TikTok Advertising for E-Commerce: Strategies and Best Practices

With over 1 billion monthly active users, TikTok has become one of the most popular apps in the world, particularly among younger generations. In fact, over 60% of TikTok’s users are under the age of 30, making it an attractive platform for Ecommerce brands looking to reach younger audiences.

One of the key benefits of TikTok Ads is their ability to deliver targeted and cost-effective advertising. With TikTok Ads, businesses can create ads that are highly relevant to their target audience and deliver them in a cost-effective manner. This is in contrast to traditional advertising channels, which can be expensive and may not reach their intended audience.

With its massive and engaged user base, unique algorithm, and ability to deliver targeted and cost-effective advertising, TikTok Ads can help businesses expand their reach and connect with potential customers in new and exciting ways. By incorporating TikTok Ads into their advertising strategies, businesses can stay ahead of the curve and effectively reach younger audiences.

Table Of Contents

  • Overview of TikTok’s User Demographics and Behavior
  • Types of TikTok Ads available
  • TikTok Ads Account Structure & Campaign Segmentation
  • Measuring The Effectiveness of TikTok Ads
  • Are TikTok Ads Right For You

Overview of TikTok’s User Demographics and Behavior

TikTok’s user demographics are one of the platform’s biggest selling points for businesses looking to reach younger audiences. According to recent data, the majority of TikTok’s user base is made up of Gen Z and Millennial audiences, with around 60% of users falling between the ages of 16 and 24. However, the platform is seeing a rise in popularity among older demographics, with over 22% of users aged 30 to 49. TikTok also boasts a diverse user base, with a nearly equal split between male and female users. In terms of geographic location, TikTok’s popularity is truly global, with over 1 billion monthly active users across the world.

Engagement behavior on TikTok is unique compared to other social media platforms. Users on TikTok consume short-form videos at a rapid pace, with each video lasting only up to 60 seconds. Unlike platforms such as Instagram or Facebook, where users primarily scroll through a feed of images, videos, and text-based posts, TikTok users are highly engaged with the app, spending an average of 52 minutes per day on the platform. TikTok’s algorithm also plays a significant role in user engagement, as the “For You” page presents users with content that is personalized to their interests based on their behavior on the app.

Average monthly hours spent on social media platforms, like TikTok

TikTok’s user base is primarily made up of Gen Z and younger millennials, who are known to be more skeptical and selective when it comes to making purchases. However, a survey conducted by Statista revealed that 71% of TikTok users in the US were inspired to make a purchase after seeing a product on the platform so with the right approach, businesses can still effectively engage with these users and increase their chances of making a purchase.

Types of TikTok Ads available

TikTok offers a variety of ad types to choose from, each designed to reach different marketing objectives and audience segments. These ad types include In-Feed Ads, Brand Takeovers, TopView Ads, Branded Hashtag Challenges, Branded Effects, and Spark Ads. Each ad type has its own unique features and strengths, making it important for brands to test out which works best for their specific goals.

Different types of TikTok ads that can be used on the platform
  1. TikTok Spark Ads

TikTok Spark Ads are a type of advertising format on TikTok that allows brands to collaborate with creators to create sponsored content. The creators are tasked with creating engaging and authentic content that resonates with their followers and promotes the brand’s message. The brand is then able to “spark the organic content, using bidding strategies to place it in front of targeted audiences. 

The unique aspect of spark ads is that while you are able to leverage organic content in your paid ads strategies the ad creative itself remains completely authentic and organic-looking.

  1. In-Feed Video Ads

In-Feed TikTok Ads are a type of native advertising that appears in the “For You” feed of the TikTok app. These ads can be either image or video-based and typically include a call-to-action (CTA) to encourage engagement or a link to a website.

There are several types of In-Feed TikTok Ads that businesses can utilize. One example is the TopView ad, which is a full-screen video that appears as soon as a user opens the app. Another type is the Brand Takeover ad, which takes over the entire screen upon opening the app and typically includes a 3-5 second static or video ad that leads to an internal or external landing page. In-Feed Native Video ads are also a popular option, as they blend seamlessly with organic content and are optimized for mobile viewing.

  1. Branded Hashtag Challenges

TikTok Branded Hashtag Challenges are a popular and engaging form of advertising on the platform. These challenges encourage users to create and share content related to a specific brand or product using a specific hashtag. This type of ad campaign is highly effective in promoting brand awareness and engagement among the TikTok community.

A great example of a successful Spark Ad campaign is the #GuacDance challenge by Chipotle. The challenge encouraged users to create videos of themselves doing the “Guac Dance” to a specific song, with the hashtag #GuacDance. The campaign received over 250,000 user-generated videos and 430 million video starts, resulting in a significant increase in brand awareness and engagement.

TikTok Ads Account Structure & Campaign Segmentation

The structure of your TikTok Ads campaign is a critical component of its success. By creating a well-structured campaign, you can efficiently target your desired audience, track performance, and optimize your advertising spend. A well-structured campaign can also help you to better understand your audience’s behavior, and which ad formats are driving the most engagement and conversions. Ultimately, taking the time to develop a strong campaign structure can lead to higher ROI and a more successful TikTok Ads campaign overall.

Before we get into the meat and potatoes of TikTok account structures let’s review the different campaign components and best practices.

