How Much Does it Cost to Advertise on Instagram?

In many ways advertising on Instagram is the same as advertising on Facebook. This shouldn’t come as a surprise, with Instagram being part of the Facebook network. We recently covered how to work out the cost of your Facebook ads. This article shifts the focus to Facebook's very visual, rapidly increasingly popular sibling, Instagram. Just how much does it cost to advertise on Instagram?

As with Facebook, there is no set price for advertising on Instagram. You create a bid for your ad’s placement. In theory, Instagram will place the ad of the company that makes the highest bid for any particular advertising slot. In reality, it is much more complicated than this, and you can not guarantee that Instagram will accept any ad you provide and serve it on the Instagram accounts you bid for. There is more to obtaining a spot for your ad than just making the highest bid.

You can expect that you will have to pay somewhere between 20 cents and $2 per click (CPC) on an Instagram campaign. According to Revealbot data,  the average Instagram CPC in July 2021 in the United States was $1.28 per click, as opposed to 2022 CPC which is $1.33 per click. However, if you prefer to run your ads on a cost per mille (CPM) basis, focusing on impressions, the average Instagram CPM in July 2021 in the United States was $8.51, compared to 2022 CPM which is $10.39. In comparison, the average Facebook CPC in July 2021 was $1.01 per click, and the average Facebook CPM was $12.91.

Smart Insights has collated statistics comparing clickthrough rates (CTRs) for display ads, paid social ads, and Google Ads. Unfortunately, the CTRs have generally dropped across most types of online advertising over recent years. They found that the ad clickthrough rate in the Instagram feed was 0.22% in Q1 2020. This was significantly lower than in the previous year when it was 0.60% in Q1 2019. However, the CTR for Instagram Stories was higher at 0.33%. As a comparison, the average Facebook CTR in the newsfeed is 1.11%, also a downwards trend from 2019.

Instagram advertising has increased markedly over the last few years. In March 2017 they enjoyed their 1 millionth advertiser.

Instagram is Part of the Facebook Ads Platform

If you read our earlier article on the cost of Facebook ads, you will have seen that Facebook offers Instagram as one of the locations you can bid to place your Facebook ads. When you bid for your Facebook (group) ads, they encourage you to position your ads at the following locations:

Feeds:

• Facebook News Feed (desktop or mobile, depending on how people access Facebook)
• Instagram feed (mobile feed when using the app only)
• Facebook Marketplace
• Facebook Video feeds (on Facebook Watch and Facebook News Feed)
• Facebook right column (on computers only)
• Instagram Explore
• Messenger Inbox

Stories:

• Facebook Stories
• Instagram Stories
• Messenger stories

In-Stream:

• Facebook in-stream videos
• IGTV videos
• Instagram Reels

Search:

• Facebook search results

Messages:

• Messenger sponsored messages

In-article:

• Facebook Instant Articles

Apps:

• Audience Network native, banner, and interstitial
• Audience Network rewarded videos

Oculus:

• Oculus Mobile App Feed
• Oculus Mobile App Search Results

Every Facebook advertiser is encouraged to add Instagram to their advertising preferences – they are given discounts for doing so.

How do Instagram Ads Compare with Facebook Ads?

While some companies might choose a mix of both Instagram and Facebook ads, it will very much depend on your target market. It makes the most sense to advertise where your customers (and potential new clients) spend their time.

Facebook has the advantage of its vast user base. It reported a colossal 2.89 billion monthly active users as of the second quarter of 2021. Sure, your target audience may not regularly use Facebook, but most do. Also, as you can see from the above list of advertising types, Facebook has more advertising options than Instagram does. 

On the other hand, if your target audience matches Instagram's main demographic, you will benefit from advertising there. 

According to data reported by Statista, about 60% of Instagram's users are aged between 18 and 34. Although the balance between the genders is relatively even overall (51% females, 49% males), it is less so in the 18-34 range. Overall, 32.1% of Instagram users are males aged 18-34, while 29.9% are females of the same age.  Instagram is also the third most popular social network for teenagers in the United States. In Fall 2020, 25% of US teenagers ranked Instagram their favorite social app, after only Snapchat (34%) and TikTok (29%). Facebook was preferred by only 2% of the teenage respondents.

Clearly, if you sell to people under 34, you should seriously consider including Instagram ads in your marketing mix. You might well consider some Facebook advertising, too, although less so if Generation Z is your target market.

Advantages of Instagram Advertising

Assuming that your target audience spends time on their Instagram apps, there are excellent reasons for adding Instagram to your marketing mix. 

Traditionally, Instagram has a higher clickthrough rate than Facebook. While not true currently, as SmartInsights has shown, that has been the exception rather than the norm. At most times, Instagram's CTR has been much higher than that of its older sibling. 

