TikTok Ads Bidding: How to Win the Auction and Grow Your Business

TikTok is one of the most popular social media platforms in the world, with over 1 billion monthly active users. It offers a unique opportunity for advertisers to reach a large and engaged audience with creative and interactive video ads. But how do you get your ads to show up on TikTok? And how do you optimize your budget and performance?

The answer lies in understanding TikTok ads bidding, the process that determines which ads are shown to which users and at what cost. In this article, we will explain everything you need to know about TikTok ads bidding, including the different methods, strategies and best practices to help you win the auction and grow your business.

What is TikTok Ads Bidding?

TikTok ad bidding works on an auction system where multiple advertisers compete for the same ad space, and the highest bidder wins. Advertisers can set a daily or campaign budget and bid on the basis of parameters such as clicks, conversions, and impressions.

The bid amount is the maximum price an advertiser is willing to pay for each desired result. The actual cost per result may be lower than the bid amount, depending on the competition and the quality of the ad. The quality of the ad is determined by factors such as relevance, engagement, and feedback from users.

TikTok ads bidding is influenced by three main factors: budget, bid strategy, and optimization goal. Let's take a look at each of them in more detail.

Budget

The budget is the amount of money an advertiser allocates to run their ads on TikTok. There are two types of budgets: daily budget and campaign budget. A daily budget is the maximum amount an advertiser is willing to spend per day on an ad group. A campaign budget is the maximum amount an advertiser is willing to spend on a campaign during its lifetime.

Advertisers can set a minimum daily budget of $50 and a minimum campaign budget of $500. They can also choose between two delivery methods: standard delivery and accelerated delivery. Standard delivery distributes the budget evenly throughout the day, while accelerated delivery spends the budget as quickly as possible.

Bid Strategy

The bid strategy is the way an advertiser tells TikTok how to bid for them in the ad auction. TikTok offers three bidding strategies: bid cap, cost cap, and lowest cost. Each strategy has its own benefits, use cases, and availability depending on the advertising objective.

Bid cap is a strategy that ensures that the cost per result remains below a predetermined maximum. It gives advertisers fine-grained control over their bids and allows them to optimize for reach and video views.

Cost cap is a strategy that tries to achieve an average cost per result that is close to the bid amount. It allows advertisers to control their average cost per result and optimize for conversions, app installs, and lead generation.

Lowest cost is a strategy that does not require a bid amount. It allows TikTok to use the available budget to generate as many results as possible at the lowest cost per result. It is suitable for advertisers who want to maximize their results for their budget.

Optimization Goal

The optimization goal is the desired outcome that an advertiser wants to achieve with their ads on TikTok. It tells TikTok what kind of users to target and how to measure the performance of the ads. There are four optimization goals available: impression, click, conversion, and video view.

Impression is when an ad is shown to a user on TikTok. It is suitable for advertisers who want to increase their brand awareness and reach as many people as possible.

Click is when a user taps on an ad on TikTok. It is suitable for advertisers who want to drive traffic to their website or app.

Conversion is when a user completes a specific action after clicking on an ad on TikTok. It can be anything from installing an app, making a purchase, or filling out a form. It is suitable for advertisers who want to generate leads or sales from their ads.

Video view is when a user watches at least 6 seconds of an ad video on TikTok (or the full duration of the video if it's shorter than 30 seconds) or interacts with it. It is suitable for advertisers who want to increase their video views and engagement.

TikTok Ads Bidding Methods

Depending on your overall strategy and TikTok advertising objectives, there are several different bidding options available. Currently, TikTok Ads Manager offers 4 different types of bidding: Cost per Mille/Thousand Impressions (CPM), Optimized Cost per Mille/Thousand Impressions (oCPM), Cost per View (CPV), and Cost per Click (CPC).

Each bidding method has its own advantages and disadvantages, and they are not mutually exclusive. You can use different bidding methods for different ad groups within the same campaign. Let's take a look at each bidding method and how they work.

CPM

CPM stands for Cost per Mille or Cost per Thousand Impressions. It means that your bid is the price you are willing to pay for one thousand impressions of your ad. The system will deliver your ads to get the most exposure and reach to as many customers as possible within your budget.

CPM is calculated by dividing the total cost by the total impressions and multiplying by 1,000. For example, if you spend $100 and get 50,000 impressions, your CPM is ($100 / 50,000) * 1,000 = $2.

