Instagram’s ads are a powerful tool for business growth. You can show your ads to the 2.3+ billion monthly active users to promote any product or service in the world. If companies want to maximize online reach and growth, ads are an important part of the equation.
Instagram costs less than other platforms – even Facebook – and it works a little differently, too.
But before discussing these key differences, let’s see how successful advertising on Instagram can be:
- Instagram ad revenue in 2023 is expected to hit $50.6 billion
- Revenue per user averages $300
- Ad revenue is expected to rise 16.9% between 2022 and 2023
- 76% of marketers are happy with their Instagram ROI
- 1.08% is the average conversion rate on Instagram ads
Instagram is part of Meta, so they have an in-depth ad system that allows businesses to purchase ads and direct them to their ideal customer segment with precision targeting and a reach of billions of people.
In North America alone, there are 187.2 million active users, but you’ll see even more in Asia, South America and India.
When setting up your ads, you can target who sees your ads by:
- Behavior
- Location📍
- Interest
- Age
- Gender🧒
- Etc.
If you have the data to narrow down your audience to the exact buyers your business is targeting, you can use Instagram to reach them.
Let’s see how ads work to help you grow your account and make sales.
How Do Instagram Ads Work?
An Instagram boost post can make your business a lot of money. But behind the scenes, Instagram’s algorithms are hard at work to show the right ads to the right users. How does it all work?
We don’t know every fine detail, but what we do know about Instagram Ads is:
- Businesses purchase ads, set their goals, adjust targeting filters and set their budgets
- The ad algorithm will show ads based on the bidding system (you can set auto-bidding)
- If a user that matches your filters is browsing their feed, the algorithm may show your ad
Instagram’s algorithm will filter users, consider your bidding thresholds and display ads to the right users at the right time. You can track your performance the entire time and make adjustments based on it.
You can buy ads and create campaigns that are shown in:
- Story ads – 500M accounts use the feature daily
- Photo ads
- Video ads
- Carousel ads
- More
If you want to capture your audience’s attention, video ads are the go-to option. When interactions are your goal, nothing beats a carousel ad. Story ads are highly effective because they cover the screen.
How Much Do Instagram Ads Cost?
If you’re wondering “how much do Instagram ads cost,” you may not be happy with our answer: it depends. Your audience and niche play a role in the overall cost of ads, but you can also pay for different types of ads or actions.
- Cost Per Click (CPC) costs between $0.00 – $2.00+, but more than 50% of businesses won’t pay more than $0.75 a click.
- Cost Per 1000 Impressions (CPM) averages $0.00 – $6.00, but you’ll find that in a few industries, you can pay $10 or more per CPM.
- Cost Per Engagement (CPE) is how much you’ll pay for certain types of engagement on your ads, and these costs are between $0.03 and $0.08. Nearly 1-in-5 marketers will pay more than this amount for CPE, but it’s 100% dependent on the niche and ad setup.
Facebook Ads vs. Instagram Ads: What’s the Difference?
Facebook, Instagram – which is best? Both platforms have differing demographics, with Instagram tending to be younger. Total reach is more extensive on Facebook, but both platforms do offer the same extensive ad control and filtering.
Costs and demographics are the two main differences between Facebook and Instagram.
Facebook lacks the number of ad placement options that Instagram offers, so with less ad space, it makes sense that costs are higher.
How Much Higher are Facebook’s Ad Costs vs Instagram?
| CPC | $0.00 – $0.25 | $0.26 – $0.30 |
| CPM | $0.00 – $4.00 | $1.01 – $3.00 |
| CPE | $0.03 – $0.08 | $0.00 – $5.00 |
Are Instagram Ads More Effective Than Facebook?
Instagram and Facebook Ads use the same underlying algorithm for targeting users. Costs for Facebook are slightly higher than Instagram, and in terms of overall reach, the figures don’t like:
- Facebook’s total monthly active users = 2.9 billion
- Instagram’s total monthly active users = 2.3 billion
If you want to keep costs low, Instagram offers more ad placement options, which can reduce your ad spend. However, a general rule of thumb is:
- Facebook is king for traffic and conversions
- Instagram is the go-to option for brand awareness
In the ideal world, you’ll use both Instagram ads and Facebook ads to promote your brand and make sales.
Are Facebook Ads More Expensive Than Instagram Ads?
Instagram ad pricing is favorable for businesses, but you need to consider your target audience, too. You may spend more on Facebook ads, but if they convert better, they’re worth the cost. Consider the following:
- Facebook’s largest demographic is 25 – 34; 56% are male, and older users prefer the platform.
- Instagram’s largest demographic is 18 – 24; 51.8% are male
If you want to target Gen Z, Instagram is the better option. Millennials tend to use Facebook more often, but these demographics are evolving over time, too. In the ideal world, you’ll test ads on both platforms and see which performs best for your business.
