7 TikTok Ads Metrics E-Commerce Sellers Should Keep an Eye On

TikTok marketing has emerged as one of the best ways to promote an e-commerce business. Not that long after the app was launched, it boasted over one billion monthly active users. In fact, it stole the title of "most downloaded app" in 2020. That's because it offers business owners a broad and agile audience that's highly responsive to content, including TikTik ads.

In this blog, we take a look at the different TikTok ads metrics you can use to track your store's performance and to show you where your strategy may need to change.

» Not sure how TikTok ads work? Follow this guide to create TikTik ads for your online store

1. Click-Through-Rate (CTR)

Your CTR calculates the percentage of users who viewed your ad (impressions) and then went on to click on the ad. You can use this formula to work out your TikTok ad's CTR:

CTR =

(Total Clicks on Ad) / (Total Impressions)

An average CTR for TikTok is 1%. Just remember that this changes for the type of advert you use. If your ads are getting a CTR of less than 1%, it's time for you to rethink your ad strategy. But, if you're CTR is more than 1%, you're attracting your audience's attention—which will translate into better sales down the line.

2. Conversion Rate

Your conversion rate is your number of conversions divided by your total number of visitors. If your TikTok ad campaign gets viewed by 5 000 visitors in a month and you have 50 conversions, you would calculate your conversion rate as follows:

50/5 000 = 0.1 x 100 =1% conversion rate

Conversion rates tell you how many of your site visitors complete the actions you wanted them to (e.g. subscribing or purchasing). This will help you to understand whether your marketing campaign is successful, depending on its purpose. Additionally, because your conversion rate is a percentage, you can compare it to the performance of your other advertising platforms like Facebook, Snapchat, or Instagram. You can decide to change your strategy for low-performing platforms or to invest more in platforms that give you high conversion rates.

» How can you optimize conversion rates? Discover how to calculate macro and micro conversions

3. Engagement Rate

Your engagement rate is also calculated as a percentage and tells you how engaged your visitors are with your TikTok ad content. In other words, this metric assesses the quality of your content and how your followers interact with it. You can calculate your engagement rate with this formula:

Engagement Rate =

Total Engagement / Total Followers x 100%

Total engagement refers to the number of likes, shares, and comments a post receives. Therefore, the goal of your engagement rate is to measure your brand awareness and your followers' reception of it as this may lead them to becoming paying customers. As with conversion rates, you can compare the engagement rates of your different advertising platforms and adjust your strategy depending on the results.

4. Return on Ad Spend (ROAS)

ROAS is how much money you make on an ad campaign versus how much you spent on putting the ad campaign together. There's no point in putting a sophisticated ad campaign together if you're not going to get enough sales to cover the costs and give you good returns. You can use this formula to calculate ROAS:

ROAS =

(Revenue from Advertising / Cost of Advertising)

Let's look at a quick example:

If you spend $100 on your ad campaign and it generates $250 in revenue from that specific campaign, your ROAS would be 2.5. An average ROAS is 1:4, so in this example, your campaign is successful.

» What is a good ROAS? Read this breakdown of e-commerce ROAS per platform

5. Cost per View (CPV)

CPV is a pricing model that calculates how much you pay for each video viewed in your brand awareness campaigns. This metric will help you ensure that you're getting your money's worth out of your advertising budget. You can calculate your CPV with this formula:

CPV

= Advertising Cost / Video Views

Let's look at another quick example:

If your company's total cost of advertisement is $4 000 and your total number of views is 20 000, then your CPV is 4 000/20 000 = 0.02. This means that your CPV is $0.02. The average CPV is around $0.20 - $ 0.25, so the lower this cost, the better for you.

6. Cost per Click (CPC)

This is a pricing model which charges you a set cost per user click. On TikTok, the CPC is $0.19, while the average CPC is $1 or less based on biddable ads. The formula for calculating your CPC is:

Cost Per Click =

Advertising Cost / Number of Clicks

CPC will help you to determine what type of adverts are working for your business, thereby shaping future ad campaigns. If a campaign becomes too expensive, then it's no longer effective and you should consider changing your strategy.

7. Cost per Mille (CPM)

CPM calculates how much you're spending on an ad campaign for every 1 000 impressions ("mille" means 1 000). TikTok CPM ads cost $10 per 1 000 views with a minimum spend of $500 on a campaign. Here is the formula most commonly used for calculating CPM:

CPM =

Cost/Impressions x 1 000

It's difficult to set a good CPM benchmark, because there are many factors working in the background, e.g., the user's device and location, the placement of the ad, the industry you're working in, etc. These factors also mean that your ad impressions aren't necessarily clear and accurate, because they can include false impressions based on duplicate views and don't necessarily distinguish between high- and low-quality traffic. Therefore, it's important that you use CPM with other metrics to get a better overall view.

» How do you leverage CPM? Follow this marketer's guide to CPM

A Final Thought...

Tracking the key performance indicators of your TikTok ads will help you monitor your progress, refine your strategy for better conversions, and encourage continual improvement. If all the formulas and metrics are shifting you right out of your comfort zone, you can turn to BeProfit for a simple solution to calculate the profits generated from your ads.

» Are TikTok ads worth it? Discover the value of TikTok ads for e-commerce in 2023