TikTok has become one of the most popular social media platforms in the world. Whether it’s dancing challenges, funny videos, or creative tutorials, TikTok has something for everyone. It’s especially popular with younger audiences, making it a goldmine for businesses looking to reach Gen Z and Millennials.

One of the reasons businesses love TikTok is because of its advertising opportunities. Many companies find that TikTok ads are relatively cheap, at least when they first start running campaigns. However, as businesses try to scale their ad campaigns, they often discover that TikTok ads can become much more expensive than they expected. This is because, while TikTok ads might seem affordable at first, they come with challenges and costs that increase as the campaign grows.

In this article, we’ll break down why TikTok ads look cheap at first but can get more expensive as businesses try to scale them. We’ll explore how TikTok ads work, why they seem inexpensive, and why costs rise as you spend more money on them.

What Are TikTok Ads?

Before we get into why TikTok ads look cheap at first, let’s understand how they work. TikTok ads are paid advertisements that appear in users’ feeds while they scroll through the platform. These ads can come in several different forms, including:

• In-Feed Ads: These are regular video ads that show up between user-generated content while you scroll. They can look just like any other TikTok video, but with a "sponsored" label on them.

• Branded Hashtag Challenges: These are interactive ads that encourage users to participate in challenges, usually by creating their own TikTok videos with a specific hashtag.

• Branded Effects: TikTok allows businesses to create special visual effects or filters that users can use in their own videos. This helps businesses get more people involved with their brand in a fun way.

• TopView Ads: These are full-screen video ads that appear when you first open the app, capturing the user’s full attention.

• Spark Ads: These are ads that use organic TikTok posts from businesses or creators and turn them into sponsored content.

TikTok ads are designed to be highly engaging. Because the platform is full of short, fun videos, ads are usually also creative and interactive, making them a natural part of the user’s experience. This is one of the reasons why businesses find TikTok ads so appealing.

Why TikTok Ads Look Cheap at First

At first glance, TikTok ads can seem like a bargain. Compared to other social media platforms, the cost of advertising on TikTok can be surprisingly low. This has led many businesses to start running campaigns on the platform, believing they can get a lot of exposure for a small budget.

Here are some of the reasons why TikTok ads look cheap at the beginning:

1. Low Cost Per Click (CPC) or Impressions (CPM)

When you first start advertising on TikTok, you might notice that the cost per click (CPC) or cost per thousand impressions (CPM) is relatively low. CPC means how much you pay every time someone clicks on your ad, while CPM means how much you pay for every thousand times your ad is shown to people. These prices tend to be much lower on TikTok compared to other platforms like Facebook or Instagram, especially in the early stages of a campaign.

Because TikTok is still growing as an advertising platform, it has lower entry costs, making it seem like an affordable option for businesses to test their ads. Many businesses, especially small ones, are attracted to TikTok because they can run campaigns without spending too much money upfront.

2. TikTok’s Algorithm Helps Ads Reach the Right Audience

TikTok’s algorithm is known for being really good at showing users content they’re likely to enjoy. This means that ads on TikTok are often shown to the right people, making it easier for businesses to reach their target audience. As a result, businesses don’t have to spend as much money to get the same amount of engagement.

When businesses run ads, TikTok’s algorithm helps ensure that those ads are shown to people who have similar interests. This helps businesses avoid wasting money on people who aren’t interested in their products, making it feel like TikTok ads are more affordable than other ad platforms.

3. TikTok’s Younger Audience is More Engaged

TikTok’s primary audience is younger people, especially teens and young adults. These users are very active on the platform and engage with ads more often than other age groups. They’re also more likely to interact with branded challenges or use branded effects in their own videos.

This high level of engagement makes TikTok ads seem even cheaper. When users engage with the ad, it helps the ad perform better, leading to more visibility without having to spend extra money. In turn, businesses see a good return on investment (ROI) when they run their first few campaigns.

Why TikTok Ads Get More Expensive When You Scale

While TikTok ads may look cheap at first, they can quickly become more expensive as businesses scale their campaigns. This happens for a few reasons, and businesses often don’t realize the costs involved until they’ve invested more money into their ads.

1. Increased Competition

As more businesses start advertising on TikTok, the competition for ad space increases. Just like any other marketplace, the more demand there is for something, the higher the price goes.

