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How to Acquire Customers With TikTok Ads
TikTok ads intro
Over a billion active users and growing. An unsaturated platform with exponential user growth. Impressions between $1-5 on average (~1/10th the price of Facebook’s).
Marketers’ mouths should be watering.
TikTok is no longer the next big opportunity in paid social. It’s already here.
And yet, most businesses haven't tested a single TikTok ad.
Uncertainty and a lack of understanding of this massive opportunity:
- TikTok’s creative requirements are more complex than other ad channels. Marketers avoid it because they’re not sure where to start.
- TikTok's isn't just for Gen Z. Half of users are over 30. Marketers often aren’t sure if their target audience is on TikTok, let alone how to advertise to them.
- You can't follow your Facebook ads playbook and expect the same results. You need a new strategy.
This Demand Curve guide teaches you proven strategies to acquire customers with TikTok ads.
We’ll cut through the noise and show you what’s working on TikTok now. So crack your knuckles and grab a notebook. Let’s get to work.
With their insights and our research, we blew this channel wide open. We’ll outline a TikTok ads strategy you can launch today to get conversions for your business.
If you're just starting with TikTok ads, we recommend reading the chapters in order—each one builds on the last.
There's a lot of ground to cover, but before we dig into actionable best practices, let's cover the fundamentals.
By the end of this chapter, you'll understand why TikTok has so much potential. You'll know whether TikTok ads are right for your business, and you'll have a clear path to get started.
The 3 things every marketer needs to know about TikTok ads
For your TikTok marketing to be effective, you need to understand user behavior—how and why people use TikTok.
1. Why people use TikTok
People use TikTok primarily for entertainment. That means buyer intent is low on this channel.
What draws people in is the “For You” Page.
The For You Page (FYP) is a personalized and endless scroll of short video clips—a torrent of dopamine hits that users love.
TikTok's algorithm curates videos so well, that the average user opens the app eight times a day for over an hour total.
- People of all ages spend time on TikTok because the breadth of content is so immense.
- Videos range from educational tips and tutorials to viral memes, comedy sketches, and plenty of dance videos—all designed to grab your attention and not let go.
2. How to incorporate it into your growth strategy
For most brands, TikTok is best suited as a secondary channel to drive top-of-funnel traffic.
At a high level, the paid strategy we recommend looks like this:
- Get people to stop swiping and pay attention to your ads.
- Bring them back to your website (or app) to track, retarget, and convert.
It’s the same two-pronged approach we recommend Growth Program students follow to acquire customers on any ad platform.
For a smaller subset of businesses—particularly those selling visual products with broad appeal and short sales cycles OR those targeting Gen Z—TikTok is worth exploring as a primary acquisition channel to convert customers right away.
Note: To reiterate, TikTok isn't only for Gen Z, but younger generations are more accustomed to today's integrated social shopping trend.
3. It's all about the creative
The secret sauce on TikTok has nothing to do with technical media buying—it has everything to do with your content.
Rigorous creative testing is how you'll succeed here.
We walk you through how to approach content creation for your ad creatives in the next chapter.
But for now, let's continue with the fundamentals and talk about why you should care about TikTok in first place.
Why should you care about TikTok ads?
TikTok was the world's top-grossing and most downloaded mobile app in 2021, now surpassing one billion active users, like we stated in the intro.
It’s projected to overtake the ad revenue of Twitter and Snapchat combined in 2022—and match YouTube within two years.
For comparison, see how TikTok's reach stacks up against major social ads channels:
Most popular social media by the number of active users.
Despite the app's mass adoption, many marketers still think of TikTok in terms of teenage dance videos and singsong duets. The reality is that 75% of TikTok users are over 20 years old, and 50% are over age 30, like we mentioned at the beginning.
That means you aren't advertising exclusively to Gen Z and younger millennials who lack significant purchasing power.
Here’s the latest breakdown of users’ age demographics in the United States:
TikTok appeals to many different age groups.
The social media platform's user base grows larger every year. Brands can no longer ignore the opportunity to get in front of this highly engaged and growing audience.
Why do companies struggle so much with TikTok?
If the opportunity is there, why aren't companies taking advantage?
Companies struggle with TikTok because they've been trained to believe their ads must always look like ads. They don't understand that the conventional ads playbook doesn't work on TikTok.
On TikTok, ads hardly resemble ads at all. The best TikTok ad creatives manage to blend in and match the light, entertaining context of the platform.