  1. Campaigns & Objectives

Campaigns are where you set your overall objective, ensuring it aligns with your brand goals. TikTok offers various campaign objectives, such as brand awareness, app installs, and conversions. It is recommended to create separate campaigns for each objective to have better control and optimization. Here is an outline of the major campaign objectives available on the platform

  1. Bid & Budget Optimizations

TikTok Ads uses an auction-based system, where advertisers bid for ad placements. It is recommended to optimize your bids and budgets to get the best results for your campaign.

  1. Adsets & Audiences

Ad sets allow you to target specific audiences, such as location, age, gender, interests, and behaviors. Grouping ad sets by audience rather than product or creative type will help you to better monitor and optimize your targeting efforts.

  1. Ad Groups & Ads 

Ad groups allow you to test different creatives for the same ad set. It is recommended to use ad groups to test different ad formats, messaging, and visuals to see which resonates best with each one of your audience segments.

Much like Meta ads, we recommend a simple, easy-to-use, track and optimize account structure. We start by aligning our campaign objectives with our overall brand goals for the platform. Typically we recommend using “conversions” as your campaign goal as it almost always is the end goal for Ecomm brands. 

Next we begin segmenting our campaigns, and for our strategy is very tailored to the client. However, the most common strategy here is to have 1 TOF campaign, 1 MOF campaign, 1 BOF campaign, and commonly we’ll incorporate a separate testing campaign. The most important aspect here is that we are not segmenting by audience, creative or product (unless you have hundreds of SKUs access several product categories, then a multi-SKU structure might make sense. We’ll save that for a separate eBook though) and segmenting by funnel stage.

Overview of TikTok full-funnel campaign strategy

Once we have identified our winning account structure next we delve a bit deeper into the campaign and begin segmenting audiences at each stage of the funnel. We typically like to see 2-3 ad sets per campaign. This allows us to target different customer segments with unique messaging as well as test different segments to find the highest performing ones. 

A good rule of thumb for TOF campaigns is to segment different targeting options into ad sets. Meaning, one ad set should be focused on broad demographic based targeting, another ad set should take it a step further and add interest-based targeting measures, while another one could focus on behavioral targeting or lookalike audiences (which happen to be very strong despite iOS14 issues)

Finally we reach the innermost workings of our campaigns, where we create different ads to target each of our audience segments. Here is where we test multiple creative and messaging iterations across to find what resonated the most with each audience segment.

We typically recommend testing 3-5 ads per ad set but this can fluctuate depending on budgets and overall account diversity. 

One thing to note here is that unlike other platforms where we can track frequency (which is a metric used to understand how many times a user in one of our audience saw a single ad) and typically see a correlation between rise in frequency and a drop in performance, 90% of your TikTok ad creative will be exhausted within 10-14 days after launch. For this reason we recommend being very strategic with the way you are sourcing and cycling in fresh content. 

Measuring The Effectiveness of TikTok Ads

Assessing the effectiveness of TikTok ads requires a different approach compared to other ad platforms due to the unique nature of the TikTok platform. The app’s short-form video content and highly engaged user base necessitates a focus on metrics such as views, engagement, and click-through rates (CTR) as compared to Meta ads, where a lot of the focus is put on cost per acquisition (or action), return on ad spend (ROAS), conversion rate (CVR), and overall conversion value. 

Because TikTok is a TOF heavy platform we assess the effectiveness of the advertising strategy on its ability to seed retargeting platforms like Meta, Google, and Klaviyo, with new and relevant users to retarget and drive towards conversion. 

Here are a few of the metrics you should keep a very close eye on to gauge the effectiveness of your TikTok ads:

  • Impressions (CPM)
  • Engagement Rates
  • Video Completion Rate (VCR)
  • Click Through Rate (CTR)
  • Cost Per Click (CPC)
  • Conversion Rate
  • Return on Ad Spend

Measuring campaign performance can be done from a number of different sources. You can choose to use a 3rd party server-side software (which we always recommend with a omni-channel digital marketing strategy), connect your reports to a 3rd party software that created dynamic visualizations, or you can analyze the data right in the TikTok ads platform. The image below gives you a general overview of the TikTok ads dashboard that can be customized to highlight the metrics most important to you and your business.

TikTok ads performance dashboard allowing users to get a general understanding of account performance

Long story short, TikTok ads require a unique approach to assessing their effectiveness due to the nature of the platform. Unlike other ad platforms, metrics such as engagement rates, video completion rate, and click-through rate are crucial to measuring the effectiveness of TikTok ads. In addition, focusing on seeding retargeting platforms such as Meta, Google, and Klaviyo with new users is key to driving conversions. While return on ad spend (ROAS) is not as critical on TikTok as it is on other platforms, recent data suggests that it should be given more attention. By closely monitoring these metrics, businesses can create more effective TikTok ad campaigns and improve their overall ROI.

Are TikTok Ads Right For You

The TikTok ads platform presents an incredible opportunity for brands to tap into a highly engaged audience with its unique content format, but getting it right can be a challenge for those new to the platform. With a shift in mindset needed, from creatives to KPI analysis, it’s important for brands to assess whether TikTok is the right fit for their target audience.

For those looking to expand their reach and connect with a younger (and sometimes older) audience, TikTok should definitely be on their radar. However, it’s essential to understand the platform’s capabilities and develop a solid strategy to make the most of it. 

If you’re feeling lost in the world of TikTok, fear not – our Growth Strategists are here to help you navigate the waters and get the framework in place for a successful TikTok advertising campaign. Schedule a call to learn more about adding TikTok ads to your paid media mix

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