In the past few years, Instagram has announced its ad service for businesses who would like to start Instagram marketing. Now, they can use Facebook Ad Manager to run an ad on Instagram. But, something that makes most businesses unsure about running an ad on Instagram platforms is the Instagram advertising cost. Let’s see how to calculate it and what factors can affect this price.
Despite using the Instagram platform for advertisement, you can join Influencer marketing platforms to collaborate with Instagram influencers. Most brands believe that influencer marketing is more effective than Instagram ads. We will get to it in this post, too.
But first, let’s take a quick look at Instagram advertising.
What is Instagram advertising?
Instagram ads are the perfect solution for promoting a business, product, or service on social media. With their wide reach and engaging visual format, you can capture the attention of potential customers and drive more traffic to your site.
This type of ad looks similar to regular posts and stories, but they have a “Sponsored” label and a call-to-action button to show that they are sponsored posts.
Furthermore, Instagram advertisements target specific audiences based on their interests and demographic information. This feature adds to its effectiveness because the ad is shown to people who might be interested in that service or product.
Unlike regular posts on Instagram, these ads are not free, and Instagram advertising cost is not fixed. It differs based on some factors, such as ad type.
Let’s see what factors can impact the costs of Instagram ads.
Factors Influencing Instagram Marketing Costs
There are many factors that could influence the Instagram marketing costs, such as:
#1 Campaign Objective
Depending on the purpose of your campaign and the stage of the marketing funnel that your target audience is in, you may incur greater or lower advertising costs than you had originally planned.
Advertising campaigns with a higher-value end goal, like conversions, will cost more than those with a lower-funnel end goal, like raising brand recognition.
Targeting users farther down the funnel, who are more familiar with your brand and offers and ready to open their wallets or take a higher-value action, is more valuable than having larger, colder audiences view your ad to drive brand awareness.
#2 Audience Size
It’s more cost-effective to aim for a wide audience because there will be less competition for each individual. Due to increased competition for a smaller pool of viewers, the cost of Instagram ads per view may rise if you restrict your audience to targeting a smaller geographic area or younger age group. Campaign expenditures tend to be greater for retargeting initiatives because the audiences are smaller.
#3 Bid Amount and Strategy
The Instagram advertising cost is normally calculated based on bidding, which means you should use a bidding strategy to show your ad to more people. For example, you can dedicate $1000 as your budget for an ad and set your bid amount to $1 per click. Therefore, you can expect to get 1000 clicks.
You should note that if your bidding amount is lower than your competitors, you will not get the number of clicks you expect per day because their ad will be shown to more people. Therefore, you should keep an eye on your competitors’ ads to see if you need to increase or decrease this amount.
#4 Click-Through Rate
A low CTR can lead to increased Instagram ad cost because the system may conclude that your intended audience isn’t responding to the content of your advertising. Your advertising CTR is a great sign of how well they’re connecting with your ideal customer.
CTRs of 2% are considered to be optimal. Maintaining a good CTR should help decrease Instagram marketing costs.
#5 Estimated Action Rate
Your Instagram marketing costs will also be affected by the estimated action rates. This fee is calculated by Instagram ads cost calculator based on the number of individuals who are likely to take action after seeing your ad. In essence, they are attempting to determine how interested your target demographic is in your ad.
Interactions like clicking and making a purchase fall under this Instagram marketing cost. Instagram hopes that by advertising your content, more people will view it and interact with it.
If Instagram thinks more people would engage with your ad, it will prioritize it. Because of this, you should expect to decrease the pricing amount to pay for Instagram ads, resulting in more clicks and potential customers.
#6 Competition and Timing
As mentioned in the bidding strategy, your competitors can affect your Instagram ad cost. Since competitors might have the same audience and bid more for each click, you should be ready for a bidding war, which may increase your advertising costs.
Furthermore, you should definitely know when your potential audience are online on Instagram. So, your Instagram ad should be displayed at the right timing to receive more clicks. At the same time, this timing might be the perfect time for your competitors, too. You may have to dedicate more budget to ads that are shown on busy times.
