to select from multiple bidding strategies that can be optimized based on your goals. And keep in mind, different types of brands will have different bidding strategies. 

App developers who want app installs will want to optimize their campaigns for “App Install” as an objective. Or, more granularly, if this app developer is looking to pay for an ad on TikTok whenever a user takes a specific action within the app, they can even optimize their ad campaign budget using TikTok’s “App Event Optimization (AEO)” as a target goal. 

Brand advertisers, on the other hand, may want to generate impressions for their new product at a specific cost. As such, they would run campaign using "Reach" as the optimization goal and use a bid cap to enter a maximum amount for how much they willing to pay for a thousand impressions

So, when you select a bid type, it’s telling TikTok how you want to achieve your optimization objective. As you plan your next campaign, think about bidding as a tool that you can use to set the pace of how TikTok should go about reaching your goals.

Pro tips to keep in mind

Bidding is as much of an art as it is a science. So, to offer the best chance to optimize your budget, we’ve come up with some key tips for you to keep in mind when selecting your bidding strategy.

Don't Constrain Yourself - There’s no perfect solution when it comes to reaching your target goals. Rather there are solutions that will help you to optimize your spend. For some brands, the cost per goal isn’t as much of a priority as metrics such as engagement. Likewise other brands may pay closer attention to each dollar that’s spent and who is seeing their ads. But it’s important to remember that the more control you maintain over costs, the more constraints you place on our platform to find lower cost opportunities for your desired outcomes. 

Know your Target Audience - The more you know about who you’re targeting, the easier and more cost-effective it is for you to optimize your budget. The more data you have about an ad group, such as conversions or clicks, leads to better delivery predictions. For example, if you’re optimizing for website conversions, set up your ad groups so that they have a higher chance of capturing more conversions.

Set a High Budget-to-Bid Ratio – When bidding at the onset of a campaign, we recommend setting your daily budget to be many times larger than your bid. The chances of striking a rock bottom bid price for the highest quality customers are low – especially at scale. In reality it takes time to find the ideal group of target users. You don’t want to restrict TikTok’s optimization model from finding high quality customers at a reasonable bid price. If your bid price and budget is too low, you may get some conversions but could end up spending more money showing your ads to non-converting users. Your competitors could even be outcompeting you for the same ad inventory. Or, the pace of your ad campaign might be more sluggish than anticipated. Therefore, we recommend you to set as high of a budget-to-bid ratio as possible.

Bidding Strategies

There are several bidding strategies available on TikTok Ads Manager, each with their own advantages. Depending on the strategy you select, TikTok's auction ads system will optimize its algorithm to ensure that you're either within your daily spend limit or cost per result. If you have very specific cost per conversion targets, you'll use a Cost Cap or Bid Cap strategy. If you're looking for volume, but can be flexible with your CPA, you'll want use Lowest Cost bidding strategy.

Cost Cap & Bid Cap (Previously Standard Bid)

When using Cost Cap or Bid Cap, you're setting a specific bid price that you're willing to pay per optimization goal (clicks, conversions, impressions, etc.). This is great for controlling the cost per acquisition (CPA), but there's a caveat. Your CPA may fluctuate on a day-to-day basis, as it's also dependent on the performance of your competitors. In addition, your budget may not be used up by the end of your campaign as competitors could be bidding at a higher price and outbidding you, thereby limiting the available inventory you might be eligible to win.

Lowest Cost (Previously Max Conversion)

This bidding strategy does not restrict your budget based on a cost per conversion. With Lowest Cost, you're only setting a total campaign budget. TikTok's auction ads will automatically be adjusted to maximize the volume of conversions. It also offers a more stable daily spend as you're looking to determine your true bid or cost calculation. Additionally, Lowest Cost can help your budget spend faster than other bidding methods.

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. Others simply want to acquire new app downloads. Bidding Options are designed to further tune a TikTok advertising campaign that best fits their marketing goals.

CPM - Cost Per Mille or Cost Per Thousand impressions tell 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 (CPV) will charge an advertiser for every view on a video or predefined interaction. Also used by brands that want to promote their videos, for example an official Branded Hashtag Challenge video, a CPV will optimize your ad campaign around the cost of a single video view.

CPC - Cost Per Click (CPC) 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 - While CPM helps get you the best price per impression, Optimized Cost Per Mile (oCPM) 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.

We've only just touched the surface of advertising on TikTok. But these tips and tricks can help give you a clearer idea of the type of bidding strategies you'd want to use before you dive head-first into running your first TikTok auction ads campaign.

For more information on bidding, visit the TikTok For Business Help Center.