The Stolen GMV from TikTok GMV Max?

As TikTok transitions from TTAM to GMV Max, many sellers may initially feel encouraged by what appears to be strong performance metrics. However, to truly understand the impact of this change, it's important to clarify the difference between ROAS and ROI, and how GMV Max calculates them differently.

Understanding the Difference Between TTAM ROAS and GMV Max ROI

Under TTAM, the performance of your ads was measured using ROAS (Return on Ad Spend). This metric calculates how much sales were generated strictly from your advertisements. For example, if you spend RM1 and earn RM10 through ad-attributed GMV, your ROAS is 10. This method does not take into account any organic sales, ensuring that only paid performance is being evaluated.

In contrast, GMV Max uses ROI (Return on Investment), which includes both paid and organic GMV in its calculation. This significantly changes the way performance is reported and can lead to inflated expectations.

A Clearer Example for Better Understanding

Let’s say your shop usually generates RM100,000 in monthly sales organically, without running any ads.

Now, you decide to launch a GMV Max campaign and spend RM15,000 on ads. That month, your total GMV increases to RM150,000.

At first glance, TikTok reports an ROI of:

RM150,000 (Total GMV) ÷ RM15,000 (Ad Spend) = ROI 10

This appears highly profitable. However, if you break it down, you’ll notice that only RM50,000 of that total came from the ads. The remaining RM100,000 was already part of your regular organic sales.

When you calculate ROAS, which considers only the GMV directly brought in by ads, the real picture looks like this:

RM50,000 (Ad GMV) ÷ RM15,000 (Ad Spend) = ROAS 3.33

Suddenly, the campaign performance doesn’t look as strong. While the ROI shows a return of 10, the true ad effectiveness, as reflected in ROAS, is far lower.

Why This Matters

The shift from TTAM to GMV Max marks a significant change in how sellers interpret advertising performance. By including organic sales in the ROI metric, GMV Max can make it appear that campaigns are more effective than they actually are. This may lead to decisions based on inflated performance, misallocation of budget, or unrealistic expectations.

It’s important to remain critical and calculate both ROI and ROAS when analyzing your campaign outcomes. ROI offers a broad picture, but ROAS provides a more precise understanding of how efficiently your ad spend is being converted into revenue.

Final Thought

During this transition from TTAM to GMV Max, sellers need to adopt a more analytical approach. Don't rely solely on ROI. Always ask: How much of this GMV did my ads actually generate? This distinction is essential for maintaining a sustainable and data-driven advertising strategy.