CPM is suitable for advertisers who want to increase their brand awareness and visibility. It is also applicable for the reach advertising objective.

oCPM

oCPM stands for Optimized Cost per Mille or Optimized Cost per Thousand Impressions. It means that your bid represents the price you are willing to pay to create one thousand impressions, targeting users that are likely to complete a conversion event, become a lead, or install an app.

oCPM is calculated by dividing the total cost by the total impressions and multiplying by 1,000. For example, if you spend $100 and get 40,000 impressions, your oCPM is ($100 / 40,000) * 1,000 = $2.5.

oCPM is suitable for advertisers who want to optimize their ads for specific actions or outcomes. It is also applicable for the conversions, app installs, and lead generation advertising objectives.

CPV

CPV stands for Cost per View. It means that you pay when a viewer watches 6 seconds of your video (or the full duration of the video if it's shorter than 30 seconds) or interacts with your video, whichever comes first. The system will deliver your video to maximize engagement and views to your creative.

CPV is calculated by dividing the total cost by the total video views. For example, if you spend $100 and get 10,000 video views, your CPV is $100 / 10,000 = $0.01.

CPV is suitable for advertisers who want to increase their video views and engagement. It is also applicable for the video views advertising objective.

CPC

CPC stands for Cost per Click. It means that your bid is the cost you are willing to pay per click on your ad. The system will deliver your ads to users who are most likely to click them at a cost that is as close to your bid as possible.

CPC is calculated by dividing the total cost by the total clicks. For example, if you spend $100 and get 500 clicks, your CPC is $100 / 500 = $0.2.

CPC is suitable for advertisers who want to drive traffic to their website or app. It is also applicable for the traffic, app installs, conversions, and community interaction advertising objectives.

TikTok Ads Bidding Strategies

TikTok ads bidding strategies are the ways an advertiser tells TikTok how to bid for them in the ad auction. They help advertisers achieve their desired results while optimizing their budget and performance. TikTok offers three bidding strategies: bid cap, cost cap, and lowest cost.

Bid cap is a strategy that ensures that the cost per result remains below a predetermined maximum. It gives advertisers fine-grained control over their bids and allows them to optimize for reach and video views.

Cost cap is a strategy that tries to achieve an average cost per result that is close to the bid amount. It allows advertisers to control their average cost per result and optimize for conversions, app installs, and lead generation.

Lowest cost is a strategy that does not require a bid amount. It allows TikTok to use the available budget to generate as many results as possible at the lowest cost per result. It is suitable for advertisers who want to maximize their results for their budget.

In this section, we will explain how each bidding strategy works and when to use them.

BidCap

Bid cap is a strategy that ensures that the cost per result remains below a predetermined maximum. It gives advertisers fine-grained control over their bids and allows them to optimize for reach and video views.

To use bid cap as a bidding strategy, you are required to enter the maximum cost per result you are willing to bid, and the system will automatically optimize delivery against it. Note that the bid cap is not the actual bid used by the system, i.e. your actual cost per result may be equal to or below the bid cap.

Bid cap is supported by a suggested bid and reach estimator to help advertisers understand the impact of the bid to be used. The suggested bid is based on the historical data of similar campaigns and the current competition in the market. The reach estimator shows the estimated number of impressions, clicks, or conversions that can be achieved with the given bid and budget.

Bid cap is suitable for advertisers who have a clear idea of how much they are willing to pay for each result and want to control their costs. It is also suitable for advertisers who want to increase their brand awareness and visibility by reaching as many people as possible within their budget.

Bid cap is available for the following advertising objectives: traffic, reach, video views, app installs, and conversions. It is also available for the following billing events: cost per click (CPC), cost per mille (CPM), and cost per view (CPV).

Cost Cap

Cost cap is a strategy that tries to achieve an average cost per result that is close to the bid amount. It allows advertisers to control their average cost per result and optimize for conversions, app installs, and lead generation.

To use cost cap as a bidding strategy, you are required to enter an average cost per result that you want to achieve, and the system will automatically optimize delivery against it. Note that the cost cap is not a fixed limit, i.e. your actual cost per result may sometimes fluctuate higher or lower than the cost cap.

Cost cap is suitable for advertisers who want to optimize their ads for specific actions or outcomes and maximize their return on ad spend (ROAS). It is also suitable for advertisers who have a flexible budget and can tolerate some fluctuations in their costs.

Cost cap is available for the following advertising objectives: app installs, conversions, and lead generation. It is only available for the optimized cost per mille (oCPM) billing event.