Like Facebook, Instagram provides advanced targeting opportunities with its ads. You can home in on your target audience and not waste funds advertising to the wrong people. You can target your ads based on location, demographics, interests, behavior, and lookalike audiences, as well as letting Instagram/Facebook target automatically. You can also create custom audiences and retarget those people who have already interacted with your business. 

Instagram can also drive higher average order values (AOV) than other social networks, depending on your industry. For example, research by eCommerce personalization platform Nosto found that Instagram achieved an AOV for paid posts of $103 on mobile for fashion retailers. In comparison, Facebook's paid AOV was $69, and Snapchat's paid AOV was $57. 

Instagram has far higher engagement rates compared to Facebook. According to data in We Are Social's Digital 2021 July Global Statshot Report, the average engagement rate for all post types on Instagram is 0.83%. Engagement for photo posts is 0.81%, video posts 0.61%, and carousel posts 1.01%. In comparison, Facebook’s average engagement rates are 0.11% (all posts), 0.16% (photo posts), 0.13% (video posts), 0.05% (link posts), and 0.17% (status posts).

Key Factors Contributing to Advertising Cost

As with Facebook advertising, three main factors affect what you will have to pay for your Instagram ads:

1. The amount you are willing to bid for your campaign
2. Your ad quality, taking into account such factors as feedback from people viewing or hiding the ad and assessments of low-quality attributes in the ad, such as withholding information, sensationalized language, and engagement bait
3. Your Estimated Action Rates – how likely that Facebook / Instagram believes that people will take the action for which you target your ads, e.g., how likely are people are to convert when they see your ad

Estimated action rates combined with ad quality measure ad relevance. Instagram subsidizes those ads they consider relevant to the people who will view your ads. A lower bid could succeed over a higher bid from somebody else because of better relevance.

Instagram now uses ad relevance diagnostics in place of their previous ad relevance score. You can use ad relevance diagnostics to diagnose underperforming ads. Ad relevance diagnostics look at your quality ranking, engagement rate ranking, and conversion rate ranking. Ideally, you want all three factors to be average or above. 

Facebook explains these factors in more detail in their Help section.

A crucial factor from this is that your Instagram advertising price is not affected by your bid alone. You can reduce your advertising costs by creating quality Instagram ads that people will value and focusing your ad content on the most suitable people.

Obviously, competition will also play an essential role in determining your Instagram advertising cost. For example, if you have multiple people bidding for the same target audience as you, you may have a bidding war, increasing the overall cost. Some of the many factors affecting competition include:

• Holidays and events – competition is higher for holidays and special events. The CPC rises dramatically in the days leading up to Christmas, for instance.
• Day of the week – Instagram users engage more on weekdays than at weekends. This makes it more likely that you will pay more mid-week than on a Saturday or Sunday.
• Your market – some industries have higher advertising rates than others, to a large degree due to the level of competition. Also, firms targeting females tend to pay more than those targeting males as females engage more on Instagram typically.

Creating Your Instagram Ads in the Most Cost-Effective Way

Too many people place ads on Instagram (and often Facebook) without knowing what they are doing. It should be no surprise, therefore, that these people often lose money. You need to think carefully about the people you are targeting and create the perfect ad for these people.

Ads Manager is the starting point for running ads on Facebook, Instagram, Messenger, or Audience Network. It's an all-in-one tool for creating ads, managing when and where they'll run, and tracking how well your campaigns perform.

Facebook / Instagram splits its Ads Manager into three sections:

1. Campaign
2. Ad Set
3. Ad

They allow you to build your ads up following these three parts:

1. Set Campaign Details

You begin by selecting your objective for your entire Instagram Marketing Campaign

There is no value going into this process without knowing what you wish to gain out of it. You need to begin your campaign by setting campaign goals and objectives.

The Facebook / Instagram Ads Manager offers you 11 different marketing objectives in three categories:

Awareness

• Brand Awareness
• Reach

Consideration

• Traffic
• Engagement
• App Installs
• Video Views
• Lead Generation
• Messages

Conversion

• Conversions
• Catalogue Sales
• Store Traffic

Make sure you don’t select an irrelevant objective for Instagram – for instance focusing on Messages (which is designed for those wanting to get more people to send messages to your business in Messenger).

If you are just beginning your advertising on Instagram, it is a good idea to optimize for conversions. Instagram will target your campaigns to give you your best results at a lower price.

2. Set Details for Your Ad Set

You may have various settings to choose from, depending on your preferred objective. For instance, if you opt to focus on increasing traffic you are asked whether you want to target a website, app, or Messenger.

You are then asked whether you want to create an offer to help encourage people to convert, depending on your objective.

You are then given the opportunity to define your audience. If you want the best price for your ads and the best ROI on them, you want to be smart and create a selected audience.

You are given quite a few options for targeting your ads, and you can save your audiences so that they can be reused in future campaigns.

Don’t waste money by broad targeting. You might think that you will have a higher chance of converting if 10 million people see your ad – but the majority of these people have no wish to buy anything from you.

