Identifying the true value of TikTok ads using MMM

Tiktok, with its immersive full-screen and diverse video content, has struck a chord with creators, viewers, brands, and advertisers alike.

What's more, it has become one of the most effective promotional platforms, with 1081 million monthly active users. For marketers, it makes perfect sense to capitalize on TikTok ad campaigns to boost their reach across this user base.

Like any promotional campaign, TikTok advertising also needs an effective tool to measure the overall performance. But the problem is that measuring the success of advertising campaigns on TikTok is not as straightforward as other social media platforms and digital channels. The metrics (conversion rate,click-through rate, and cost per action) do not give a clear picture of the impact of the campaign.

TikTok creates more of a passive impact in driving sales and measuring the impact of TikTok ads on overall ROI is complicated.

Thats why an increasing number of brands are leaning towards marketing mix modeling (MMM) to measure the performance of their TikTok ads.

MMM focuses on a holistic approach and analyzes non-marketing data like recession, political trends, and consumer behavior to identify TikTok ads role in your brand's overall growth.

If you're a marketer who's looking to understand how to track TikTok advertising performance with media mix modeling, we have written this article for you.

Why is it Hard to Measure TikTok Ads Effect on Sales?

While TikTok's ad revenue is projected to jump to $33 billion by 2025, measuring TikTok's ad performance is challenging. Especially for brands in the ecommerce and DTC sectors, the traditional metrics are unable to paint a clear picture.

1) TikTok's role in customer journeys is nonlinear

While number of clicks' is one of the famous metrics to measure ad campaign performances on platforms like Facebook and Instagram, the situation is slightly different for TikTok. Click is a suitable ad KPI in scenarios where the customers are looking for a product and click on a website intending to make a purchase, like say on a marketplace like Amazon.

Source

However, the purchase journey on TikTok is not linear. So it builds the customers' interest while they are entertained with a bite-sized dance video. That means users don't always jump to purchase a product immediately after watching a video or viewing a TikTok ad. It might create a demand in their minds, and they might decide later.

TikTok plays a role in driving online shopping, but there is no exact way to measure its impact on a customer's journey.

Other platforms like Instagram encourage users to click on a post or visit the linked website, but TikTok is based on endless scrolls. Users transition from one video to another, but pinning down a single point of engagement is nearly impossible. That's why traditional advertising metrics like click-through rates (CTR) become less relevant for TikTok.

Another challenge for advertisers is that even if the user likes the video, they may not pause or engage directly, but rather continue their scrolling journey. For these reasons, measuring the depth of engagement or interest based on standard metrics becomes challenging.

This means the last-click attribution that heavily relies on the final interaction does not work here as it neglects the collective influence of multiple engagements on the customer journey.

2) Regular attribution tools are not effective for TikTok

Marketingdive highlights that TikTok ads were undervalued in 73% of scenarios when it comes to driving purchases. Due to the unconventional TikTok algorithms and the fact that it doesn't fall under the “click-and-buy bucket, regular multi-touch attribution (MTA) tools are not always effective in measuring TikTok advertisement performances.

Marketers must rely solely on TikTok's first-party attribution solution that provides insights on content views, customers actions (like if they added a product to a cart after watching content), checkout initiation, and completion.

So platforms like Google and other social media channels give instant gratification in the form of a click or app download. They provide tangible data that enables the brand to link the ad to a direct result like a sale or a new subscriber.

But TikTok isn't built for direct actions. In other words, some TikTok ads could prompt a click or swipe, but the platform's user behavior does not align with the traditional metrics. Brands cannot solely rely on the age-old metrics to determine the success of their advertising campaigns on TikTok.

3) Different brands have different goals

The effect of TikTok ads on your overall ROI is also related to your business goals and industry of operation.

For example, the goal of a game application will be to boost their downloads. In that case, when a TikTok ad appears in the feeds of their potential users, the scope of conversion is higher because they need to perform only one action (click on the download CTA), and there are no financial transactions involved.

However, for a DTC store, "conversion" means when a potential customer makes a purchase by getting influenced by an ad. The conversion scope is less here as users often tend to perform in-depth research before buying something. Here, the TikTok ad might be the first trigger but owing to the non-linearity of the purchase journey it cannot be directly linked to the action (app download, sale, or subscribe).

Other activities are likely to be involved, like going through the product reviews, checking out competitor products and even waiting for a sale, before they finally decide to buy it.

Estimating the performance of TikTok ad campaigns and stating their impact on overall sales is challenging.