That's why the TikTok ads strategy we outline in this guide is closer to influencer marketing than traditional paid acquisition.
People buy products on TikTok based on the trusted recommendations of influencers and lesser-known creators, not brands' blatant self-promotion.
To acquire customers with ads, your TikTok videos must be authentic and drive strong engagement. It's the only way.
If you don't have the resources to make your own ads, we recommend you outsource creative production to creators who can do this work for you (see how to do this in Chapter 3).
What products are TikTok ads best for?
There are two types of products we've seen have the most success with TikTok ads:
- Direct-to-consumer (DTC) ecommerce
- Mobile apps and games
Let's look at a few examples of each.
1. Direct-to-consumer (DTC) ecommerce
TikTok is a visual, high-energy platform, so it's only natural that visual consumer goods do well on it.
Companies that sell physical products with average order values (AOVs) under $150 and short sales cycles are ideal for TikTok ads.
Here are a few industries we've seen have the most success, with examples from each:
- Beauty and cosmetics: Jones Road sells clean, high-grade beauty products for all skin types and tones. They use makeup tutorials and seemingly authentic product reviews to show viewers how to use their products. This strategy helps to generate awareness, interest, and desire.
- Fashion and apparel: True Classic sells premium fitted T-shirts for men of all body types. They use before-and-after user-generated content (UGC), testimonials, and side-by-side product comparisons with competitor brands.
- Consumer-packaged goods (CPG): Athletic Greens, a mega podcast advertiser, sells a nutritional greens powder. They incentivize conversions with unique discount codes and free samples.
2. Mobile apps
Mobile apps and games work well on TikTok for the same reason they work on other channels: Free app installs are low friction and tend to convert well.
To get affordable CPIs (cost per install), show real-time usage of the most exciting parts of your app (e.g., gameplay, onboarding, user progression, exclusive features your competitors don't have).
Advantages and challenges of TikTok ads
TikTok presents several advantages over paid social channels like Facebook, Instagram, YouTube, and Snapchat.
1. TikTok is unsaturated
Competition remains low and traffic affordable. Here are a few performance benchmarks to keep in mind, depending on your campaign objective:
2. Exponential user growth
Low advertising competition and an influx of engaged new users make TikTok a potential blue-ocean channel for customer acquisition.
And the broad range of age demographics allows brands to market to secondary audiences effectively.
3. If an ad works on TikTok, it'll work anywhere
The creative learning curve is steep on TikTok, but once you iterate to a winning formula, you can repurpose creatives for other ad channels and anticipate comparable results.
For instance, repost your best TikTok ad creatives to Instagram Reels and expect similar performance.
4. Streamlined media-buying experience
The TikTok ads media-buying experience is more intuitive and approachable than Facebook’s. The main reason for that is how you target audiences.
While TikTok has similar custom audience features as other paid social platforms, broad demographic targeting tends to produce the best results, making it easy to get started fast.
As long as you supply your ad account with a high volume of creatives to test, TikTok will find audiences for them. Let your creatives do the heavy lifting.
There are four main challenges to consider before advertising on TikTok.
TikTok is one of the most creative-intensive channels by far.
In addition to allocating a portion of your total ad spend to TikTok ads, you'll need adequate resources to make bespoke video content that feels native to the platform.
That includes a large stockpile of UGC, custom or license-free music, and the patience to withstand repeated ad rejections.
2. High ad refresh rate
TikTok users have short attention spans, and ads fatigue faster than on other channels.
Ads also tend to hit or miss with relatively little in-between, which means rapid testing and iteration cycles are crucial to success. Expect to launch and test flights of new ad creatives every 1-2 weeks to keep up the pace.
3. Limited targeting options
As an immature advertising platform, TikTok lacks the robust targeting, reporting, and attribution capabilities of mature channels like Facebook and Google ads.
That means targeting isn't the primary lever to pull—creative is.
4. Attribution challenges
TikTok relies on a single-session attribution window, making it difficult for businesses to optimize if they’re relying exclusively on TikTok's in-app reporting.
Another important limitation: You can't upload customer email lists to create lookalike audiences.
As of this writing, the only way to upload a customer list is with a Mobile Ad Identifier (MAID)—kind of like a cookie for mobile devices. TikTok accepts two MAID formats: Apple identifier for advertisers (IDFA) and Google advertising ID (GAID).
Key takeaway: The creative requirements are high on TikTok, and it remains a challenge for brands to measure ad success accurately without using third-party solutions. We discuss potential solutions at the end of chapter 4.
