The simple answer is Yes!
The more complicated answer is that it really depends on product price, profit margin, CPA and profitability.
Most people dropshipping on Tiktok will have a product with an average price of $30.
On the first day of testing their product, they may have ads that are performing poorly and need to know if they should turn it off.
By ads that are performing poorly, we mean ad that have a CPC above $1, a CTR less than 2.5% and a CPM above $6.
In this instance, we recommend turning off poor performing ads, there is no need waiting around for something to work, when the data already shows it isn’t working.
You should test other creatives and targeting options, to get better metrics.
However, for the complicated answer; it’s possible to have an ad that does not meet our recommended metrics and still be profitable.
This will depend on your product price, profit margin, CPA and profitability.
For example; you can be selling a product of $199 with a profit margin of $50. Let’s say you have CPC $2, CTR of 1%, CPM of 7 dollars and CPA of $20
To analyze this, we can already see that the product price is higher than $30 as well as the profit margin. We can see the advertiser already has the CPA metrics which is Cost per Action of $20.
this means that the advertiser had spent $7 for every 1000 impressions and only 1% of them clicked on the website, the Cost per click (CPC) is $2 and the Advertiser has a CPA of $20
The CPA is the important metric. Which is the cost per Action. So, if the advertiser ran Tiktok conversion ads. The CPA is the cost of each conversion.
The profit margin is $50. The advertiser had to spend CPA of $20 to make a $30 profit.
This means the advertiser is still profitable and so doesn’t need to turn off the ad.
On the other hand, most Tiktok advertisers will fall under the category, where you have a product with an average price of $30 and a profit margin of about $15.
More so, if the advertiser don’t have the CPA metric yet, because nobody has made a purchase or taken required Action.
Let’s also assume that the advertiser has a CPC above $1, a CTR less than 2.5% or a CPM above $6. We recommend turning such ad off!
Test creatives to get better performing ads.
If you are thinking “Well, maybe I should keep running the ad and I may end up with a CPA of $10 and therefor, a profit of $5”.
As a matter of suggestion, How about you quickly test creatives, get a better performing ad and perhaps end up with a CPA of $5 and a $10 profit?
The reality is you can’t even tell at that point what CPA or profit you will end up.
Nevertheless, ads with good metrics gives you a better chance of conversion.
More so, there is no need sitting on the clock when you can test creatives for better results more quickly.
Except you invented the product, have thousands of units of the products stocked up in your warehouse, don’t want to loose both time and money and so, you are passionately deciding to stick it out.
Well, this isn’t the case for most Dropshipers. So, except that is you, then there is no need waiting around for something to work, when the data already shows it isn’t working.
We generally recommend turning off poor performing ad if the ad has spent a budget of $5 or more.
