Instagram Ad Prices: All You Need To Know

With over one billion active monthly users, Instagram is undoubtedly the leading social media channel of recent times. 

Rather than just being a place to connect with your friends and share visual content, Instagram has been turned into a world of experiences. As an ever-growing platform, it has always been lucrative for businesses to showcase their products and services to the right audience. 

If you’re looking for Instagram ad prices, we can assume that you have similar goals of growth and creating leads to turn them into sales. Even though running ads are pretty simple on Instagram, figuring out the prices might be a bit tedious, especially for someone who is new to the platform. 

However, there’s no need to worry, as we are here to help you. This guide will take you through everything from the costs of running Instagram ads to what influences the prices. 

So, without further ado, let’s begin! 

How Much Do Instagram Ads Cost?

Let’s begin by addressing the question that almost all businesses have when they plan on running the first ad on Instagram. Several sources point out that an Instagram ad will cost you anywhere between $0.20 and $6.70, which would be based on the bidding model. 

Most prefer the cost-per-click or CPC, for which a business needs to pay anywhere from $0.20 to $2.00 per click. However, some sources believe the cost in CPC usually hovers around $0.50 to $1.00 but can reach $3.50 per click. The price varies based on the competition in your domain. For instance, it’s usually higher for businesses advertising in fashion or beauty domains. 

On the other hand, for cost-per-impressions or CPM, you’ll typically need to pay around $6.70 per thousand impressions. Another bidding model is cost-per-engagement or CPE, where you might be charged $0.01 to $0.05 for every engagement. 

Do note that these are just estimates, and they will drastically differ based on factors like the age, gender, or even demographic of your target audience. As Instagram ads are sold in an auction environment, advertisers need to have access to a flexible budget to accommodate the changes made by supply and demand. 

For instance, in June 2022, the average CPM for ads run in the USA was $11.46, which is on the steeper side. 

AdEspresso did a deep dive into the Instagram ad costs of 2017 and found that the prices can also vary based on the ad placement. One of the key takeaways was that ads placed on the main feed of Instagram have a higher cost and perform seemingly better than those run on Instagram stories. 

Is There a Difference Between the Cost of Instagram Ads and Facebook Ads? 

As you might know already, Facebook and Instagram both come under the parent company of Meta. Naturally, this concerns many people about how different the advertisement budgets are for the two platforms. Also, note that Meta currently lets businesses run ad campaigns on Facebook, Instagram, and Audience Network. The company states that it’s on business owners to decide the budget, and the final cost depends on the ad auction. 

Now, coming to the comparison, multiple sources claim that running Instagram ads is a tad costlier than Facebook ads. For instance, in the case of CPC, the average cost on Instagram is between $0.20 and $2.00, while on Facebook, it’s just $0.97. 

However, it’s key to note that the ad strategy works a bit differently for the two platforms. While Facebook ads tend to target a wider audience of all demographics, Instagram is better at bringing in results from the younger audience aged between 25 and 29. 

That’s why you’ll notice newer businesses running ads across Instagram rather than Facebook. Having said that, it’s always a better idea to run ads on multiple social media platforms for the best results. 

Another thing to note is that even though CPC costs might be a bit higher on Instagram, the platform had one of the highest engagement rates. A RivalIQ report found out that 832K posts on Instagram may bring an engagement of 2.94B. In comparison, 1.7M posts on Facebook bring 614M engagements. Hence, it’s obvious that businesses would prefer to run more ads on Instagram to receive better engagement. 

According to a marketing report from Shopify, a popular e-commerce platform noted that Instagram users, on average, spent $65, compared to $55 spent by Facebook users when led through ads. 

Quick Wins for Your Campaigns

How Is The Cost of Instagram Ads Determined? 

Before you can successfully advertise on Instagram, it’s key to know how the bidding system works. This will let you have a better go at deciding the budget as well as the whole advertising plan. One thing you should note is that the bidding rules are pretty similar to that of Facebook. If you have some experience in Facebook advertising, then Instagram ads won’t seem as alien. 

When starting an Instagram ad campaign, you’ll be given the option to choose a budget for a week. However, you won’t be in control of choosing the cost generated when someone clicks or interacts with the ad. You can still use the Ads Manager to some degree to choose an expected cost, but the outcome might differ. 

Your actual cost to advertise on Instagram depends on these four factors: bid amount, ad relevancy score, estimated action rates, and competition. Let’s have an in-depth look at them to get a better idea of how the Instagram advertising prices may vary. 

1.) Bid amount 

As we said earlier, Meta wants businesses to decide how much they want to spend on a respective ad campaign. That’s why you’ll be asked to state a bid for your estimated weekly expenditure while initiating an ad. Based on the domain of your business, you should always be ready to spend a bit more money to achieve the desired impressions, engagement, and leads. 

