How Instagram and TikTok Exploit Your PPC Ad Budget

by | Jun 23, 2024 | Video

In the old days of digital marketing, you used to have some say in how much you paid for each click. However, the way the industry is currently trending, they’ve realized that they can just ask how much you want to spend in a day or a week or whatever, and then they’ll decide how much you pay per click.

It basically functioned on a bidding system. So whoever offered to pay the most got their ad shown and got the click. The benefit of an auction system is that it keeps prices reasonably low. If you’re bidding on something that doesn’t have a lot of other competition, you’ll tend to pay just a little bit for it.

And if you’re bidding after something that everyone else wants, you’ll tend to pay a lot for it. As digital marketing becomes a more essential part of every marketing mix, the platforms are realizing that they can get away with just sort of charging whatever and people will pay for it because they have to.

Instead of you defining how much a click is worth to you and then winning those clicks when you’re the highest bidder, you’re now entrusting those decisions to the platform that stands to make more money when you bid more. Imagine going to a car auction and a Mazda Miata comes up for sale and the bidding goes up and up and you might want a Mazda Miata so you bid on it.

But at some point, the price goes too high for you and you don’t want to keep bidding for that particular car. The way ad platforms are increasingly working, it’s more like you give 10, 000 to the auction house and they decide how much they’re going to bid for you. This is especially true for social platforms.

If you do boosted posts on Instagram or TikTok, There’s relatively little transparency about what’s happening and not much reporting on it. You kind of have to go in and try to extrapolate whether the campaign was even worthwhile. They’re counting on the fact that a lot of their audience doesn’t really understand how these platforms work anyway, so they’re just kind of throwing money toward it and hoping it works.

And that the rest of the audience, the professionals who do know how it works, don’t have much of a choice. They just have to do it anyway. If you want on TikTok, that’s how you do it. If you want on Instagram, that’s how you do it. Unfortunately, there are no great solutions to this. If you want to play their game, those are the rules.

But being aware of that may at least help you go through and run the analytics to determine what kind of results you’re actually getting per dollar from those platforms. So you can make an informed business decision about whether it’s worthwhile and how much you want to put into it.

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