Advertising on TikTok: setup, formats and budget
TikTok ads are managed through TikTok Ads Manager. Setup needs a business account, an ad account and the TikTok Pixel on your site. On TikTok the creative matters more than the targeting, and how closely the ad format resembles organic content directly affects performance.
TikTok parts ways with the other channels at one point: content wins, not targeting. On the same budget, the performance gap between two different videos is larger than the gap between two different audiences.
That makes TikTok easy to set up and hard to sustain. The rate at which you can produce creative sets the ceiling of the campaign.
1. Account setup
Open a business account at ads.tiktok.com
Create an ad account and choose the country and currency
Install the TikTok Pixel on your site or connect it server-side with the Events API
Upload your product feed if you sell from a catalog
2. Campaign objective
Objective | When to use it |
|---|---|
Conversions | Pixel installed, with a sales goal |
Catalog sales | E-commerce with a product feed uploaded |
Traffic | A new account still collecting data |
Reach | A launch or awareness push |
3. Creative rules
On TikTok an ad that looks like an ad gets scrolled past. The best performing formats are vertical, have sound, and say something in the first three seconds.
Carrying finished visuals over from other channels usually does not work. The difference in format is behavioral, not aesthetic.
Vertical 9:16, full screen
A clear hook in the first 3 seconds
Sound is assumed to be on, but captions should still be added
Creative fatigue is fast, plan on weekly refreshes
4. Budget
TikTok has daily minimums at campaign and ad group level. But the practical floor, as on Meta, is set by the learning threshold.
On a new account the first week is a data collection week. Judging performance and shutting the campaign down during it means never starting the learning at all.
The difference on the measurement side
TikTok's attribution window and model work differently from other channels. The same sale can look different in the TikTok dashboard and in Google Analytics.
If you advertise on three channels you end up holding three separate truths, and none of them shows the whole picture. You are then forced to make the budget decision by looking at those three separate truths.
Sources
Ad budget calculator
Change the five numbers below to match your own business. The budget is calculated backwards from your goal.
The monthly sales figure you want ads to bring in.
What a customer spends on average. Short for AOV, average order value.
What is left as a percentage after you subtract product cost from the sale price. If $1,000 leaves you $300, that is 30 percent.
How much of that gross profit you are willing to spend on ads. Common range is 40 to 60 percent, spending all of it means breaking even.
How many of a hundred visitors buy. Short for CVR, conversion rate. If you do not know it, 1 to 2 percent is a reasonable start.
Your monthly ad budget
$45,000
About $1,480 per day
300
Orders needed
How many orders per month it takes to hit the revenue goal.
$150
Target CPA
Cost per acquisition. The most one sale is allowed to cost you.
15,000
Visits needed
How many people have to reach the site to produce those orders.
$3.00
Implied CPC
Cost per click. The most you can pay for a single click and still hit the target.
6.67x
Target ROAS
Return on ad spend. How much revenue every 1 unit of spend has to bring back.
How the number was reached
- Divide the revenue goal $300,000 by the average order value $1,000. You need 300 orders a month.
- 30% of the order value is profit, so each order leaves $300 of gross profit.
- You spend 50% of that profit on ads. One sale may cost at most $150, and that is your target CPA.
- 300 orders times $150 is $45,000 per month.
- At a 2% conversion rate those orders need 15,000 visits. Budget divided by visits means you can pay $3.00 per click.
This is not a guess, it is the arithmetic result of the goals you entered. Change a number and the result changes with it. The closer your conversion rate and margin are to your real data, the closer this is to reality.
Frequently asked questions
Does TikTok advertising work?
What is the minimum budget on TikTok?
Can I use my organic videos as ads?
Is the TikTok Pixel mandatory?
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