In most cases, having a higher bid amount gives you a better footing in seeking more leads. For instance, having a total budget of $2000 and a CPC of $2 may provide you with approximately 500 clicks. 

Having said that, to make it easier for beginners, Instagram allows you to place automatic bids. Before placing the ads, you can even view the number of clicks or impressions your selected budget may generate. Selecting automatic bidding is recommended for the first few times to analyze the budget that would suit your business to launch Instagram ads. 

2.) Ad relevancy score 

One of the mistakes often made by businesses is to choose irrelevant content while running Instagram ads. As you might have noticed, Instagram prefers to push relevant ad copy to its users. So, businesses are bound to put more effort into creating relevant pieces, and Instagram will score the ad based on how the users react to the ads. 

The relevancy of an advertisement invariably increases when it pulls in more engagement in the form of likes, comments, shares, and saves. On the other hand, Instagram may score your ad low if users choose to hide it, which will hurt its performance. Also, ensure that the ad leads to relevant landing pages, or it may generate a negative response. 

As you might have guessed, ads with irrelevant content or those with a low ad relevancy score will cost more to reach further impressions. However, you’re likely to pay the minimum amount when you have a high score with positive feedback as more Instagram users engage with the ad. 

3.) Estimated action rates 

Another important factor that matters while measuring your true Instagram ad cost is the estimated action rates. This stands for the amount of action or engagement Instagram expects from your ad copy. As a social media platform, Instagram wants more people to feel positive about the ads and spend more time on the app. So, it prefers to promote ads that will attract greater interactions. 

Creating ads that focus on engagement is quite essential for businesses to thrive and convert leads into sales. High engagement on your ads will give you a better-estimated action rate which can lower the overall Instagram ads budget. 

If Instagram believes that your ad may bring in better engagement, the platform will even push it ahead of similar businesses that may have spent a higher bid amount. That’s why it’s advised to select your target audience carefully, as it can make or break the relevancy of an advertisement. 

4.) Competition 

As told earlier, Instagram advertising costs may vary based on the domain of your business. If you’re interested in running campaigns in the domain of fashion or beauty, you’ll likely end up incurring a higher cost due to the competition. Moreover, other businesses might want to spend on generating leads from a similar demographic as your target audience, which will increase the advertising cost. 

In many cases, when there’s tough competition between advertisers, the situation may lead to a bidding war. The CPC might be more inflated than the average cost, and you’ll need to consider improving the other factors to achieve suitable ad placements and high ad rank. 

Furthermore, the competition for placing ads may see a rise during certain periods like holidays and events. For instance, you’ll need to set a larger budget for running ads during Christmas or Black Friday Sales to achieve valuable leads. 

The Instagram advertising cost of your business may also depend on the market you’re targeting. In general, B2B companies have to spend more on running ads as compared to B2C companies. That’s because Instagram is a preferred platform for individual users rather than businesses. 

Overall, your goal should be to place higher bids and create ad content that Instagram, as well as the users, find relevant to drive engagement and eventually turn into leads. 

How Instagram Advertising Works

When it comes to designing initial Instagram ad campaigns, most businesses are unaware of how Instagram ads work. Well, we want to let you know that it’s pretty simple. Instagram mainly lets your run advertisements on the main feed and stories. A user can typically see the ads while browsing through the different content. 

Based on the demographic chosen by a business, the ads will be shown to people who might be interested in the product or service. The most ingenious trick of the platform is to blend the ads with the usual content to make them seem like regular Instagram posts. That’s why Instagram focuses on the value of relevant content which won’t generate negative responses from the user. 

One of the only ways a user can tell apart an ad from the regular posts is the word “sponsored” written under the Instagram handle of the business. The ads also accompany a call-to-action or CTA with phrases like “learn more” or “call now” that lead users to the specific landing page tied to the campaign. 

How To Lower Instagram Ad Costs

To maintain a business, one needs to invest in several advertising platforms. That’s why you might be indecisive while setting up a budget for Instagram ads. But, don’t worry as we have got some tips that will surely help keep the costs low while possibly fetching the maximum returns. So, let’s check them out! 

1.) Begin with automatic bidding 

We know that going for manual bidding may seem to be a better choice when it comes to attaining your campaign objective, but that isn’t always true for Instagram. The platform itself suggests the use of automatic bidding to get the best price. 

Automatic bidding is the safest route to go for businesses that are unaware of their average CPC. Starting with automatic bidding helps to understand the realistic expectations as well as if the same audience is able to generate good leads. It also prevents a business from overbidding for an advertisement that may get fatigued in a couple of days. 

Moreover, automatic bidding is the best way to create reliable data for future ad campaigns. The next time you have to launch an Instagram ad campaign, use the CPC generated from automatic bidding to fetch the best results. 

