Last updated February 2023
Use this TikTok CPM Calculator to determine how much ads cost to place on TikTok.
CPM is the price per 1,000 ad impressions (an ad impression is a single time an ad is shown on TikTok). When using the Reach objective in TikTok you are charged on a CPM basis.
As TikTok is a powerful branding and community-building platform, it can make a lot of sense to use Reach advertising on it.
TikTok CPM Calculator
Feel free to experiment with different scenarios in order to help you understand this ad pricing model better.
The equation for CPM is:
CPM = (Ad Spend ÷ Ad Impressions) × 1000
What is a CPM?
CPM stands for Cost Per Thousand Impressions (with M standing for mille – which is French for 1,000 ). It is one of the most common ad pricing models.
Paying for ads in blocks of 1,000 impressions is fairly standard online. This is because one person seeing an ad a single time will likely make no difference to anything. But 1,000 people seeing an ad may start to make a difference. That is why online ads are often measured in a set of 1,000.
When you run a CPM campaign, TikTok will look at your targeting and budget and find a set of people to show your ad to. It will try to ensure you use up your budget in the timeframe set while giving you a good amount of impressions for your money.
The amount you end up paying for 1,000 ad impressions is called your CPM.
CPM vs RPM
CPM is different to RPM – which stands for Revenue Per Thousand. A CPM is what the advertiser pays, while the RPM is what TikTok creators receive (if they are signed up to TikTok Pulse).
The difference between the two is due to:
- The revenue split with TikTok. Advertisers aren’t just paying you, they are paying TikTok as well. This means they keep 50% of the money.
- Taxes. Depending on where you are located, your TikTok revenue might be subject to tax.
- Differences in counting. CPM counts the cost of 1,000 ad impressions. RPM counts the revenue from 1,000 video views.
CPM vs oCPM
oCPM stands for Optimised CPM. It is calculated in the same way as CPM, however, oCPM is used when the goal of your advertising is conversions rather than impressions.
This is because when running a conversion campaign on TikTok, the TikTok algorithms will aim at getting you a certain number of impressions that are likely to convert (rather than just a certain number of impressions).
This means the TikTok algorithms search out impressions from people who have converted before (or are similar to people who have converted before). This smaller targeting pool of high-value audiences means that an oCPM is always likely to be higher than a CPM (see below).
[Find out more about TikTok bidding methods from them here]
Why is CPM Important?
How much you pay for 1,000 ad impressions matters because a lower CPM will mean that your money can go further. However, it should be noted that a higher CPM generally gives you access to a ‘better’ audience.
This is because TikTok’s algorithms will know which audiences are valuable in terms of:
- their likelihood to take a valuable action (such as making a purchase) after seeing an ad
- their demographics (eg how likely they are to be wealthy or similar to other people who have taken valuable actions).
To ensure that advertisers who spend the most with TikTok are encouraged to spend even more, the algorithms will give ‘better’ audiences to ‘better’ advertisers.
That means that paying a lower CPM might make your ad show to more people, but if you pay too little the audience who sees your ads may not be worth it.
All advertisers should experiment with different targeting options until they see results that are good value for money.
Once you have decided who you are targeting, you need to work out how to target them in TikTok and how much you are going to break down your advertising. You have the option to not break it down at all and put all of your targeting and budget in one ad group.
However, if you are targeting several different types of people you may want to split your campaign into multiple ad groups. The advantage of splitting them up are:
- You can target the groups with more tailored ads (which will improve performance)
- You will find it far easier to work out which audience works best for you
On the other hand, the smaller the set of people you are targeting the more likely it is you will have to pay a higher CPM. This is because in a very large pool of people the TikTok algorithms can pick and choose who would be best for you and your budget.
When the pool of people to choose from is relatively small, however, the TikTok algorithm has to just take what it can get. This can sometimes mean paying a higher CPM simply to use up your budget.
Balancing between smaller targeted groups for better performance, and larger broad targeting groups for cheaper CPMs is the most effective way of optimising your CPM and performance.
Find out more
- CPM Definition
- CPM Advice for Ad Buyers
- Why RPMs Are Lower Than CPMs [Infographic]
- Impression Definition
- TikTok Engagement Rate Calculator
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