Lowest Cost

Lowest cost is a strategy that does not require a bid amount. It allows TikTok to use the available budget to generate as many results as possible at the lowest cost per result. It is suitable for advertisers who want to maximize their results for their budget.

To use lowest cost as a bidding strategy, you do not need to enter a bid amount; instead, you only need to set your budget and optimization goal. The system will automatically adjust your bids in real time based on the market conditions and your campaign performance.

Lowest cost is suitable for advertisers who are not sure how much to bid or do not have a specific target cost per result. It is also suitable for advertisers who want to explore new markets or audiences and test different creatives or strategies.

Lowest cost is available for all advertising objectives and billing events.

TikTok Ads Bidding Best Practices

Now that you know how TikTok ads bidding works and what options are available, here are some best practices to help you optimize your bids and get the most out of your campaigns.

Choose the right bidding method

The first step is to choose the right bidding method for your campaign objective and optimization goal. You should consider factors such as your target audience, your creative quality, your expected results, and your budget constraints. Here are some general guidelines:

• If you want to increase your brand awareness and reach as many people as possible, you can use CPM or CPV bidding methods with bid cap or lowest cost strategies.
• If you want to drive traffic to your website or app, you can use CPC bidding method with bid cap or lowest cost strategies.
• If you want to generate leads or sales from your ads, you can use oCPM bidding method with cost cap or lowest cost strategies.
• If you want to increase your video views and engagement, you can use CPV bidding method with bid cap or lowest cost strategies.

Set realistic bids

The second step is to set realistic bids that reflect your campaign goals and market conditions. You should avoid setting bids that are too high or too low, as they may affect your delivery and performance. Here are some tips to help you set realistic bids:

• Use the suggested bid and reach estimator to get an idea of the optimal bid range and the expected results for your campaign.
• Monitor your campaign performance and adjust your bids accordingly. If your results are lower than expected, you may need to increase your bids. If your results are higher than expected, you may be able to lower your bids.
• Consider the seasonality and competition in your market. If there is high demand or low supply for your target audience, you may need to bid higher to win the auction. If there is low demand or high supply for your target audience, you may be able to bid lower and still get good results.

Test and optimize

The third step is to test and optimize your bids and strategies to find the best combination for your campaign. You should experiment with different bidding methods, strategies, and amounts to see what works best for your goals and budget. Here are some ways to test and optimize your bids:

• Create multiple ad groups with different bidding methods, strategies, and amounts within the same campaign. Compare their performance and identify the best performing one.
• Use the split test feature to run two or more versions of your ad group with different bids or strategies. Analyze the results and apply the winning version to your campaign.
• Use the automatic rules feature to set conditions and actions for your ad groups based on their performance. For example, you can set a rule to increase your bid by 10% if your cost per result is lower than $1, or pause your ad group if your cost per result is higher than $5.

TikTok Ads Bidding Breakdown

To help you understand how TikTok ads bidding works in practice, here is a detailed table breakdown of the different bidding methods, strategies, and availability for each advertising objective.

TikTok Ads Bidding FAQ

TikTok ads bidding can be confusing for beginners and experienced advertisers alike. Here are some of the most common questions and answers about TikTok ads bidding to help you get started.

What is the minimum bid for TikTok ads?

The minimum bid for TikTok ads depends on the bidding method and the billing event you choose. For CPC bidding, the minimum bid is $0.01 per click. For CPM bidding, the minimum bid is $0.01 per thousand impressions. For CPV bidding, the minimum bid is $0.01 per view. For oCPM bidding, the minimum bid is $0.01 per thousand impressions.

How do I change my bid on TikTok ads?

You can change your bid on TikTok ads at any time by editing your ad group settings. You can either enter a new bid amount manually or use the suggested bid and reach estimator to get a recommended bid range. Note that changing your bid may affect your delivery and performance, so you should monitor your results and adjust accordingly.

How do I know if my bid is too high or too low?

You can check if your bid is too high or too low by looking at your delivery status and performance indicators. If your delivery status is "limited by budget", it means that your bid is too high and you are spending your budget too quickly. You may want to lower your bid or increase your budget to get more results. If your delivery status is "limited by bid", it means that your bid is too low and you are losing the auction to other advertisers. You may want to increase your bid or improve your ad quality to get more exposure.

What is the difference between CPM and oCPM?

CPM and oCPM are both bidding methods that charge you based on the number of impressions of your ad. The difference is that CPM delivers your ad to as many people as possible within your budget, while oCPM delivers your ad to people who are likely to complete a specific action or outcome, such as installing an app, making a purchase, or becoming a lead.

