TikTok Shop ad CPMs rose 28% in Q1 as merchant competition intensified

TikTok Shop's advertising marketplace is getting more expensive. Average cost-per-mille on in-feed ad placements rose 28% quarter-over-quarter in Q1 2026, reaching $11.40 across all active markets, according to data compiled by PerfxAd from three media buying agencies with direct platform access.

The increase reflects intensifying competition among merchants. TikTok Shop's active merchant count grew 45% year-over-year, with the most aggressive growth in electronics and home goods — categories that were previously dominated by Amazon and Shopee in Southeast Asia.

What is driving the CPM increase

Three factors converged in Q1:

Merchant onboarding accelerated. TikTok's merchant recruitment program, which offers subsidized shipping and reduced commission rates for the first 90 days, attracted a wave of new sellers in January and February. More advertisers bidding on the same inventory pushes prices up mechanically.

Category expansion into higher-AOV verticals. Electronics merchants, who typically bid higher CPMs due to larger basket sizes, entered TikTok Shop in significant numbers for the first time. Their willingness to pay $15–$20 CPMs pulled the platform average upward.

Seasonal demand. Lunar New Year and Ramadan shopping periods overlapped in Q1 2026, creating a demand spike in Southeast Asia that compressed available inventory.

How this compares to Meta

Meta's Advantage+ Shopping campaigns — the closest competitive product — saw a 6% CPM decline in the same period, according to two of the three agencies surveyed. This suggests some budget is shifting from Meta to TikTok Shop, though the agencies cautioned that the two platforms serve different purchase intents.

"TikTok Shop is capturing impulse and discovery-driven purchases. Meta is still stronger for intent-driven retargeting. They are not perfect substitutes, but at the margin, budgets are moving." — Media buying director at a top-10 agency, speaking on condition of anonymity.

TikTok's response

TikTok expanded its auction-based bidding system to three new Southeast Asian markets — Vietnam, Thailand, and the Philippines — in March 2026. Previously, these markets used a fixed-rate insertion order model. The shift to auction pricing is expected to improve fill rates but may further increase CPMs as more sophisticated bidders enter.

The company also introduced a "Smart Bidding" feature in beta that uses predicted conversion rates to adjust bids automatically. Early results from two test advertisers showed a 12% improvement in return on ad spend, though the sample size is too small to draw broad conclusions.

What to watch

The Q2 earnings cycle will reveal whether TikTok Shop's CPM trajectory is sustainable or whether merchant churn — particularly among subsidized new entrants — will create a correction. Amazon's response, if any, to TikTok Shop's encroachment into electronics will also be a key signal.