When businesses scale their campaigns, they’re not just competing with other small businesses—they’re now competing with larger companies that also have big advertising budgets. Larger companies can afford to pay more for ad space, driving up the cost for everyone else.

In the early stages, when you’re running a small campaign, you might not notice this competition. But as you increase your budget, you’ll start to see the costs rise as the demand for space in TikTok’s feeds increases.

2. Audience Saturation

When you first launch a TikTok ad campaign, your ad is shown to a fresh audience, and it gets good engagement. However, as you scale up and spend more money, your ad starts to reach the same people multiple times. This can lead to audience saturation, where the same group of people sees your ad over and over again.

When people see the same ad repeatedly, they’re less likely to engage with it, leading to lower click-through rates (CTR) and less overall engagement. As engagement drops, TikTok’s algorithm may stop showing your ad as much, causing you to pay more for fewer impressions. This can make the cost of running the campaign go up without increasing the number of clicks or sales.

3. Ad Fatigue

Ad fatigue happens when users get tired of seeing the same ad. Even if your ad was performing well at first, the more times it’s shown to the same users, the less likely they are to interact with it.

This is especially a problem for businesses that are scaling their TikTok campaigns quickly without refreshing their ads. Ad fatigue can result in lower engagement, which means that businesses need to spend more money to get the same results. The more money you put into an ad campaign without changing the content, the more expensive it gets to maintain the same level of performance.

4. Higher Cost to Reach New Audiences

In the beginning, TikTok’s algorithm helps your ad reach new people who are likely to be interested in it. However, as you scale, it becomes harder to find fresh audiences. This is because TikTok’s algorithm will start showing your ad to people who are similar to those who already engaged with it, but the more you scale, the fewer “new” people are left to target.

Reaching new audiences comes at a higher cost, especially when there’s a lot of competition. If your target audience is too broad, your ad may be shown to people who aren’t as interested in your product, leading to lower engagement and a higher cost per click. To keep costs under control, businesses need to continuously refine their audience targeting as they scale.

5. Higher Bids to Compete for Premium Ad Spots

As you increase your budget, TikTok may require you to place higher bids in order to compete for premium ad spots. This is especially true for top-performing placements like the “For You” feed, where the most engaged users are most likely to see your ad. The more money you’re willing to spend on these prime spots, the higher your chances of getting visibility, but it also increases the overall cost of the campaign.

6. Limited Control Over Ad Placement

When you scale your campaign, you may not have as much control over where your ad appears. TikTok automatically places your ad in the most relevant places, but this may not always be the most cost-effective choice. As you increase your ad spend, the platform may push your ads into more competitive placements, which can raise the cost.

What Can Businesses Do to Keep Costs Down?

While TikTok ads can get expensive as you scale, there are ways businesses can manage costs and keep their campaigns effective. Here are a few strategies:

1. Test Different Ad Formats

Instead of relying on just one type of ad, businesses should experiment with different formats, such as In-Feed Ads, Branded Hashtag Challenges, and TopView Ads. By testing out different types of ads, businesses can find the formats that work best for their target audience and help keep costs lower.

2. Refine Audience Targeting

Businesses should constantly refine their audience targeting to avoid showing their ads to the same people repeatedly. TikTok offers advanced targeting options, so businesses should take advantage of these to reach new, engaged audiences while avoiding ad fatigue.

3. Refresh Ad Content Regularly

To combat ad fatigue, businesses should refresh their ad content regularly. This could mean changing the visuals, updating the messaging, or using new video clips. By keeping the ads fresh and engaging, businesses can maintain higher engagement rates and avoid paying more for less effective ads.

4. Optimize Bidding Strategies

As businesses scale their campaigns, they should focus on optimizing their bidding strategies. TikTok offers various bidding options, including automatic and manual bidding. By experimenting with these options, businesses can find the most cost-effective way to reach their target audience.

Conclusion

TikTok ads may seem cheap at first, but as businesses scale their campaigns, they often discover that the costs can rise quickly. Increased competition, audience saturation, ad fatigue, and higher bidding costs can all contribute to higher expenses. However, with careful planning, businesses can manage these challenges and make the most of their TikTok advertising budgets.

By testing different ad formats, refining audience targeting, refreshing ad content, and optimizing bidding strategies, businesses can keep their TikTok ads effective and cost-efficient as they scale. TikTok remains a powerful platform for businesses to reach their audience, but understanding the costs involved is key to running successful campaigns.