If you’ve been following our insights, you already know that paid ad support is a must-have for success on TikTok Shop. However, when it comes to paid ad strategy, many brands struggle to set up the right structure and maximize return on investment (ROI). One of the hottest ad options right now—and one that TikTok is heavily pushing—is GMV Max ads.

GMV Max ads promise to completely automate your TikTok Shop advertising, taking a hands-off approach to maximize Return On Ad Spend (ROAS). GMV Max ads are designed to leverage multiple ad formats and video assets—including both brand-created content and affiliate-generated posts—to maximize conversions.

It sounds great in theory. But how well do GMV Max ads actually perform?

Based on our experience managing paid ads for TikTok Shop brands across multiple categories, GMV Max ads tend to underperform other paid ad setups. And the key to understanding why lies in how GMV Max Ads ROAS is calculated.

How to Accurately Assess GMV Max Ads’ ROAS

Exhibit 1 below starts from a hypothetical 2.5 reported ROAS from GMV Max (a number that would not be unusual for an average brand) and reflects the four main corrections that need to be made to get closer to a true GMV Max ROAS.

1. The revenue accounted for by GMV Max ads is greater than your GMV (Gross Merchandise Value). GMV takes into account discounts and refunds, while gross revenue used by advertising products on TikTok does not. We have found discounts are the big driver of difference here. While it will vary by brand, we typically see GMV be 70-90% of gross revenue. Note this correction needs to be applied to all shopping-oriented advertising spend on TikTok, not just to GMV Max ads
2. GMV Max ads aims at optimizing your GMV across all types and all sources. As a result, in attributes organic GMV to its campaigns, where other TikTok advertising products do not. On average across TikTok Shop, we find organic represents 20-40% of a brand’s total revenue, depending on stage
3. Similarly, GMV Max Ads will count in its sales numerator the full-price value of free samples sent to affiliates. While affiliate samples may be insignificant for a mature brand on the platform, they can represent a significant percent of units sold for brands earlier int heir journey. For the purposes of this analysis, we quantified them as another 2-10% of sales
4. Finally, for brands running Live events on their accounts, the sales from those events are also included in the revenue incorporated in GMV Max Ads’ ROAS calculation. To the extent that those Lives are attended by the brands’ own follower audience (which is when they become profitable, otherwise we recommend not running them), they need ot be pulled out of the GMV Max ads ROAS for comparability

What’s the True ROAS for GMV Max Ads?

Once these four adjustments are made, a reported 2.5 ROAS from GMV Max ads often drops to around 1.2—a 50% decrease.

For brands running Live Shopping, the adjusted ROAS can drop even further to 0.9, a 64% reduction from the original figure.

This does not mean that GMV Max ads are ineffective, but rather that brands should interpret performance metrics carefully and compare results with alternative ad setups.

When Should Brands Consider Using GMV Max Ads?

While GMV Max ads may not always be the most efficient ad setup, there are three reasons why some brands may still want to consider the product:

1. For brands with diverse video assets and larger ad budgets, GMV Max’s automation can be more effective. The larger the data set, the better the algorithm can optimize spend allocation. Additionally, the ROAS adjustments mentioned earlier have less impact on larger brands.
2. GMV Max ads can be the better alternative for brands that may have reduced flexibility due to internal budget delineations or marketing politics. GMV Max is a highly efficient way to get around those constraints by letting the system optimize away dogmatic positions (“I don´t like the way that affiliate looks”) or entrenched interests (“I want the video I produced to show more sales”) and focusing only on what drives sales.
3. Finally, we should acknowledge that GMV Max ads remains a young technology product, and while it may not be fully tuned to deliver for every brand today, it is likely to continue improving and driving higher results. For that reason alone, it is probably good discipline to give it a test every 6 months to a year.