Instagram Ads Cost & Winning Tips

Instagram Ads Cost Cover
Ravi Davda Rockstar Marketing CEO

Written by Ravi

Feb 8, 2023

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With over 1.28 billion users in 2022 (according to Statista), Instagram is one of the most popular social media platforms out there. It provides businesses with a plethora of advertising options that allow them to reach their target audiences and engage with them. We should mention, however, that all of that comes at a cost (as does everything).

Instagram ads can cost a considerable sum, but if you do things right, it can make for a great investment.

In this article, we’ll be detailing the different variables that factor into the cost of advertising on Instagram. We’ll also list a few tips that will help you elevate the return on your ads to its highest potential.

How Instagram ads work

How do Instagram Ads work

Instagram ads work by allowing businesses to place sponsored content in the form of photos, videos, and carousel posts in users’ feeds and in the Explore section of the app. These ads are targeted to specific users based on their interests, demographics (location, age, gender), and behaviours.

To create an Instagram ad, you’ll need to have a business account on Meta and use Ads Manager to create and manage your campaigns. Keep in mind that you can actually advertise on Instagram without having an account there. All you need to have is a business page on Facebook since Facebook is the parent company of Instagram. That said, if you want to maximise your marketing efforts, you should get to know the content that speaks best to your target audience. That would require having an Instagram account.

Once you’ve set up your account and campaign, you can choose the specific objective for your ad. Some of the objectives include increasing brand awareness, promoting a product, or driving traffic to your website.

Once you’ve created your ad, you’ll be able to target it to a specific audience based on the aforementioned targeting options. You can also set a budget for your ad campaign and choose the duration of the campaign. Instagram will then show your ad to users who fit your target audience and who are most likely to take the desired action.

Instagram ads can be a powerful way for businesses to reach a large, targeted audience and achieve specific marketing objectives. However, it’s important to keep in mind that ad performance can vary. It’s essential to regularly track and optimise your campaigns to ensure you’re getting the best possible results.

Instagram Ads cost explained

To have a good idea about Instagram Ads cost, we’ll talk about the average cost per engagement, cost per click, and cost per thousand impressions. Then, we’ll go into the factors that affect the cost of advertising on Instagram.

Instagram Ads cost per click (CPC)

Cost per click (CPC) is a pricing model that charges advertisers based on the number of clicks their ads receive. A click here refers to any time a user clicks on a destination URL (that leads to a landing page) within an ad.

CPC is calculated by dividing the total cost of the ad campaign by the number of clicks it receives. For example, if an ad campaign costs £100 and receives 1,000 clicks, the CPC would be £0.10.

According to WordStream, Instagram’s cost per click for ads with a destination URL ranged between £0.40 and £0.80 in 2021,

Instagram Ads cost per engagement (CPE)

Cost per engagement (CPE) is a pricing model that charges advertisers based on the number of times users interact with their ads. These interactions can be in the form of likes, comments, and shares.

The cost per engagement is calculated by dividing the total cost of the ad campaign by the number of engagements it receives. For example, if an ad campaign costs £100 and receives 1,000 engagements, the CPE would be £0.10.

In 2021, the cost per engagement on Instagram was between £0.01 and £0.04.

Instagram Ads cost per thousand impressions (CPM)

Cost per thousand impressions (CPM) is a pricing model that charges advertisers based on the number of times their ads are displayed, or “served,” to users. The “M” in CPM stands for “mille,” which is Latin for thousand.

The CPM is calculated by dividing the total cost of the ad campaign by the number of impressions it receives, and then multiplying that number by 1,000. For example, if an ad campaign costs £100 and receives 10,000 impressions, the CPM would be £10.00.

In 2021, the cost per one thousand impressions ranged from £2.1 to £2.9 when it came to well-performing campaigns on Instagram and their corresponding ad sets.

Our research shows that CPMs tend to be twice as high in the case of Facebook compared to Instagram. But when it comes to CPCs, Facebook is lower than Instagram by nearly 50%.

Factors that affect Instagram ads’ cost

Ad pricing on Instagram, just like on other platforms, is affected by a number of variables, including:

Campaign goals

Advertising costs can get higher or lower depending on campaign objectives. It depends on your choice and how it relates to your target audience’s place in the funnel.

Here’s an example:

Let’s say your campaign objective is brand awareness. Costs for it will be lower in comparison to a campaign objective with a higher value objective and a deeper level in the funnel, like conversions, for instance.

A brand awareness campaign targeting a colder, broader audience is considered a lower-value action in comparison to aiming at an audience lower down the funnel, which will be an audience that’s familiar with what you do and is more open to spending and making a higher-value action.

Ad relevancy score

Another factor that influences Instagram ads cost is your ad relevancy. It indicates how relevant your ad is to users according to Instagram’s assessment.

Users want to see ads they’re interested in, and Instagram is going to try to provide them with that. So your score will be determined by how people react to your ads.

  • If they react positively by doing things such as liking, commenting, etc., your score will go up
  • But if users react by hiding the ad, for instance, your score will go down. Having a low relevancy score means your ad won’t perform as well

Ads that have high scores will be prioritised over ads with low relevance scores. And a nice bonus of having a good score is that the expenses that you pay for ads will go down. Your campaign will get clicks, and you’ll grow an audience.

The size of your target audience

The bigger the audience you’re targeting, the lower the costs will usually be since there’d be less competition. The more you narrow your aim, by targeting a smaller geographical range or a smaller age interval, for example, the more competition will grow for that audience, and the prices will increase. Campaigns for retargeting users also tend to be smaller, so they’ll usually cost more as well.

One thing to keep in mind here is that the broader the audience, the lower the conversion rate. In other words, picking a broad audience just to lower costs is actually counter-productive.

