If you are an advertiser or a digital marketer, “TikTok CPM” is probably a term you hear a lot. Despite being an important metric to assess advertising strategies, many are still clueless about its meaning and how it works.
Therefore, in this topic, we will explore the importance and implications of CPM on the popular video-sharing platform. Moreover, we’ll include tips and learning points from our own experience to ensure that you completely understand this metric.
Table of Contents
What is TikTok CPM?
CPM, which stands for Cost Per Mille (or Cost Per Thousand), refers to the cost advertisers pay for every 1,000 impressions of their ad. It represents the cost of reaching a thousand users with an ad, whether or not they interact with the ad.
How to calculate your TikTok CPM?
To calculate your TikTok CPM, follow this formula:
The final value you obtain using this calculation will represent the cost you incurred for every 1,000 impressions of your ad. It allows you to compare the cost efficiency of your campaign across different platforms, ad formats, or time periods.
Let’s imagine if you spend $500 in your ad campaign, and gain a total of 30000 impressions, your CPM is (500/30000)*1000 = $17/mile. This means you have to pay $17 per thousand impressions.
What does TikTok CPM mean for your businesses?
There’s no doubt that CPM is a crucial metric for the cost-effectiveness of your TikTok ad. So, you might be wondering: During which stage of the ad process that you’ll need to calculate your CPM? To answer your concern: CPM can be used as a bidding cost when setting up your ad group, while also serving as a metric to assess and monitor your campaign’s performance.
A bidding cost to run ads
If you plan to run TikTok Bidding ads such as In-feeds or Spark ads, remember that TikTok always uses CPM as a metric for the bidding method. During the campaign setting process, you can choose to either set your daily budget or skip it; however, we would recommend small businesses fill in your budget at this stage. So, keep in mind the budget benchmark that TikTok has required before you decide to run the ads:
- Campaign Level Minimum Budget: For both daily and total budgets, the minimum requirement is $50
- Ad Group Level Minimum Budget: Daily budgets for ad groups must exceed $20.
In the ad group creation, a suggested CPM will be filled automatically based on your pre-filled budget. This will allow your ad to be delivered to as many people within your audience range as possible.
You can feel free to remove the existing bid and replace it with a bid that is more suitable for your budget.
Assess the cost-effectiveness of the campaign
After publishing your ad, analyzing your CPM can help you assess the cost-effectiveness of your campaigns. Thanks to CPM, advertisers can determine which options deliver the most impressions at the lowest cost by comparing CPM rates. As a result, you will be able to optimize your advertising budgets and allocate resources more effectively.
A low CPM suggests efficient ad delivery and the potential to reach a larger audience within a given budget.
On the other hand, a high CPM indicates a relatively higher cost for every 1,000 impressions of the ad, which may be less cost-effective. It can be a result of various factors such as increased competition, specific targeting criteria, premium ad placements, or the nature of the audience being targeted.
What is the average CPM for TikTok ads?
The CPM range for your campaign will depend on the performance of your ads and their reach among TikTok users. So, if you’re wondering what is a good CPM for TikTok ads, our answer is simple: the lower, the better. However, it’s worth noting that, according to reports from many businesses that have run TikTok ads, the average TikTok CPM is around $10.
Advertising on TikTok at a $10 CPM is quite affordable compared to platforms like Facebook, Instagram, and YouTube. Facebook, which is a popular platform for advertising products, currently has a CPM of $14.4. Given TikTok’s potential to reach a wide audience, it’s no surprise that many businesses are redirecting their advertising budgets to TikTok.
How to get a low TikTok CPM?
Any advertisers who have run TikTok about 2-3 times would know that it is not easy to get a low CPM on TikTok. The number can fluctuate easily as it depends on both creative and scheduling elements. Therefore, to avoid getting a high CPM, you can consider trying some of our recommended tactics below:
Improve ad relevance
Relevance is the key factor that can keep or lose your audience’s interest, as no one would want to watch an ad that doesn’t speak to their needs. That’s why you need to create engaging ads that address your audience’s problems and offer the solutions they desire.
Besides good content that tackles their pain points, make sure your ad is both visually and aurally appealing. High-quality, authentic, and attention-grabbing content can increase user engagement, which in turn can positively impact your CPM.
Let’s look at this amazing Spark ad from @thewobbles, a crochet start-up founded by an AAPI couple in the US.
The ad effectively created an authentic experience for the audience by addressing the challenges faced by crocheters, which is why they could present their product positively and naturally. Additionally, the brand utilized various TikTok optimization tools such as CBO, VBO, and ACO to enhance the performance of its ad.
The results? The ad saw a 25% decrease in CPM and an 18% decrease in CPA! Impressive numbers thanks to relatable content and ad optimization.
Change ad regularly
One reason can also be that your audience has caught ad fatigue from seeing your creatives too many times. According to TikTok, you should refresh your creatives ideally once every 7 days or at least once every 2 weeks.
Schedule your ad strategically
You may have a good creative, but if your ad is uploaded during your audience’s inactive time, most of the effort can be wasted. Hence, we recommend you experiment with different times of the day or days of the week to figure out what is the best time to post on your TikTok.
By running your ads during peak engagement periods, you can potentially reach more users, increase interactions, and potentially lower your CPM.
Try different TikTok ad format
You can experiment with different TikTok ad formats available to identify the most cost-effective option for your campaign goals.
For small businesses with tight budgets, we suggest using Spark ads. Not only is Spark ad more cost-effective than other premium ad options, but the brand can also actually assess which videos are performing better to decide which would be run as an ad.
Studies also show that TikTok users tend to engage with Spark ads longer due to their authenticity, hence reducing the CPM.
But, does a low TikTok CPM alone determine your ad success?
It’s important to understand that CPM is only a small part of the equation. You may have a high CPM, but then a good profit margin. Does that mean you have to rebuild your ad from scratch again? Absolutely not! In the end, it all depends on your campaign objectives:
- If you aim to increase your brand awareness and reach, a low CPM can be an excellent determinator to see if your campaign is cost-effective.
- If your goal is to improve traffic for your website or your landing page, a low CPC is what you should pay attention to.
- Finally, if your ultimate goal is about sales and profit, you should aim toward a high ROAS.
For your success, you need to understand how to run TikTok ads effectively, not just focusing on only one metrics. Other than that, you should also review your industry benchmark and your target audience’s media insights to make sure that you are using the right metric, and the right KPI to measure your campaign’s success!
Get ready to run TikTok ads!
We hope the article has given you a clearer understanding of TikTok CPM and how you can optimize this metric. However, as we have stated, CPM is only a small link to a whole chain. In order to run effective ads that can really give profit to your business, you’ll need to continuously experience and accumulate more understanding about the platform.
Great news! We’ve got just what you need to simplify TikTok ads. Meet NestAds, our advertising management solution. It lets you run ads with ease, manage campaigns in your e-commerce store, and target potential customers effectively. Plus, you can dive into customer insights with detailed data reports. So don’t miss this chance to reach TikTok’s vast audience and boost your business!