Timeline and budget considerations
You need to invest enough resources to test, learn, and optimize your TikTok ads before you can spot patterns to see what's working and what isn't.
Here are a few general guidelines on testing timelines and advertising budgets.
How long does it take to test and validate TikTok ads?
It typically takes six to ten weeks to test and validate TikTok ads.
And like most major ad platforms, you'll need to reach 50 conversion events per week to exit the learning phase and start optimizing.
If you implement what we teach in this guide, you can expect to see the full potential of your account in about that timeframe.
- If, by that point, you're still an order of magnitude off where you need to be in your CAC and return on ad spend (ROAS) goals, it's unlikely that you'll be able to make TikTok work.
- On the other hand, if, after six to ten weeks, you're 50% of the way there, you should be able to close the gap with further creative testing, giving the algorithm more time to learn.
How much do TikTok ads cost?
The TikTok ad platform requires an ad spend of at least $20 per day but recommends spending 20x your CPA goal.
Beyond that, we’re hesitant to give specific numbers on ad budget (every company is different). As a rule of thumb, plan to allocate 10-30% of your primary ads channel budget to TikTok.
We recommend allotting ~85% of the total amount to prospecting and creative testing and 15% to retargeting. Let your performance metrics determine how you distribute that 85%.
- For example, suppose a new batch of creatives causes your creative testing campaign to outperform your prospecting campaign. In that case, you should allocate more budget to the testing campaign and less to the prospecting campaign.
What's a reasonable starting budget?
Use your CPA target to get a rough idea of how much you should expect to spend per day.
Use this formula to find your starting number, then optimize based on performance:
- To calculate your weekly budget, first multiply your target CPA by 50 (minimum weekly conversion threshold needed to optimize).
- Then divide your calculated weekly budget by seven to arrive at your daily budget.
- Here's a hypothetical example using a $35 CPA:
- Ex: $35 x 50 = $1750 / 7 day = $250 daily budget
When is it the right time to test TikTok ads?
Ask yourself these four questions to decide if now is the time to test this new channel:
- Can you commit the budget to test TikTok ads properly? Every new channel has a cost of entry, and you must be prepared to spend money to learn. Again, we recommend you set aside 10-30% of your marketing budget to test this channel properly.
- Does your business have strong product-channel fit? Two types of products work best on TikTok right now: products that are visually appealing, with a short sales cycle, and AOV between $25-150, and mobile apps and games. This doesn't mean TikTok can't work for other products, these are just the ones we've seen perform best.
- Do you have the capacity to focus on TikTok as a separate channel in your ad mix? TikTok is an entirely different beast from Facebook. To give TikTok ads a fair shot, you'll need to invest resources to produce a high volume of channel-specific creatives that you can test diligently.
- Have you seen success with Snapchat ads, Instagram Reels, or Instagram Stories? If you've had success with any of these channels and want to diversify, TikTok is the next logical step. It's cheaper, less competitive, and since the format is similar, you can repurpose assets from these other channels.
If you answered “yes” to all four questions, TikTok ads are 100% worth testing.
If not, and you're still interested in experimenting with TikTok, consider trying an organic strategy first.
Consideration: Start with an organic TikTok marketing strategy
It typically takes many weeks or months to get results with organic social media marketing.
Paid advertising lets you accelerate the time to results by paying for attention instead of building it piecemeal via community-building tactics and content marketing.
As we explained, setting up a TikTok ads account doesn't make sense for every business. However, nearly any business can learn to create great content and build an audience organically. This can happen faster than you think.
TikTok is a virality engine
TikTok may be the only platform where it's still possible to rack up hundreds of thousands—potentially millions—of views overnight with a new account and zero followers.
TikTok content is served based on users' interests, not which accounts they follow (the FYP algorithm, remember?). That's huge because unlike Instagram, follower count on TikTok doesn't directly impact your video views.
Your ability to grow depends on the quality of your content, not your popularity.
If you learn how to make excellent thumb-stopping TikTok content, the algorithm will show it to new audiences as long as people engage with it. You'll have a real shot at building a marketable audience much faster than on any other platform right now.
Example: Morning Brew
The popular daily newsletter, Morning Brew, started with an organic content marketing strategy to test video concepts, build brand awareness, and grow a following on TikTok.
Once MB proved they could make the type of content that drives engagement and new followers, they partnered with TikTok content creators to help produce ads in a similar style.