What is the difference between cost cap and lowest cost?

Cost cap and lowest cost are both bidding strategies that optimize your bids for a specific result. The difference is that cost cap tries to achieve an average cost per result that is close to your bid amount, while lowest cost does not require a bid amount and tries to generate as many results as possible at the lowest cost per result.

How do I choose the best bidding method and strategy for my campaign?

The best bidding method and strategy for your campaign depends on your advertising objective, optimization goal, budget, and expected results. You should consider factors such as your target audience, your creative quality, your market competition, and your campaign performance. You should also test different bidding methods and strategies to find the best combination for your campaign.

How does TikTok measure the quality of my ad?

TikTok measures the quality of your ad based on factors such as relevance, engagement, and feedback from users. Relevance is how well your ad matches the interests and preferences of your target audience. Engagement is how much your ad attracts and retains the attention of users. Feedback is how users react to your ad, such as liking, commenting, sharing, or reporting.

How does TikTok determine the winner of the auction?

TikTok determines the winner of the auction based on a combination of factors, such as bid amount, ad quality, and estimated action rate. Bid amount is the maximum price you are willing to pay for each result. Ad quality is the score that reflects the relevance, engagement, and feedback of your ad. Estimated action rate is the probability that a user will complete the desired action after seeing your ad. The winner of the auction is the advertiser who has the highest value score, which is calculated by multiplying bid amount, ad quality, and estimated action rate.

How can I improve my TikTok ads bidding performance?

You can improve your TikTok ads bidding performance by following some best practices, such as choosing the right bidding method and strategy, setting realistic bids, testing and optimizing your bids and strategies, improving your ad quality and relevance, and monitoring your campaign performance and results.

Where can I learn more about TikTok ads bidding?

You can learn more about TikTok ads bidding by visiting the TikTok Ads Manager Help Center, where you can find detailed articles and videos about different aspects of TikTok ads bidding. You can also contact TikTok Ads Support if you have any questions or issues regarding your TikTok ads bidding.

Conclusion

TikTok ads bidding is a complex but powerful process that can help you reach your advertising goals and grow your business. By understanding how TikTok ads bidding works and what options are available, you can create effective and efficient campaigns that deliver results.

We hope this article has given you a comprehensive overview of TikTok ads bidding and some useful tips to help you get started. If you want to learn more about TikTok ads bidding or other aspects of TikTok advertising, feel free to check out our other articles on our blog.

If you are interested in running TikTok ads for your business but don't know where to start, we can help. We are a team of experts who specialize in TikTok advertising and have helped hundreds of clients achieve their goals on TikTok. We can help you create, manage, and optimize your TikTok ads campaigns with our proven strategies and best practices. Contact us today for a free consultation and quote.

Thank you for reading this article. We hope you found it helpful and informative. If you liked it, please share it with your friends and colleagues who might benefit from it. And don't forget to subscribe to our newsletter to get more updates on TikTok advertising and other digital marketing topics.

Advertising Objective	Bidding Method	Billing Event	Bidding Strategy	Optimization Goal
Traffic	CPC	CPC	Bid Cap Lowest Cost	Click
		CPM
	CPM	CPM	Bid Cap Lowest Cost	Impression
		CPV
Reach	CPM	CPM	Bid Cap Lowest Cost	Impression
		CPV
	CPV	CPM
		CPV
Video Views	CPV	CPM	Bid Cap Lowest Cost	Video View
		CPV
	CPM	CPM
		CPV
App Installs	CPC	CPC	Bid Cap Lowest Cost	Click
		CPM
		CPV
	oCPM	oCPM	Cost Cap Lowest Cost	Conversion (App Install)
		CPM
		CPV
Conversions	CPC	CPC	Bid Cap Lowest Cost	Click (Conversion)
		CPM
		CPV
	oCPM	oCPM	Cost Cap Lowest Cost	Conversion (Conversion)
		CPM
		CPV
Lead Generation	CPC	CPC	Bid Cap Lowest Cost	Click (Lead)
		CPM
	oCPM	oCPM	Cost Cap Lowest Cost	Conversion (Lead)
		CPM
Community Interaction (Follows)	CPC	CPC	Bid Cap Lowest Cost	Click (Follow)
		CPM
	oCPM	oCPM	Bid Cap Lowest Cost	Conversion (Follow)
		CPM

Video Reference about : TikTok Ads Bidding: How to Win the Auction and Grow Your Business