Recommendation

How it helps

Use your expected cost per action to calculate your Ad Group's Daily Budget

If you don't allocate enough budget for your ads on TikTok, you will lose out on opportunities to find ways to improve campaign performance. This is true at an abstract level, but also in a tactical way.

TikTok Ads Manager uses a Learning Phase where the system identifies the best audience for your ads. Until you pass the Learning Phase, ad delivery and your cost per action may fluctuate.

At the very minimum, you will want to give your ad groups enough budget to pass the Learning Phase and hit 50 conversions. To calculate how much budget you'd need to hit 50 conversions, simply use the formula: “ad group daily budget = 50 conversions x target CPA.”

However, if you cannot support a daily ad group budget of 50 x target CPA, you can use a different formula depending on your optimization goals.

For app-based optimization goals:

•App Event Optimization using upper and mid-funnel events: 20 x target CPA

•App Event Optimization using Purchase event: 10 x target CPA

For web-based optimization goals:

•Complete Payment Optimization event: 10 x target CPA

•Other Optimization events: 20 x target CPA

Bid against conversion events

If your business goal is to drive specific outcomes on your website or app, optimize your campaigns against conversion events instead of clicks or impressions.

Bidding for clicks will make our system look for impressions that will give you the most clicks for your budget, while bidding for conversions, our system will try to generate the most actions on your website or app that align with your desired business outcome.

Wait for enough conversions to evaluate your CPA

It takes about 50 conversions for our system to allow your ad to learn the conditions of the marketplace for optimal delivery, so the cost per action (CPA) you’re seeing before then may not be reflective of what you’ll see after reaching 50 conversions.

As conversions accumulate, the randomness will be gradually ruled out, and the CPA is going to be close to the truth. So the more conversion events you can generate, the bigger your sample size, and the more accurate or stable your CPA will be. If you have trouble getting a high number of conversions, consider moving your optimization goal to an event further up the funnel.

Also, try to avoid making frequent changes to your campaigns, as this can bring fluctuations to your ad performance.

Segment your target audience

Various audiences may have different costs per conversion. Try creating different ad groups to target each separate audience segment.

Identify and monitor key metrics

Only focus on the metrics that matter to your business goal. For example, if your goal is to drive conversions and your CPA is decreasing (or stable) but the cost of impressions is going up – then there is no reason for concern.

By closely tracking the metrics that matter to your business, you will be able to determine if your budgets are being used effectively.

Pick your bid based on economic calculations

There are two factors that you should consider when determining your bids.

1.How much is a new customer worth to your business? This can be approached from a transaction or a lifetime value (LTV) perspective.

2.How much are you willing to spend to acquire a new customer? This can range from making full margins to breaking even and will be your target cost per acquisition (CPA), which can then be used as your bid or cost cap.

These factors depend on your goals and how you want to balance growth vs profitability.