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What Are TikTok Ads and Why They Work for Businesses

When you hear the word viral, what comes to mind? If you’re like most people, you probably think of hilarious dance moves on TikTok or stunt videos that you can’t help but share with friends. For those of us who work in digital marketing and business growth, the word viral means something totally different.

Viral video can put a business on the map. A single video clip can be shared hundreds, thousands, or even millions of times, leading to a level of awareness and brand momentum that’s nearly impossible to achieve through paid advertising placements alone.

Every marketer in 2022 is looking for ways to go viral, and there’s no better place to get discovered than through TikTok Ads.

TikTok is a social media service for creating, sharing, and discovering short videos. TikTok allows people to express themselves through singing, dancing, comedy, and lip syncing in video form, and those videos are shared broadly across an enormous global community.

Unlike many of the stars it has created, TikTok wasn’t born overnight. The platform was originally launched as Musical.ly by the Chinese product designer Alex Zhu back in 2014. It gained a cult following and slowly picked up momentum, until it was purchased by ByteDance in November of 2017. ByteDance merged Musical.ly with a competing app called TikTok, and magic was born. Within the year, TikTok had launched in the U.S., and by October 2018 it had surpassed Facebook, Instagram, Snapchat, and YouTube in overall downloads.

Now in 2022, TikTok has reached 755 million users worldwide. According to the app intelligence firm Sensor Tower, the short-form video app crossed 2 billion downloads across the App Store and Google Play in the first quarter of 2020. A separate report, this one by App Annie, found that TikTok saw 325% growth in 2020, and the monthly time spent per user also grew faster than any other mobile app.

If that’s not impressive enough, consider this: TikTok users between the ages of 18 and 24 watch an average of 233 TikTok videos a day, and a whopping 48% of millennial mothers are now using the mobile platform. Women between the ages of 25 and 34 spend an average of 60 minutes a day on the TikTok app.

TikTok Highlights

• An average of 1 million TikTok videos are watched each day.
• TikTok users spend an average of 52 minutes per day on the platform.
• 90% of TikTok users access the app on a daily basis.
• TikTok is currently worth an estimated $50 billion.

TikTok Ads — An Untapped Opportunity for Businesses

Sensing an opening in the marketplace, more and more brands have looked for opportunities to connect with consumers on the TikTok platform. Currently, the most effective way for businesses to take advantage of TikTok is with TikTok Ads.

TikTok has been actively working to make its platform more lucrative to businesses for some time. The same addictive algorithm that’s made the platform so successful with younger audiences is also what makes it so effective for businesses. More businesses are using TikTok to engage with younger audiences than ever before.

Engagement is key, and it’s part of what differentiates TikTok from competing advertising platforms. TikTok Ads are often designed in a way that makes them interactive — encouraging users to participate by creating their own content as part of “challenges” that relate to the brand. That kind of user-generated content gives brands credibility, and it extends the lifespan of a digital campaign.

Businesses can access TikTok Ads through the TikTok for Business Ads Manager platform. Advertisers have the ability to design their ads from scratch and select from one of five ad formats. 

The most popular ad formats on TikTok Ads are:

• TopView Ads: Video ads that appear once a day, immediately after a user opens up their app. Top View ads run for 60 seconds, and they are best used to promote products or services. A good example of a Top View ad would be a movie trailer.

• In-Feed Ads: Video ads that appear on a user’s discovery page. In-Feed ads are the fourth video most users see when they open up the TikTok app. These ads are recommended to drive conversions. For optimal results, in-feed ads should include a call-to-action (CTA).

• Branded Hashtags: Exclusive hashtags available to businesses. Branded hashtags can be expensive, so they are typically only used by the very largest businesses. For example, a fashion brand might create a hashtag called #ThisIsMyPinkDress, where TikTok users are encouraged to post videos of themselves wearing the brand’s signature pink dress. Businesses that purchase branded hashtags have exclusive rights to the hashtags, which prevents competitors from posting their own content with the hashtag.

• Brand Takeovers: This ad format includes TopView, In-Feed, and Branded Hashtags all at once. As you can expect, the price of a brand takeover can be quite expensive, reportedly starting at $50,000 per day. For the price, brands get access to all TikTok ad formats at once, and they can achieve incredibly high engagement rates.

• Branded Effects: Ads using 2D, 3D, or AR to add product images into users’ TikTok videos. When we think of branded effects, what we most commonly think of are stickers and filters. TikTok users can put these stickers and filters on their own content, giving businesses a form of promotion that can go viral in an instant. Branded effects are best used to create awareness and engagement.

How to Use TikTok Ads to Grow Your Business

Young audiences are on TikTok. Businesses are on TikTok. What you might be wondering now is how it all comes together. How can you use TikTok Ads to grow your business in a sustainable way? 

Getting started isn’t very difficult. Setting up a professional account on TikTok is simple. Enter a brief description of your business, as well as billing information and payment information, to begin using TikTok’s paid business services. 

(Click here to set up a TikTok Business Account.) 

A business account is your brand’s public profile, where you’ll create engaging video and other short-form content for audiences to explore.

Choose between two ad manager modes—simplified or custom—depending on the level of control you want over your ads. In simplified mode, the TikTok algorithm will make most determinations when it comes to how your ads are viewed by users. With custom mode, you will have better control over how your ads are displayed. Custom mode includes advanced customization options, like A/B testing, audience targeting based on video and creator interactions, and ad combinations.