Looking at the shortcomings of the existing TikTok advertising metrics ( like clicks), you must be thinking, is there a better way to measure the impact of your TikTok ads?

Views on the Video are a More Accurate Metric Compared to Clicks

This could be in the form of 2-second or 6-second video views.

2-second video view

When the viewer is scrolling through the feed, even a 2-second pause is a good indicator of the spark of interest. You'll be in a better position to understand and optimize these brief moments of connection for better results.

6-second video views

A major challenge for brands advertising on any channel is sustained engagement. A 2-second view indicates the user's interest whereas a 6-second view signifies engagement. Your brand can use this duration for a deeper connection, possibly giving a better idea of the product, message, or even a promotional offer.

Applying MMM to TikTok Ads

Marketing mix modeling (MMM) incorporates statistical methods like time series analysis to measure the impact of advertising campaigns on an organization's overall sales.

MMM is reliable for TikTok ad performance measurement because it emphasizes both regular ad metrics like clicks and content views as well as political and economic factors like seasonality and inflation to give a comprehensive understanding of what truly drives consumer behavior.

MMM media mix modeling is a multifunctional approach. Each function helps decode the different aspects of your brand's marketing strategy to give a well-rounded view of the performance. The functions include: base drivers, budget optimization, and spend efficiency analysis.

What's the advantage of using MMM for TikTok?

By now, it is clear that last-click attribution is ineffective for TikTok. Mix models, on the other hand, identify the underlying value of every customer interaction by evenly distributing attribution across multiple touchpoints. With appropriate media marketing mix models, you can quickly grasp TikTok's changing user engagements.

How do modern MMM solutions generate deeper insights?

Think of MMM principle as a holistic, dynamic, and data-rich approach for brands to get critical insights into performance marketing. Let's look at the MMM from the lens of TikTok advertising.

Campaign objectives and marketing mix modeling

The objectives of TikTok ads can range from:

Awareness

• At this stage, MMM measures if awareness converts into recall.

Consideration

• Since this TikTok advertising campaign is aimed to drive traffic or maximize video views, MMM can help track these interactions and measure the journey from interest to consideration.

Conversion

• Here, media mix modeling helps understand the ad's direct and indirect outcome in generating leads, promoting apps, or website conversions to understand the conversion pathway.

Bidding Strategies and MMM

TikToks bidding strategy allows brands to promote ads based on their budget and core objectives. Marketing mix modeling aligns with each of the three bidding strategies including bid cap, cost cap, and lowest cost to show the impact of each of the strategies on the campaign's overall performance. This way, your brand can refine the approach based on insights driven by the marketing models and ensure that the campaign is aligned with your brand's core objectives.

How does MMM differ from Last-Click Attribution?

What's more, contrary to the marketing modeling mix myths, MMM pinpoints channels with diminishing returns so that you can redirect funds to other channels with untapped potential. 

Check out this case study to see how a well-known FMCG company used Marketing Mix Modeling to make better campaign investments and learn more about how each of their marketing platforms contributed in different ways.

LifeSight's MMM Solution for Measuring TikTok Advertising Performance 

With automated MMM tools like Lifesight, measuring TikTok advertising performance is rather easier, as compared to the confusing last-click attribution.

Here's how brands can leverage the MMM media mix modeling solution Lifesight:

• Lifesight's marketing mix model is trained with your brands historical ad performance data. It trains your model within 45 minutes, tests previous budget scenarios, and auto-allocates new budgets based on changing customer lifecycle.

• TikTok's confusing analytics is why marketers are often unsure about the ROI on ad spending on this platform. With Lifesight, you can find the answer to - how far you can push your budget to achieve your goals. MMM solution Lifesight draws a clear picture of your TikTok campaigns' potential so you can prevent overspending, adjust your TikTok budget as per pre-defined KPIs, and allocate your budgets to the right kind of TikTok ads.

• Lifesight's marketing mix models are auto-calibrated. It can create data feeds based on all available source integrations. Since your model is calibrated, you can generate outcomes of your TikTok ad campaigns faster and make data-driven decisions.

Request a demo to explore Lifesight.

FAQs

1) What is a good CTR for TikTok ads?

Any click-through rate of over 1% is considered a good CTR for TikTok ads.

2) What is media mix modeling?

Mix modeling is a statistical technique for measuring the performance of various advertising campaigns and their impacts on overall sales.

3) How much do TikTok ads cost?

TikTok ads cost $10 for generating every 10,000 views.