Here's an example of an ad they ran:
Note: We wrote this guide to help companies acquire customers with ads, but the creative best practices we teach also apply to an organic content strategy.
Now let's dig into the details and talk about TikTok's various ad formats.
Types of TikTok ads
There are two main TikTok ad formats in self-serve ad accounts:
- In-feed ads
- Spark ads.
Test both in-feed ads and Spark ads in tandem to see which format performs best. We'll show you how to set up both types in the final chapter of this guide.
In-feed video ads
In-feed ads are the dominant ad type on TikTok. They’re auction-enabled and appear in the For You feed between organic posts.
From a user perspective, two main elements distinguish an in-feed ad from an organic TikTok video.
- Sponsored tag: Ads feature a “Sponsored” tag in the bottom left-hand corner of the screen, above the music track.
- Call to action: CTA button is visible after three seconds.
Spark ads are TikTok's version of boosted posts or "whitelisted" ads on Facebook—your ad looks like it's coming from an influencer, but it's coming from your ads account.
Unlike regular boosted posts (when, for instance, companies pay to amplify their organic content on Facebook), Spark ads function just like ads. They serve through TikTok's ad auction. You retain full audience targeting and optimization abilities, and performance is tracked through your TikTok Ads Manager.
Spark ads can be a huge driver of conversions. They help make ads feel significantly more organic and look natural within the platform, which is the key to success on TikTok.
Source: TikTok Business Help Center
Again, we recommend testing both in-feed ads and Spark ads to see what performs best, but here are the noteworthy advantages of Spark ads:
- Social proof: Consumers are more likely to trust a product recommendation from a 'person-like-me' than a brand's self-promotion. With Spark ads, businesses can partner with everyday creators to promote products in a non-promotional way.
- Minimal branding: Unlike in-feed ads, Spark ads don't display the "sponsored" tag—a dead giveaway. Spark ads disguise all branding elements, making them look more organic.
- Spark ads benefit influencers: Influencers are more likely to work with brands that offer to put money into Spark ads using the influencers' accounts. As a brand, this lets you tap into the influencer's existing audience and new audiences simultaneously. And influencers benefit from the increased exposure.
- Passive organic growth: Unlike in-feed ads, which give users only one option—the CTA, Spark ads let users visit your profile or follow you directly.
- Give Spark ads a second life as organic content: Spark ads are clever because you can save the ad content to your profile as an organic post. If the content is good (as evidenced by the amount of ad engagement), TikTok may boost it to new audiences organically.
Alternative ad types
TikTok is testing features in several different markets, which means that certain ad types may be unavailable to you. Moreover, several alternative ad formats such as collection ads or dynamic products ads (DPA) are only available to managed agency accounts.
TikTok also has a few premium ad options, but they're significantly more expensive and better suited to large-scale brand awareness campaigns versus customer acquisition. Here's a quick overview.
- AR Branded Effects ads: Like Snapchat and Instagram's ad products, TikTok Branded Effects lets businesses create shareable stickers, filters, and AR effects to help drive engagement in their promotions.
- TopView ads: TopView ads are 60-second ads that play immediately as the first video in the user's FYP. TopView ads offer guaranteed reach to brands who can afford them ($65k minimum per day and up to $2 million on a major shopping holiday).
- Brand takeover ads: Impossible to ignore; these are full-screen ads that display immediately after a user signs into the app.
- Sponsored Hashtag Challenge ads: Companies can sponsor hashtag challenges that appear next to the organic hashtag challenges on TikTok’s Discover Page. These can cost up to $500k and are used to generate awareness and encourage virality through digital word of mouth and user-generated content.
What ad placements should you use?
TikTok has three main placement options. Depending on the countries you do business in, you have the option to place ads on TikTok, Pangle, and News App.
Each placement option has different creative and format specifications—so you can't conveniently deploy a TikTok ad creative across multiple placements without making significant adjustments. For that reason, and considering this guide is about using TikTok ads, we recommend sticking with the TikTok app as your sole placement.
Read TikTok's documentation for more information on placements and available locations.
What’s next: How to create A+ TikTok ad creatives
Let's pause for a sec. You have officially mastered the fundamentals of TikTok ads and sized up the opportunity for your business. You're already ahead of the game.
How do you feel?
If you're ready to put theory into action and get your hands dirty, head to the next chapter.
There, we cover creative formulas and best practices for your TikTok ad campaigns, so you can implement them immediately. Plus, we share lots of examples and insights on why they work.
If you're wondering what A+ ad creatives look like, you're about to find out.
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