As an advertiser, you may have noticed your tiktok ad performance dropping after increasing your budget and wonder why this is happening.
When you start running ads and it’s beginning to get some traction, you’d want to scale your ads and have greater ad performance and more conversion.
This is the primary reasons advertisers increase their budget.
Getting the opposite of the expected results can be rather confusing, so let’s understand why this is happening and what we can do about it.
The tiktok algorithm is designed to spend your budget within the time frame scheduled.
When your budget is to low, tiktok spends your budget slowly, trying to stretch the spending of that budget within the selected timeframe.
Tiktok algorithm learns to understand your audience. The tiktok algorithmic behavior can be observed even in an organic tiktok user Account.
When you open a new Tiktok user account you may find that your first few videos get 0 views.
This is because with a new account, Tiktok is still learning to identify your ideal audience. So, the algorithm is trying to work out the right audience for your posts.
After working out the right audience and you make another post, Tiktok shows your posts to a few audience, if the few audience engages with the post. For example, by liking or commenting on it.
Tiktok algorithm begins to understand that it’s got the right audience for your post. It shows your post to more and more people until the video reach stops increasing.
This organic behavior of the tiktok algorithm is well translated into tiktok ads manager as well.
In Tiktok paid advertising, Tiktok is trying to work out the right audience for your ads and also trying to spend your ads budget within the budget schedule.
So, if you have a low daily budget, that means Tiktok is trying to slowly figure out your audience and slowly spend your budget in order to stretch that budget to be spent within the ad schedule.
If you are running a low budget ad on a new tiktok Account, Tiktok have no previous data of who your audience are. The process of Tiktok trying to stretch your low daily budget and figure out who your audience is from the scratch, can be so slow that you run into Tiktok ads not spending issues.
It is important to reach an equilibrium. This means to have just enough budget so tiktok can spend your ads competitively and just enough time so Tiktok can work out the right audience.
If you found the right balance, your ads can perform optimally but the issues then comes when advertisers want to scale up their ads and increase budget above this equilibrium. What is called “the law of diminishing returns” sets in.
Tiktok would strive to spend that high budget quickly in order to be able to spend all of the budget within the ad schedule.
While trying to quickly spend the budget, Tiktok hasn’t had time to figure out the adequate number of ideal audience to quickly spend the budget on. What then happens is Tiktok will spend the budget quickly on both the right and wrong audience trying to accomplish its mission of spending all of the budget within the ad schedule.
We say “law of diminishing returns” because having increased the budget, instead of getting the better results you hoped for, you get a decreased result.
We understand this may sound all abstract and you may ask how do I know when I have reached a budget equilibrium?
The easiest way to know that you have found a budget equilibrium, is to observe that your ads are performing well and increasing your budget does not make a difference anymore or even makes for poorer results.
You should also put into consideration that there would always be bad and good advertising days.
That can be occasioned by factors outside of your control. For example; less people within your target audience using Tiktok on day A compared to day B.
So, if it’s just a small dip in your Tiktok ads performance, it may not have anything to do with your budget increase.
The advertising graph is not a straight line, it’s a zig zag. So, take cognizance of pattern rather than a single day’s metrics.
If you’ve established that increasing your budget is not increasing your ad performance or making your ad performance decrease, then you should either stop at your current budget and let TikTok catch up with that or revert back to your previous budget.
