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How Much Do TikTok Ads CPM Cost in 2023?

TikTok is extremely popular and has significant advertising potential for businesses. What is the TikTok CPM and how much does it cost to advertise on the platform?

The below data and insights are based on Varos’ data set. Thousands of advertisers are using Varos to get real-time benchmarks for digital marketing and revenue metrics (CAC, Retention, CPM, CTR, Conversion Rate, LTV, Revenue Growth, etc.) compared to similar companies.

When looking at benchmarks, it’s also important to normalize for by vertical, size, product price, campaign objectives, country and more - which you can all do directly within Varos.

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TikTok’s stratospheric rise

TikTok has quickly become one of the most popular social media apps ever, with simple video creation tools that make it easy to become an instant creator. TikTok allows users to shoot and share videos, pictures, and other user-generated content (UGC). TikTok’s appeal lies in its many trends that are constantly changing, which keep users engaged and creating new content. Trends on TikTok include dances, challenges, pranks, and more.

While TikTok launched in 2016, its popularity skyrocketed in 2019 and 2020, and the app has been downloaded 3.5 billion times and has grown to over 1 billion users worldwide. TikTok’s short-form videos have spurred wannabes on other platforms, such as YouTube Shorts and Instagram Reels. TikTok is available in 75 different languages and 155 countries, making it a great choice for reaching people around the world.

A creator’s paradise

TikTok’s engagement rate is high compared to that of other social media platforms. Users love the fact that they can create and modify videos with a myriad of special effects, download content from TikTok, and save posts to their favorites within the platform. TikTok leverages user behavior, such as how much time users spend watching a video, whether they watch it multiple times, and whether they send it to another TikTok user. These details impact TikTok’s algorithm and curate the content it suggests to users. TikTok’s Q&A feature also enables creators to maximize their relationship with audiences, thereby fine-tuning their ability to produce future relevant content for them.

TikTok’s popularity makes it an ideal platform for digital marketing. Businesses of all sizes use TikTok to increase their brand exposure by engaging directly with audiences and going viral. Creating your own TikToks is one way to get the word out about your brand, and you don’t have to have a lot of skills to do so. Replicating a current trend is one of the easiest ways to quickly get yourself and your brand out there. Create simple videos that showcase your product and easily add the catchy music that is a TikTok staple. TikToks create a total experience in which users can envision themselves as your customers and are more likely to buy your product.

When you create TikTok content to market your brand, keep these tips in mind:

  • Don’t push your product too hard. TikToks should be casual and fun without being too obviously salesy. Your TikToks should blend in well with other user-generated content, so your ads don’t feel like ads.  
  • Make sure your content isn’t boring. You want to give users something to stop scrolling for, so remember to incorporate eye-catching graphics and engaging content. That said, keep your message consistent so your TikTok is favored by the platform’s algorithm and you show up consistently in your target audience’s feed.
  • Rely on the power of music. TikTok content is all about the music. Brands should use songs that are already well-known and popular on the platform, so they feel familiar to users.
  • Shorter is better. Don’t make your TikTok longer than 15 seconds or you’ll lose users’ attention.

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Advertising on TikTok

More and more eCommerce businesses are turning to TikTok advertising to reach users. While the platform traditionally appeals to younger users, TikTok is rapidly gaining popularity among users of all ages. Advertising on TikTok is easy and often affordable. It lets you reach a very diverse audience, with a level playing field in terms of which ads become popular or go viral.

TikTok’s ad formats are designed to facilitate maximum user engagement and increase your brand’s exposure. You can market your product in a realistic way on TikTok, which breeds a sense of authenticity and connection with users.

There are several different ad formats on TikTok, and the type you choose will depend on your budget, your business’s size, and your ad campaign’s goals. Here are some of the more common ways to advertise on TikTok:  to engage in paid advertising on TikTok. Video ads on TikTok come in several different formats, including In-Feed ads, Top view ads, branded effect ads, brand takeover ads, hashtag challenges, and several new formats.

In-Feed ads are ads that are shown natively within users’ news feeds, blending organically into their “For You Page”. In-feed ads allow users to like, comment, interact with, and share the ad. They can be easy to scroll through, so they rely heavily on catchy images and music. In-feed ads can also include a call to action that helps drive product sales.

Top view ads are video ads that appear right after users open the TikTok app, which makes them very effective for driving interactions. They can be up to 60 seconds long, which makes this format a good choice for businesses that want to advertise a long-form video or trailer.

Branded effects ads let your business create customized stickers or filters for TikTok. The branded effect can be set to last for up to ten days at a time. Anytime users post a TikTok using your branded effects filter, they’re running great advertising for your brand.

Brand Takeover ads let your brand take over users’ whole screen for a few seconds, after which they turn into an In-Feed video ad. Users who are interested in your ad are redirected to your website. TikTok will only show users one brand takeover ad per day, which makes them limited in number and expensive to run.

Branded hashtag ads prompt users to post TikToks of themselves using your product or doing a dance with it, tagging it with your challenge’s unique branded hashtag. They increase awareness of your brand and have high levels of engagement. These challenges create a lot of buzz for a company and the initial cost of setting one up can be expensive for small businesses. However, once your challenge is set up, users give you free publicity whenever they repost and participate in your challenge.

Spark ads let users create an ad from an already existing video that has strong potential to be effective because of proven high engagement. This ad type is one of TikTok’s more recent rollouts and lets brands sponsor popular content related to their products.

Carousel ads appear on a user’s news feed. This ad format lets you post up to ten images with unique captions for each image.

Influencer marketing is another option businesses can use to advertise on TikTok. TikTok has a huge community of influencers who can share your brand and spread awareness of your product. Sending products to an influencer allows them to try them and share them with a much larger audience. It’s a powerful way for customers to learn about your business and interact with your brand.