You can target based on:

• Location
• Age
• Gender
• Languages
• Demographics
• Interests
• Behaviors
• Connections

Facebook / Instagram will give you an indication of your estimated daily reach and expected post engagement. They will indicate whether you have targeted your audience specifically or broadly.

You then choose your placements. This is where you select to focus your advertising on Instagram, rather than Facebook. You will need to deselect Automatic Placements and instead opt for Edit Placements. Amongst the options you encounter are Instagram Feed and Instagram Stories. The device type doesn’t matter as you can’t select Instagram for Desktop.

It is a good idea to do this even if you want to do a combined campaign involving Facebook, too. By selecting your placements yourself, you have more control over your campaign optimization.

You have a few other options here, for instance, you can choose to target all mobile devices, or just iOS or Android.

Finally, in the Ad Set section, you provide your budget. You can either pick a daily budget limit or give a total Lifetime Budget amount for your entire ad set.

When you set a daily budget, you create an average, rather than an absolute limit. This is particularly important if you choose to set a budget based on an action. Instagram may be able to control the number of times they serve ads (thus limiting the impressions you have to pay for). But it is harder for them to manage how many times people click on a particular day. There are days where many people may click. If you have CPC pricing, you will go over your budget that day, but Instagram will try and compensate tomorrow.

You also have the chance to state the timeframe in which you want your ads to run.

You also have a few options to optimize your ad delivery. For instance, you can choose whether you want your Instagram ad to run multiple times per day to a person, or just the once. You can select what kind of optimizations you wish for ad delivery. For instance, you can ask Instagram to concentrate on delivering your ads to people most likely to click on a link or view a landing page. You may ask them to show your ads to as many people (within your defined audience) as possible, and focus on impressions.

You also define the method by which Facebook / Instagram charges you, e.g., are you paying cost per click (CPC), or by impressions (CPM), or by another metric?

You also have the option to select Manual or Automatic Bidding. Many people recommend that newcomers go with Automatic Bidding, but you may prefer to bid manually once you are experienced with advertising on Instagram.

If you opt for Manual Bidding you have a further choice to make: should you set Maximum or Average bids?

If you select Maximum bid, then Instagram won’t run your ads if the cost per result would be higher than your bid. You would choose this if your goal is to maximize profit.

If you select Average bid, Instagram optimizes your ad delivery to maximize your ROI – they call this the Pacing method. The Pacing method ensures that you don’t use up all of your budget early in the day, and miss out on profitable opportunities later in the day. You would select the Average bid if you want to maximize delivery, i.e., you would get more conversions, but some may cost more than what would otherwise have been your maximum bid.

You should probably begin with automatic bidding until you can build up data showing your cost per result.

One common suggestion the experts make is that if you opt for Manual bidding, select a figure towards the bottom end of Facebook’s suggested bid range.

3. Set Details Relating to Your Specific Ads

This section focuses on your actual Instagram ads.

Your first option is to select an ad format. You can choose from:

1. Carousel
2. Single Image
3. Single Video
4. Slideshow

Note that the option of Collection is currently only available for the Mobile Facebook feed – not Instagram.

If you aim to advertise using Instagram Stories you can select from:

1. Instagram Stories Single Image
2. Instagram Stories Single Video

If you want to keep your ad costs down, carousel ads are typically seen as providing the best value for your money.

Once you select the format for your ad, you provide all of the other details necessary to create the ad. These include any links, images, and videos – as well as the all-important Call to Action text.

Native Ads Work Best on Instagram

Instagram users expect to receive relevant, interesting posts. They can spot a traditional ad, and these perform poorly. If you want your ad to work on Instagram, it needs to look like a typical post.

This means that may not receive the best results from the ads with the lowest CPM. Your ad may not cost you much to deliver. But that is of little value to you if everybody bypasses it.

It is essential that you create content that your target audience appreciates. Don’ try and push sales with your first ads. It is better to begin by creating top-of-funnel posts, to introduce your brand to the people who you are targeting.

Instagram recognizes this too. Take a close look at your relevance diagnostics when targeting your content. You need to ensure your ads:

• are perceived as being high quality
• produce conversions
• spur interest
• aren't perceived as clickbait or controversial

Instagram recognizes this too. Your Relevance Score is an excellent guide as to how well you target your content.

Instagram is one of the fastest-growing social networks. A few years ago, few people included Instagram in their top echelon of social networks. Now it is considered one of the leading players.

Most firms who advertise online, or work with influencers who assist them in their marketing, should give serious consideration to including Instagram in their marketing mix.

About the Author

Influencer Marketing Hub

Writer

The Influencer Marketing Hub Team brings together a diverse group of experts with a passion for influencer marketing, digital trends, and social media strategies. Each piece of content crafted by this team is researched and written to provide valuable insights, tips, and updates for our readers. Our authors are dedicated to delivering high-quality, informative, and engaging articles that help businesses and influencers thrive in this rapidly changing digital world.