If you are running Tiktok ads and observe that some of your ads groups are doing well at a certain average CPA whereas you have some ad groups which aren’t breaking even after having passed your average CPA.
You might be wondering what is the best course of action, should you turn off the ad group which has spent over your average CPA with no profitable results. Should you wait it out and hope that your under performing ad group will catch up to the rest?
Is there a way to optimize that ad group so that it starts breaking even or better still become profitable? What should you do?
Well, we have experienced this situation and most advertisers have, so in this Article, we are going to recommend how we navigate this situation.
Is your underperforming ad group profitable?
The first thing we will need to consider in this situation is if your underperforming ad group is profitable? if it is profitable and the only issue is that the ad group has a higher CPA than your other well performing ad groups, in this case we recommend allowing that underperforming ad group to keep running.
You can try to do other things to increase your profitability such as increasing your AOV (Average order value) or reducing your COGS (cost of goods sold). That is the sum of all direct costs associated with making a product.
Is your underperforming ad group unprofitable?
In this case you will have to look at the situation, what percentage of your ad groups are profitable and what percentage aren’t profitable?
To put this into context;
- Example 1; let’s assume you have 5 ad groups and only 1 or 2 of your ad groups are profitable and performing well with an average of $10 CPA. Assuming your other 3 or 4 ad groups are unprofitable and under performing with over $10 CPA spent.
In this sort of situation given that most of your ad groups are underperforming and only very few ad groups are doing well, I will recommend allowing the underperforming ad group to spend double times the CPA average of the well performing ad groups.
In the example we have above that will mean allowing the underperforming ad group to spend (2 x $10 CPA) which is equals to $20.
If your under performing ad group, in this case has spent double the average CPA of your well performing ad groups and continues to underperform, then turn off that ad group!
On the other hand, if most of your ad groups are performing well and only a few of your ad groups are under performing. I will recommend a different approach, so let’s look at this second example;
- For example 2; if you have 5 ad groups and 4 ad groups are profitable and performing well with an average of $10 CPA whereas 1 ad group is performing poorly, is unprofitable and has spent more than the average CPA of your well performing ad groups i.e $10 CPA.
My recommendation (in example 2) will be to turn off that under performing ad group, there is no point waiting for that ad group to spend double the average CPA of your well performing ad groups.
This is because in this case illustrated in example 2, most of your ad groups are performing well at a certain average CPA of $10 and only a few ad groups are under performing.
The rule is; after having a few sales and being profitable, get an average CPA for most of your ad groups then cut off any other ad group that spends above that average CPA.