Your campaign’s budget

If your budget is limited and you’re just starting with your ad campaign, you might take longer to get done with the learning process, and that will consequently influence Instagram ads cost.

When things are just starting out, costs will likely be higher as the system is still understanding and learning about your optimisation goals, campaign type, and how the audience interacts with the ads you put out. If you get good engagements, you’ll be rewarded with lower costs by Instagram and Facebook as time goes by.

Click-through rate

If your ads’ CTR is low, the system may interpret that as a lack of engagement from the audience, and that can cause costs to go up. A high CTR is a good indication that your target audience is engaging with your ad campaign. A good CTR value to aim for is around 1-2% if you want to see costs go down.

Are Instagram Ads worth it?

Of course!

Let’s go through a few reasons why investing in Instagram ads is a good idea:

Advanced targeting options

Instagram comes only behind Facebook in second place, with more than 1 billion users every month. Seeing that both Facebook and Instagram are Meta properties, they share the same collection of vast resources and audience-targeting data.

Facebook’s analytics allows it to offer such a robust and precise set of targeting tools and the results speak for themselves.

Reaching the right users through your campaign is a pretty attainable goal whether you’re going for custom audiences through using email lists, Pixel, SDK, etc., or by simply depending on Facebook’s native audiences through behaviours, interests, and the usual demographic parameters.

Instagram ads lead to higher-order-value ads

Instagram ads lead to higher-order-value ads

Instagram Ads cost isn’t worth it just for the reach, but for what comes as a result of that.

Shopify has recently conducted a study that revealed that $65 is the average order value for Instagram users. You might be surprised to find out that that’s $10 higher than Facebook’s average order value, which sits at $55, despite Facebook generating a large amount of social media sales.

It’s important to note, though, that Instagram ads tend to be cheaper than Facebook’s.

Higher engagement rates

Engagement rates, be it through paid ads or organic interactions, are relatively high when it comes to Instagram.

According to the 2022 Benchmark Report by Rival IQ, the median engagement rate per post across all industries is 0.67%. In contrast, the median engagement rate per post across all industries on Facebook is 0.064%. That’s around 10x more engagement per post. Quite the difference, huh?

It’s important to note that while all kinds of visual content get some amount of engagement, businesses tend to notice better performance with video ads, at around 38% more engagement. With Instagram being a visual platform, videos and images tend to have a better impact compared to how they might fare on other, more text-based platforms.

High conversion rates with Instagram ads

Compared to other networks, conversion rates are maintained at a high value through Instagram ads. That’s besides producing higher-order values. For Twitter ads, conversion rates sit at an average of 0.77%. When it comes to Pinterest, the average conversion rate is around 0.54%. As for Instagram, ad conversion rate reaches 1.08% on average.

Instagram ads cost is definitely worth it. That said, you still have to set up a good ad campaign to get a worthwhile return on your investment. If you want good results, you have to optimise your strategy and develop it continuously.

As of the time of writing, you cannot include clickable links in an organic Instagram post. Links can be put in messages or post captions, but other users must copy and paste them into a browser’s search bar. Of course, they can also click a link in your bio.

That said, with Instagram advertising, ad posts can integrate clickable links that can lead to your website or any other external URL.

When it comes to your own website, you can track the traffic coming from Instagram ads using the Pixel implementation. However, you cannot do the same with links that lead to websites you do not run.

Longer videos

Instagram stories would be around 15 seconds long, while videos in the Instagram feed and the explore tab would reach up to 60 seconds. Exploiting all these features, you can get around 2 minutes of video ad content. If you manage it well, you can include all necessary information about your business and the products, services, benefits, and features that you offer all through those 2 minutes.

How to get the most out of your Instagram Ads

Let’s talk about how you can maximise your profit from Instagram ads:

Determine your objective clearly

Make sure you have a specific goal for yourself before initiating your ad campaign on Instagram. Once you do, you’ll have a good idea about the budget, target audience, and ad format for your ad campaign.

Some of the most common interests that drive ad campaigns are generating sales, increasing website traffic, and spreading brand awareness.

Use relevant targeting options

Instagram provides a plethora of targeting options to help you reach a specific target audience. Those targeting options include behaviours, interests, and demographic parameters.

These tools help strengthen your odds of reaching more users that might be interested in what you offer.

Create attractive visuals

Instagram is, at its core, a visual space. Make sure that you’re creating eye-catching visual content and make sure to maintain it at a high level of quality.

Users don’t like to engage with low-quality, dull posts, and you want to be providing the opposite of that.

Experiment with different targeting options and ad formats

Keep yourself flexible and make sure to experiment with different strategies, targeting options, and ad formats to find the one that yields the best return and highest engagement with your ad posts.

Copy should be compelling and relevant

Visuals aren’t the only important part. You must also put some effort into the copy in your ads. Make sure the copy is compelling and relevant to effectively describe your services and products and the value behind them to your audience.

Use hashtags and make sure they’re relevant

Use hashtags and make sure they’re relevant

Using hashtags is one of the best ways to expand your reach to more users on Instagram. Make sure the hashtags are not only relevant but also popular among the audience you’re targeting to improve your odds of being seen and engaged with.

Instagram ads cost is a serious aspect to consider when venturing into digital marketing. But following these tips will allow you to not only make a return on that investment but also maximise it and expand your reach throughout the platform.

Need help with Instagram ads?

Instagram ads aren’t the easiest to run. And if you have a business to take care of, you may need some help advertising on this platform. Book a discovery call with us today. One of our experts will explain how we can take your marketing efforts to the next level using Instagram Ads.

Instagram ads cost – FAQs

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