Here’s a quick rundown of TikTok’s two ad bidding strategy options and how to choose the right one.
Bidding strategies are essential for digital advertising campaigns to ensure you reach your goals. This is undoubtedly true of TikTok, where people increasingly learn about new products and brands.
TikTok only offers two bidding strategy options at the moment: Cost Cap and Maximum Delivery. Although they seem similar on the surface, each provides a unique way to get the biggest bang for your advertising buck.
In this post, we’ll discuss the two bidding strategies available on TikTok and help you determine which is the best option for you.
In TikTok ads, your bidding strategy tells the platform how to place bids for your account in the ads auction. (If you’re new to TikTok ads, read this TikTok ads primer on how they work). The goal is to pick the bidding strategy that matches your goal and budget.
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Cost Cap bidding is a performance-based approach to optimization. With Cost Cap bidding, the goal is to control the average cost per result you receive in the auction.
The TikTok platform tries to hit an average cost per result based on your campaign goals to make it work. That means that for each conversion, the cost per result might be higher or lower than your target, but the plan is to average out to your goal over time.
Cost Cap bidding is an option for App Install, Conversions, and Lead Generation campaign objectives.
TikTok says this strategy is best for goal-based campaigns and advertisers trying to keep costs around those goals consistent, regardless of market conditions. That’s because the platform will bid more or less depending on the likelihood of a conversion and won’t work to spend the budget every single day. If performance isn’t strong, it will underspend the daily budget for that day, and try again tomorrow when performance may be better.
Now, when it comes to actually setting up your Cost Cap, TikTok suggests setting the highest amount you’re willing to pay for the conversion. Or for a return on ad spend (ROAS) target, the lowest ROAS you’re willing to accept. Both of these give TikTok the most leniency when bidding for you in the auction, as they’re the least restrictive ends of the spectrum.
It also suggests that your budget should be 50 times your Cost Cap bid. While that might be feasible for some folks and is likely where the platform performs best, it may or may not be reasonable for most advertisers. In that case, try to set your daily budget at least five times your Cost Cap bid, but higher is better.
If you can’t hit the five-times mark, it’s not a dealbreaker. I’ve seen campaigns perform well with a Cost Cap at the same level as the daily budget, but it’s rare. If you’re in that scenario, you might want to examine your account’s structure and see if you can condense audiences and budgets to better align with TikTok’s suggested budget/Cost Cap split.
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Maximum Delivery, unlike Cost Cap, is a spend-based strategy rather than performance-based. You’re not able to enter a bid amount. Instead, you provide your budget and TikTok will work to drive as many of your target actions as possible while spending your entire budget.
That means the platform will not pull back on days when your performance is less efficient than others. Your costs could vary quite a bit, but your overall spending will stay level. The only wrinkle is that Maximum Delivery is only available for daily budgets and isn’t an option if you’re using a lifetime budget.
You can use this bidding strategy with every campaign objective in the TikTok platform. Just leave the Cost Cap, Bid Cap, Target CPA field in the Bidding & Optimization section empty, and you’ll default to Maximum Delivery for that ad set.
Like Cost Cap, TikTok recommends setting your budget to achieve 50 conversions per day. Again, this is likely not attainable for many people, so do your best with it.
If you’re seeing good results with Maximum Delivery and want to scale, make sure you do so in a strategic manner. While other platforms like Meta ads suggest no more than a 20% budget change on any given day, TikTok says it can handle up to a 50% bid change without seeing performance disruptions. It then suggests you wait until you receive another 50 conversions and at least one day before changing the budget again.
I’d stick to the 20% rule that Meta suggests here as well (and see how your Facebook and TikTok ads work together). 50% is a pretty huge increase, and depending on how competitive your industry is, you may see pretty fluctuant CPAs with a larger change.
I’m a fan of TikTok only having two bidding strategies on the platform. It simplifies things and makes it much easier for advertisers to digest and understand.
Are you working on ROAS or CPA targets? Cost Cap is your best option. Are you seeing good results and want to get the most scale from your campaigns? Let’s hit Maximum Delivery and see how high we can go. Hopefully, this demystifies the TikTok Ads bidding strategies enough for you to feel confident in your campaign settings.
