Budget to Bid Ratios for Scaling Auction Ad Spend
TikTok Ads Manager's system uses a Learning Phase to optimize ad delivery. During the Learning Phase, the system continuously explores new customers to help an ad group reach the most suitable audience. Once an ad group passes the Learning Phase, the system will optimize ad delivery to the people most likely to convert against your optimization goal, and your Cost Per Action (CPA) will stabilize.
On TikTok Ads Manager, the best indication that an ad group has passed the Learning Phase is completing 50 conversion events within a week. For this reason, each ad group should have a budget-to-bid ratio of at least 50:1 over the lifetime of the ad group. This will give your ad group enough budget to pass the learning phase, and achieve a stable CPA.
However, passing the learning phase is only the beginning. If your budget can support it, we recommend structuring your budget to bid ratio so that there is enough budget to pass the Learning Phase, and then take advantage of what the system learned about your audience.
For example, imagine you are creating a website Traffic campaign for the Intent part of your funnel. And you want to make a series of ad groups that bring people to your website, and you are willing to pay $0.50 to send visitors to your site. Which of the following scenarios would net the best results?
Ten ad groups, targeting similar audiences, each with a $10 budget
One ad group with a $100 budget
For the scenario where each ad group has a $10 budget, no ad groups will send enough visitors to your website to pass the learning phase because none of the ad groups could generate 50 conversion events. So while the total campaign budget may have supported 200 conversion events, no ad group would pass the learning phase, and you would not have sufficient data points to accurately calculate your ROAS and CPA.
For the scenario where one ad group has a $100 budget, the first $25 of the ad group's budget would be spent passing the learning phase. And the remaining $75 of the budget would be spent on delivering ads using the optimizations discovered during the learning phase. So not only would you spend your budget more efficiently, you could confidently use your CPA to calculate your ROAS which would determine how much you can scale your budget.
How do you know what bid to use to determine your budget?
Start with a reasonable CPA given your available historical data, ie similar ad groups that passed the learning phase. If there is no data available, try creating an ad group using the Maximum Delivery bid strategy and running it until you reach at least 50 conversion events. Then you can use that as a benchmark for CPA. Or you could try using a Cost Cap with suggested bid.
