Over the past few years, TikTok has exploded in popularity to become one of the most downloaded apps and influential social media platforms in the world. With over 1 billion monthly active users spending an average of 52 minutes per day on the app, TikTok offers a massive potential reach for brands and startups looking to get in front of a younger audience.
But are ads on this unabashedly creative and fast-paced platform actually effective? Is it worth allocating precious startup marketing dollars to TikTok campaigns? Let‘s dive into the data and real-world examples to find out.
TikTok‘s Meteoric Rise
First, some quick stats on TikTok‘s incredible growth to set the stage:
- TikTok was the most downloaded app worldwide in 2020 and 2021
- It reached 1 billion monthly active users faster than Facebook, Instagram, or YouTube
- 60% of TikTok users are Gen Zers between ages 16-24
- 80% of TikTok sessions are on mobile devices
- The average user opens TikTok 8 times per day
This paints a picture of an extremely engaged, mobile-first user base primarily made up of younger consumers and trendsetters. For startups targeting this demographic, TikTok is impossible to ignore.
Ad Formats and Targeting on TikTok
TikTok offers five main ad formats:
- In-Feed Ads – short video ads that appear natively in a user‘s For You feed
- Brand Takeovers – 3-5 second full-screen video ads when a user first opens the app
- TopView – 60-second video ads that appear at the top of the For You page
- Branded Hashtag Challenges – custom hashtags to encourage user-generated content
- Branded Effects – custom stickers, filters, and special effects for users to add to videos
In terms of ad targeting, TikTok allows brands to reach users based on demographics, interests, behaviors, and more. Some of the unique options include targeting by video interactions, hashtag use, and even video sound.
While not as robust as Facebook‘s ad targeting, TikTok still provides solid tools to get in front of the right audience. But it comes at a cost.
The Cost of TikTok Ads
TikTok ads are more expensive than other social platforms on a cost-per-click (CPC) and cost-per-thousand-impressions (CPM) basis:
| Platform | CPC | CPM |
|---|---|---|
| TikTok | $0.29 | $6.84 |
| $0.20 | $2.50 | |
| $0.15 | $1.86 | |
| $0.11 | $3.53 |
TikTok‘s minimum campaign spend is also steep at $500, and some ad formats like Brand Takeovers require even higher minimums. This means TikTok ads may not be accessible for very early-stage or bootstrapped startups.
However, for startups that can afford it, the premium pricing comes with premium engagement. TikTok boasts a nearly 18% engagement rate on sponsored posts, 4-5x higher than other platforms.
Startup Success Stories
So can TikTok ads really move the needle for startups? Several success stories say yes:
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Weightloss app Lose It! saw a 54% increase in subscriber growth from TikTok ads, with a 92% lower cost-per-registration than other platforms. Their silly sketch-style ads blended in seamlessly.
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Streaming service Quibi ran a hashtag challenge campaign centered around vertical video creation, which generated over 12 billion views and helped contribute to 1.7 million app downloads in the first week after launch.
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Language learning startup Duolingo has built a massive organic following of 3.3 million on TikTok with their quirky mascot-driven videos, which has boosted brand awareness and app installs.
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Ecommerce startup Cider used TikTok influencer partnerships to showcase their trendy, affordable fashion and generated millions in sales.
The common thread? These startups embraced TikTok‘s unique aesthetic and created entertaining, native-style content vs. overly polished ads. When done right, TikTok‘s viral nature offers unmatched potential.
Limitations to Consider
That said, TikTok ads aren‘t a silver bullet for every startup. A few potential drawbacks to keep in mind:
- Less proven direct response/conversion data compared to Facebook/Google
- Fewer tools for advanced measurement and attribution
- Content can get buried quickly in the fast-moving For You page
- More challenging to repurpose content across other channels
- Frequent algorithm and feature changes to keep up with
TikTok is also still a relatively young ads platform that is refining its offerings. While it‘s made great strides since launching ads in 2019, it doesn‘t yet offer the full funnel capabilities of more mature options.
Making the Call for Your Startup
So when does investing in TikTok advertising make sense for a startup vs. other acquisition channels? Consider these factors:
- Are your core users/customers squarely in TikTok‘s demographics?
- Does your product naturally lend itself to short video content?
- Do you have creative resources to dedicate to custom TikTok content?
- Is your customer lifetime value high enough to justify TikTok‘s premium ad prices?
- Are brand awareness and top-of-funnel growth key goals?
If you answered yes to most of the above, TikTok could be a high-potential channel to test. Dedicate a specific portion of budget, hone in on a few ad formats, track performance religiously, and iterate.
TikTok Ad Best Practices
Should you decide to take the TikTok plunge, keep these tips in mind for your campaigns:
- Embrace the "Don‘t Make Ads, Make TikToks" mindset – keep content raw and entertaining
- Jump on trending songs, hashtags, and video formats to maximize relevance
- Aim for shorter videos (15 seconds is the sweet spot)
- Include a strong CTA and drive clicks with exclusive offers
- Test partnerships with TikTok creators for extra credibility
- Create a TikTok Business account to access analytics and commerce features
- Stay agile and ready to pivot creative based on real-time trends and data
TikTok moves fast, so your team and content calendar need to as well. Think like your audience and don‘t be afraid to get a little weird. Authenticity wins on this platform.
The Future of TikTok for Startups
Despite its incredibly fast rise, TikTok shows no signs of slowing down. eMarketer predicts TikTok ad revenue will triple from $4 billion in 2021 to over $12 billion this year, surpassing Twitter and Snapchat combined.
As more users flood the app and more advertisers follow suit, competition for attention will only get fiercer. But for digitally native startups who can crack the creative code, TikTok‘s unparalleled engagement is there for the taking.
No social platform has disrupted the digital advertising duopoly of Google and Facebook quite like TikTok has. While it may not be the right fit for every startup, TikTok has undeniably earned its place on the list of high-potential channels to test.
As with any new frontier, those startups willing to experiment, adapt, and take smart risks on TikTok will reap the greatest rewards. It‘s still early innings for ads on the platform. Will your startup step up to bat?