Unboxing videos feature influencers opening your product’s packaging live and commenting about it to their audiences. Businesses often send influencers a load of several items, also called a “haul,” so they can showcase many products at once. Some influencers are happy to receive and advertise a haul instead of payment. Otherwise, the cost of TikTok influencer posts can range from $5 to $2000.

How much does it cost to advertise on TikTok in 2023?

While advertising on TikTok is considered expensive, the price will depend on the type of ad you choose. Many businesses consider the cost of TikTok advertising worth it, due to the high levels of engagement that make it so effective.

TikTok uses a metric called CPM, or cost-per-mile to charge for in-feed ads. The CPM refers to the ad cost per 1,000 views. The average CPM on TikTok is $10. TikTok advertising prices start at $0.50 CPM and $0.02 cost per click. A minimum budget of $500 is required to spend on a campaign, with a minimum daily budget of $50 at the campaign level and a minimum of $20 per day at the ad group level. The ad group level is where you specify your target audiences, ad placements, campaign budgets, optimization goals, schedule, and bids.

Some of the pricier ad types described above charge a flat fee ranging from $50,000 to $150,000 for the first six days. For example, a branded takeover or branded hashtag challenge can cost $150,000, for which your business will also be featured on TikTok’s Discovery banner, yielding you valuable visibility.

CPM advertising is most often leveraged by eCommerce businesses looking to expand brand awareness of their products and services. They’re usually just one component of a business’s total advertising strategy. Several other platforms also use CPM campaigns.

Examining your analytics

TikTok’s Ads Manager lets you track the performance of your ads and ad spend. There are several TikTok benchmarks to consider besides CPM, such as your click-through-rate (CTR). Your TikTok CTR benchmark calculates how many users who viewed your ad went on to click on it. To calculate your CTR, you can divide your total number of clicks by your total impressions. The average CTR for TikTok is around 1%.

Cost per click is the calculation TikTok uses to bill you based on how many times visitors click on your ads. The average cost per click for TikTok ads is approximately $1 and is based on a bidding system.

Your conversion rate is the number of conversions divided by your total number of visitors. Calculate your TikTok ad conversion rate by dividing your conversions by the total number of visitors you get. If your ad campaign yielded 100 conversions and was viewed by a total of 10,000 visitors in a month, your conversion rate is 1%. TikTok’s average conversion rate is around 3.4% and has been steadily getting stronger. For some ad types such as Top view ads, TikTok’s conversion rate can be up to 16%!

Tracking your conversion rate helps you gauge the success of your advertising campaign and compare its performance to your advertising on other social media platforms like Instagram and Facebook. Monitoring your TikTok ad benchmarks will help you define your ad strategy and decision-making about your marketing spend.

While TikTok’s Ad Manager offers you a glimpse into your ad performance on the platform, to get a total understanding of TikTok benchmarks, you’ll want a more comprehensive platform like Varos. You’ll gain valuable access into the KPIs your competitors are seeing on their TikTok dashboards and find out how much of their ad budget they’re allocating to advertising on TikTok.

Varos puts your TikTok ad benchmarks into meaningful context so you can refine your strategies against other companies in your sub-vertical. It lets you take the guesswork out of TikTok advertising and obtain accurate data you won’t get anywhere else.

With so many different types of ad formats on TikTok, it can be hard to know what’s really working for you. Varos’s robust tools give you immediate insight into campaign performance and let you quickly assess which types of ads are working well for your business.

TikTok’s rapid rise makes it clear that this is the platform of choice for eCommerce businesses that want to be noticed by many people in a short period of time. With a return on ad spend that’s typically high versus other platforms, and ad content that users actually enjoy, TikTok advertising’s potential can’t be underestimated.

TikTok benchmarks: Cost Per Conversion and CPM

TikTok Click-through-rate

TikTok CPC

TikTok ad conversion rate and overall spend

About the Author

Yarden Shaked

Co-founder & CEO at Varos

LinkedIn

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I'm loving what @Varos_com is doing with providing much more relevant benchmarks for #ecommerce... especially since it shows that we are absolutely DOMINATING @Elumynt on #facebookads!

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Chase Dimond | Email Marketing Nerd 📧
@ecomchasedimond

Bottom line: I’m recommending Varos to you all because it’s FREE (for now) and it’s already added a ton of value for myself and my clients.Check it out 👇

Social Savannah
@social_savannah

I would definitely recommend checking out Varos. With Varos you can easily see how your peers are performing, for free. You get insights into not only TikTok Ads benchmarks, but also similar data for Facebook Ads, Google Ads, and more. #VarosAmbassador

jason wong
@eggrolI

Varos allows thousands merchants to upload anonymize marketing data across meta and google and aggregating it to show what the average is across different categories and ad spend

Cody Plofker
@codyplof

With varos.com, I can see exactly how our performance across channels stacks up against our competitors in our space.

Barry Hott ☄️
@binghott

Compare your ad performance to benchmarks of companies just like yours, anonymously.
I would've killed for this tool years ago and now it's here and oh it's free. Amazing.

Ron Shah
@obviceo

I've been seeing some content about @Varos_com so we decided to check it out.

One underrated feature of theirs is the Shopify Benchmarking, which is FREE btw.

Literally impossible to access this data anywhere else. Check out what we're seeing at @my_obvi 👇

William Harris
@wmharris101

I'm loving what @Varos_com is doing with providing much more relevant benchmarks for #ecommerce... especially since it shows that we are absolutely DOMINATING @Elumynt on #facebookads!

This is in the Baby and Children vertical.#fbads #ppcchat #retail #dtc