What are the Factors That Influence Instagram Ads Costs?
There are several factors that affect Instagram ads cost, but there are three in particular that are especially influential:
1. Ad Relevancy
Instagram ads receive a relevancy score, which affects the cost of advertising. Basically, your score is based on how relevant Instagram thinks your ad is for your audience.
The higher your relevance score, the more likely you are to pay the minimum amount. Lower relevancy scores, on the other hand, will hurt your ad performance
2. Your Bid Amount
Obviously, your bid amount will affect your advertising costs. For example, if you set your bid amount to $2 per click and have a budget of $1,000, you can expect to get 500 clicks on your ad. However, if you set your bid amount to $0.50, that $1,000 budget would get you 2,000 clicks.
Optimizing your bid is crucial because it will help stretch your advertising dollar further. You don’t want to bid too high, but you don’t want to go too low, either. Striking the right balance is key, and your ad data can help you find that happy medium.
3. Competition
If you’re in a highly competitive market, advertising costs will naturally be higher because demand is so high.
When businesses get into bidding wars over ads, CPCs can shoot up. You’ll have to pay higher costs to reach your audience and outbid your competitors.
Other factors, like your audience size and click-through rate, may also come into play when determining the cost of your ads.
Is It Worth It to Pay for Instagram Ads?
Yes! Advertising on social media, in general, has advantages because you have the opportunity to reach such a large, engaged audience. However, advertising on Instagram has even greater advantages. It’s one of the biggest social networks out there and has over 2.3 billion active monthly users.
Some businesses, like Creatopy, see an ROI of 350% or more. Other data suggests that Instagram ads have a return of $65 per referred sale.
Instagram ads offer:
- Advanced targeting to ensure your ads are seen by the right people
- Higher engagement rates
- More options to appeal to your audience with relevant ads
With this platform, you can achieve the following goals:
- Awareness: Expand your reach or build brand awareness
- Consideration: Drive traffic, boost engagement, get app installs, boost lead generation, get more messages or increase video views.
- Conversion: Boost sales and store visits.
You also have the option to use split testing for some goals, which will allow you to experiment with different ad strategies to find the one that gets the highest conversions.
What Is a Good Budget for Instagram Ads?
A good budget for Instagram ads will largely depend on your business and its goals.
With Instagram ads, you can set a daily budget or a lifetime budget for your entire campaign. Daily budgeting allows you to set a spending limit for each day, and once that limit has been met, your ads won’t display for the rest of the day.
But what is a good budget? Here’s what your minimums should be for daily spending based on your goals:
- $1/day if your goal is to build awareness with a CPM (impression) campaign.
- $5/day if your goal is to boost engagement with clicks, likes, video views, etc.
- $40/day for lower-frequency events like special offers or app downloads.
Over time, you may tweak your budget to help you reach your goals. You can also take steps to start lowering your ad costs as your campaigns start providing insightful data.
How To Lower Your Instagram Ads Costs
Want to lower your Instagram ad spend while increasing your ROI? Smart ad optimization is the key.
- Use Automatic Bidding: If you’re new to Instagram ads, automatic bidding will help you get the best bid for your campaign until you obtain data to help you optimize your costs.
- Try Split Testing: Test different variations of your ad copy to see which one works best for your audience. More effective ads will lower your overall advertising costs.
- Set Goals: Establish whether you want your ads to build brand awareness (impression-focused), get your audience to consider your business (click-focused) or convert customers (click- and impression-focused). Setting goals will help you create better copy and optimize your budget to reduce your ad costs.
- Use Precision Targeting: Make sure you’re reaching the right people with your ads. You can target users based on their location, interests, demographics, behaviors and more.
- Optimize Your Landing Pages: Create relevant and optimized landing pages for your ads to increase conversions and maximize your advertising dollars.
These are some of the most effective strategies for lowering your Instagram advertising costs. It’s also important to note that Instagram ads aren’t the only way to reach your goals and grow your account on Instagram.
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Frequently Asked Questions
Is it Worth it to Pay for Instagram Ads?
Yes. Most marketers are happy with the return on investment (ROI) with Instagram ads. Instagram ads have higher click-through rates compared to other networks and the platform offers more advanced targeting options.
How Much do Instagram Ads Cost in 2023?
On average, Instagram ads cost up to $4 per CPM (1,000 impressions), $0-$0.25 per click and $0.03-$0.08 per engagement (comments, likes, shares, etc.).
What is a Good Budget for Instagram Ads?
As a general rule of thumb, you want to aim for $1 a day for impressions and $5 per day for engagement (clicks, likes, etc.). Most businesses spend $100-$500 per month on Instagram ads.