Now comes the fun part — it’s time to create your first ad. Creativity is the name of the game on TikTok. For maximum business growth on TikTok, you’ve got to think outside the box. What can you do to get people talking about your brand? What’s the best way to encourage people to recreate your video and share the content with their friends?

Looking for inspiration? You’re in luck. Check out what these businesses have done with TikTok Ads:

• When the sports retailer Sports Direct wanted to increase awareness of a new PUMA sneaker line, sold exclusively at its stores, the company launched a TikTok Hashtag Challenge with three videos. One video came from Sports Direct itself. The other two videos were commissioned by Sports Direct and published by popular content creators, or TikTok “influencers.” Sports Direct also ran a Brand Takeover ad on TikTok, as well as a set of In-Feed Ads that featured the same creative. In total, the TikTok ad campaign by Sports Direct reached more than 3.1 million users.

• Crumbl is an up-and-coming cookie brand that delivers fresh baked goods to consumers all across the country. In a bid to achieve business growth on TikTok, Crumbl created a series of flavor release videos leveraging TikTok’s Spark Ads. Crumbl’s videos showcased the baking experience and included behind-the-scenes content showing viewers how each limited release flavor is developed. The company’s marketing team also built hype by creating hashtags (#crumblreview and #tasteweekly) that users were encouraged to include in videos reviews of each weekly flavor. The hashtag-driven campaign helped Crumbl grow its follower count organically, leading to a 1,500% increase in followers over the course of a two-month campaign.

Feeling inspired yet? 

Once you’ve locked in a solid idea and recorded your TikTok video, it’s time to submit your ad for review. TikTok usually takes 24 hours to review ads. You can speed up the process, and avoid delays, by making sure your ad follows TikTok’s advertising policies. For example, TikTok wants to make sure ads are free from spelling or grammatical errors, contain audio, are between five and 60 seconds in length, and don’t contain too many symbols or numbers. You should also make sure to follow standard video sizes: 9:16, 1:1, 16:9.

How Much Does It Cost to Advertise on TikTok?

Most businesses assume that advertising on TikTok is very costly. Certainly, some ad formats—like branded hashtags and brand takeovers—can cost tens of thousands of dollars a day. However, most businesses that use TikTok Ads are paying far less for impressive user acquisition and engagement.  

The minimum campaign spend on TikTok is $500, compared to $150 on Instagram and $150 on Facebook. The average CPM (cost per thousand impressions) is $10 on TikTok, compared to $6.70 on Instagram and $7.19 on Facebook.

Of course, those are only minimum prices. Prices can escalate quickly when advertising on the TikTok Ads platform. According to a report in AdAge, the average price paid by brands that advertise on TikTok ranges from $50,000 to $120,000 depending on the ad format and duration. Branded hashtags and brand takeovers are two of the most expensive ad formats, while in-feed ads and top view ads are viewed as the more economical option.

What influences the cost of a TikTok ad? Beyond the ad format, which we’ve already discussed, there are a few other primary factors. These include:

• Ad objective
• Bidding method
• Bidding amount
• Targeted audience

The most effective strategy for lowering the cost when using TikTok Ads is to hire a growth agency that works with experience using the platform, like CMDS. Succeeding on TikTok requires extensive creative testing, as well as competitive analysis. Although creativity is at the heart of TikTok’s user platform, it’s really competitor analysis and testing that differentiates good TikTok advertising strategies from great TikTok advertising strategies.

Tapping Into the Latest TikTok Trends in 2022

How do you develop a TikTok campaign that will grow your audience and drive more customers to your place of business? By creating short-form video content tied to the latest TikTok trends.

How many of these TikTok trends have you seen in the past year?

1. Lip syncing
2. Social media challenges
3. Makeovers
4. Calming and satisfying videos

Any one of these trends can be used as a starting point for businesses that want to run TikTok Ads.

More than anything else, TikTok ads are known for being original. Users on the platform say they appreciate ads that are “unique” and “different” from the ads on other social media sites.

When it comes to ad equity, it’s hard to beat the effectiveness of TikTok. According to a 2021 report by Kantar, TikTok is the No. 1 platform for ad equity, ahead of Instagram, Amazon, Google, and Twitter. When consumers evaluate the ads they see on TikTok, they are looking for authenticity and originality. This is pretty different from what consumers are looking for from ads on Google or Amazon, for example, so it’s important that brands adjust their strategies accordingly when developing content for each individual channel.

The Future of TikTok Ads — What’s In Store for Businesses?

When we look at the future of TikTok, it’s clear that allowing content creators to monetize their content as a user-generated platform has been critical to the company’s success. A subscription model for original, more extended form content could someday be coming down the pipeline, but don’t expect that to impact advertisers much, if at all.

Brand advertisers are likely to see TikTok continue to expand its advertising offering, especially for mid-size businesses and agencies. Having already won over the market of global brands and retailers, TikTok’s next outreach will likely occur among medium-size organizations.

TikTok Ads is already useful for businesses that want to expose content to new audiences, and we expect that to continue to be the case in 2022 and beyond. TikTok’s “similar audiences” feature allows brands to choose lookalike audiences that are similar to their existing audiences. With more than a billion users in hundreds of countries worldwide, this opens up the door to brands finding new customers and opportunities for business growth.

If you are thinking about getting in on the action and advertising on the TikTok platform, we can help. Contact our digital marketing strategists today for a custom evaluation, and we’ll tell you how to use TikTok advertising to achieve your broader marketing and customer acquisition goals.

Tagged as tiktok, tiktok ads, tiktok advertising, tiktok for businesses