As an advertiser, when you run Tiktok ads, you mainly do it because you are trying to get customers for your product, however, in the process of running ads, you “yourself” are a customer of Tiktok.
You are also not the only customer. Let’s assume you want to sell a baseball cap and you are targeting your males in the US. At that given time, there could be hundreds of Advertisers who want to sell a product to that same target audience i.e young males in the US.
Each young male in the US can only see a few ads on their Tik Tok feed at intervals. Tiktok isn’t going to flood each user with so many ads on their feed so as not to ruin the user’s experience.
Now with hundreds of advertisers paying Tiktok to boost their ads to be seen by the same targeted audience. An action is programmed in Tiktok systems to take place automatically in the background.
This auction is going to make TikTok systems prioritize showing the ads of the Advertiser who wins the action at every given moment. In other words Tiktok will prioritise the advertiser who is willing to spend the most money on each bid.
You can determine how you bid on this action using the Tiktok bid caps setting when you set up a campaign.
Tiktok ads has 3 bidding strategies;
- Bid Cap: Here you enter a definite amount which is the highest amount you are willing to pay for each bid. For example if your bidding amount is $1, it means Tiktok systems will only show your ads where the cost to win an action is below $1.
In this case if there is an action where other advertisers are bidding $2, to show ads to a particular user, you will lose out on that action and Tiktok will prioritise the other advertiser and show their ad to the user. In which case you will not be billed.
You will however notice that your ad budget is spending slowing and your ad impressions are few.
These actions are programmed to happen and they happen automatically. However, the Tiktok system will respect the rules you’ve set in your bidding strategy.
- Cost Cap: In this case you put an average amount you want to spend for each bids. for example while setting up your Tiktok campaign if you choose to bid by cost cap and you enter $1 as your cost cap. this means that you are telling Tiktok systems that you are willing to spend an average of $1 on each bid.
In this case Tiktok can spend slightly lower than $1 or slightly higher than $1 for each bid you make in the action and if you win the action to show an ad to a user, your ads gets shown to that user.
In this is automatic action that happens in split seconds, a lot of things are at play to determine what an impression is worth so Tiktok system know how much it can bid for you while respecting your set rules.
For example, impressions shown to targeted audiences in the US will cost more in the action compared to impressions shown to users in third world countries. Impressions shown to users how have a behavioral history of purchasing advertised products will cost more on the action than impressions shown to users who are more likely to like a post.
Impressions shown to users who have previously interacted with your content and engaged with it, will cost less in the action for you compared to users who are going to be seeing your content for the first time.
There is a lot of data points that the Tiktok system is program to consider during this action. However, the bidding budget and optimization goal will always be respected.
There for the results of not winning an action that is consistent with the rules you set (such as your bid cap setting, your budget, how campaign schedule, that’s how long you want to stretch that budget to spend, your target audience, your optimization goals etc) is that you loose the action, you want get the ad impression, there for Tiktok will not charge you.
What you will see is that your ad budget did not spend or spent slowly and you had few or no impressions.
Look at it this way if your are optimizing for conversion, this means you are going for an expensive audience, if you are ali targeting a first world country like the US, which is also an expensive audience but you have a small budget and you want that budget to trench itself and spend over many days and you have set your bid cap to not spend over an average of $0.20 for example, most likely given this conditions, you’d probably loose out on every actions and your Tiktok ads just won’t spend.
- Lowest Cost (spend-based): In this bidding strategy you don’t enter any amount! We recommend using the lowest cost bidding strategy if you don’t know what amount to bid for and you would rather have Tiktok systems figure that out for you in every auction.
The lowest cap bidding strategy allows Tiktok to automatically bid an amount for you using the available ad group budget to generate as many results as possible at the lowest cost per result.
This means Tiktok will be using your available budget to bid a low cost for you. Not a low cost that makes you lose out on every action but rather a low cost that is capable of winning some actions in order to generate as many results as possible.
So if the lowest auction you can win based on your budget and campaign settings is a $0.30 action, Tik Tok systems will focus on winning those actions for you to generate as many results as possible.
Testing Tiktok bid caps
You can test Tiktok bid caps by either using the Bid cap settings (manual maximum bid) or the Cost cap setting (average bid), in this case you can increase your bid amount to be able to win the action to show your ad impression to a more competitive audience.
It’s important to be careful while testing bid caps. If you bid is so high, Tiktok systems will attempt to spend your budget to fast, It will show you ads to as many audiences as possible since you can win many bids, however those audiences may not be your best buying customers.
Tiktok pixel is a machine that can be trained and requires time to be trained. The more Tiktok shows your ads to people, it learns how people engage with your ads then it better understands the right audience for your product, over time it fine tunes you as an impression to show your ads to the people who are more engaged with it.
However if your bidding is so high that Tiktok systems is trying to spend your budget and show your ads to too many people at a very short time, then it will be missing out on the process of machine learning which requires it to learn about your audience and show your ads to your most interested audience.
Don’t get me wrong, if your ads are spending so fast, Tiktok systems can still learn but it will cost you more! This is because the ads will be spending faster than the time pace in which Tiktok system learns about your audience.
If you bid too low, that’s another issue. Your ads will spend slowly or not at all.
When testing bid caps, you test out different bid amounts and see how they impact your campaign performance.
If you do not want to venture into testing bid caps and what to leave bidding for Tiktok to figure out, we recommend using the lowest cost bidding strategy or Tiktok new smart performance campaign feature.