2.) Focus on precise targeting 

As you may have noticed, the primary reason for running Instagram ads is to reach the right people who’ll be interested in your business. That’s why precise targeting is required to run such ads which reach the correct demographic and generate the most leads. Here are some factors allowed by Instagram for the advertiser to reach the right target audience: 

a.) Location 

Where does your business operate? You can use the location setting to narrow down the reach of the ad to a specific country or city. Instagram even allows you to provide a pin code to find the suitable location to run the ad. 

b.) Demographic 

Most ads are made to cater to a specific audience based on their age, gender, and race. So, while setting up the ad, make sure to choose the right demographic that you want to target. For instance, newly launched fashion brands often prefer to run ads targeting women between the ages of 20-29 for successful leads.

However, ensure not to make it too broad or too narrow as Instagram might find it hard to target the right users, leading to a higher cost. 

c.) Interests 

Who do you think would be more interested in your products or services? Meta currently lets you base your ads on interests, devices, and even past actions. So, if you already have a follower base on Instagram, try to analyze the users to find their common interests. 

d.) Habits And Behaviors 

Most businesses are aware of the behavior of customers, especially when they’re visiting the website. The information available on the website can also be applied while customizing the ads for a better relevancy score. 

Whenever you use precise targeting while creating an Instagram advertisement campaign, it’s bound to receive a higher ad rank and lower CPC due to the added relevancy. It also leads to better conversion rates, as the targeted audience is more likely to interact with the ads, providing you with a better ROI. 

3.) Set proper goals 

Based on the type of business you own, the goals of an ad campaign might be starkly different. That’s why, before you begin running the ad, it’s essential to figure out the exact goal to have expected results along with a low ad cost. Here are some of the goals you may consider: 

a.) Awareness 

Many businesses want to initiate ads to make their target audience aware of a new product, app, or service. CPM bidding campaigns work best for awareness ads to pull in the most number of users from the desired target audience. Make sure your ad placements aren’t too restrictive to have better impressions. 

You should also set a proper frequency cap so that a user doesn’t keep seeing the ad too often, which can lead to a negative response. A cap of three to five days is said to be optimal.  

b.) Consideration 

Another key goal used by businesses is to educate their audience more about the things they have to offer. These ads lead the audience to information that’s compelling enough to convert them into buying a product or service. To reach this goal, you’ll need to run ads that provide website clicks and views with proper lead generation. 

c.) Conversion 

This is the most common kind of ad that you’ll find on an Instagram feed where businesses try to make users directly purchase things, download apps, or sign up for services. While optimizing the ad from the Facebook ads manager, choose “conversions” as the ad delivery goal. Ensure to produce a relevant ad copy that creates a positive response from your target audience to have an overall low ad cost. 

4.) Lead to proper landing pages 

One of the reasons businesses fail to turn leads into sales is due to the presence of improperly optimized landing pages. We have observed that many ads lead to the homepage of the website, which defeats the purpose of an ad campaign. So, while coming up with the Instagram ad campaign, ensure to have a relevant website landing page to go with the ad. 

5.) Test Instagram ads 

It’s important to realize that you’ll need to run some test ads before coming up with a foolproof Instagram advertising campaign. The good thing is that the ad manager tool of Instagram is full of helpful information that lets businesses create efficient ads. So, test out your ads and use the advice or estimates provided by Instagram to collect relevant data to create ads that cost less. 

How To Launch Instagram Ads

Here are the different ways you can launch an Instagram Ad

1.) Instagram app 

The Instagram app lets you run ads through your current posts on the platform. All you need to do is select a relevant post and launch it as an ad by making a simple payment. You’ll also be able to monitor the promoted posts to view the impressions and engagements. 

2.) Ad manager 

By far, this is the most preferred way for businesses to run Instagram ads as it ties up with the ad management tool of Facebook. You get a lot of tools to manage your ad campaigns or choose the suggestions made by the platform. 

3.) Instagram partners 

Need a bit more support for running ads? There’s no need to worry, as the Instagram Partners program has been launched to mitigate the digital marketing needs of businesses. You’ll be helped by experts to launch proper ads as per your desired results. 

Final Thoughts on the Cost of Running Instagram Ads

That’s everything we have to tell you for now. We hope this informative guide will help you assess how much it costs to run Instagram ads. 

Note that as more changes come to the platform, your ad spend may vary drastically even within the same month. So, you should always keep updated with the new rules set by Meta to optimize the ads accordingly. 

And if you’re wondering whether it’s valuable to spend on running ads on Instagram, we would like you to know that it’s undoubtedly an excellent option. Instagram has led several companies to become visible and increase sales drastically, especially in competitive markets. 

So, wait no more, and try your hands at launching your very first Instagram ad at the right price!

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