#7 Ad Placement
One of the factors that affect the Instagram ad cost is the Ad placement. For example, if you decide to place your Ad on the stories, you have to pay less than the times you want to display your ad in the home page or between other posts.
#8 Ad Relevancy
It’s important for Instagram to show Ads to the audience that like to see it. This is known as Ad relevancy, which has a score for Instagram. This score is given based on the reactions of the audience to your ad. For example, if more users click on your Ad, it will receive a higher score. Hiding an Ad may increase the cost of advertising on Instagram.
How Much Do Instagram Ads Cost?
Now that we know the factors that affect the Instagram advertising cost, it’s time to check out the average price of each type of Ad based on different cost methods.
Instagram ads pricing can range in price from $0.20 to $6.70 each day, depending on the bidding methodology (Instagram ads cost calculator). Let’s take a look at the average cost per click, cost per engagement, and cost per thousand impressions on Instagram.
Instagram Cost Per Click (CPC)
Typically, cost-per-click (CPC) on Instagram ads ranges from 20 cents to $2. Revealbot reports that the average cost per click (CPC) on Instagram in the United States in July of 2021 was $1.28, down from the $1.33 CPC in 2022.
The average CPC for Instagram ads in 2023 was $1.41. With a slight growth-rate, this price could be around $1.60.
Instagram Cost Per Engagement (CPE)
Cost per engagement (CPE) is an online advertising model where advertisers only pay when users interact with their ads. An interaction can be anything from liking a post, playing a video, filling a form, or sharing a post.
Typically, the average CPE to pay for Instagram ads ranges from $0.01 to $0.05.
As a platform, Instagram has a relatively low CPE, averaging out to just $0.54 for each interaction. From last year’s average of $0.32 in CPE, this is a 69% increase.
Instagram Cost Per Mill Impressions (CPM)
Another type of measuring Instagram Ad cost is based on every thousand impressions, which is known as CPM or Cost-Per-Mill. In this case, you choose to pay a price for every thousand impressions that your Ad receives.
Based on the web search results, the average cost per thousand impressions (CPM) for Instagram ads in 2023 is $8.11. According to a similar growth rate as previous years, the average CPM for Instagram ads in 2024 could be around $9.00.
Are Instagram Advertising Costs Worth It ?
Calculating the cost of advertising on Instagram can be challenging, making one wonder if Instagram ads are worth trying.
There are several reasons why Instagram ads costs are well worth such as:
#1 Advanced Targeting
Your company can take advantage of Instagram’s sophisticated targeting options. The effectiveness of your advertisements can be improved by using the available targeting choices, which range from geographic to interest-based.
When marketing to music fans, you don’t have to appeal to everyone who likes music; you can target only those who like the pop genre, for example.
#2 Higher engagement rates
Instagram users spend an average of 30 minutes on this platform. Targeting the right audience when running Instagram ads can increase engagement rate to your account, increase sales and lead to more sales.
The engagement rates on Instagram are exceptionally high, both naturally and in response to advertisements. Instagram photos get 23% more engagement, such as likes, comments, and shares, than those posted to Facebook.
#3 External links
At the moment, Instagram’s organic postings can’t include clickable links. Including a link in a caption or direct message will prompt the recipient to either copy and paste the URL into their browser or check out your Instagram bio.
Links to external websites or landing pages can be specified in Instagram ads. When running Instagram ads, it’s best to direct users to a page on your own domain, where you have full control over the permalink structure, so that you can more accurately follow their actions.
Therefore, if you want more clicks to your website and use social media as a backlink platform, Instagram ad cost is really worth it.
How to Lower Your Instagram Ads Costs?
Do you think the cost of advertising on Instagram is high? Here are some options to consider if you want to lower your Instagram marketing costs:
#1 Get Your Budget and Your Plans in Sync.
In order to get the most out of your Instagram marketing costs, you should first choose campaign goals that are most applicable to your sales funnel.
Test less expensive campaigns to introduce your brand to audiences with awareness, engagement, or, even better, a website traffic campaign so that these users leave Instagram and arrive at your website, where they will be tagged with the Pixel and can be retargeted if they do not convert on the first visit.
#2 Try Automated Bidding
One of the methods to lower Instagram marketing costs is to set an automatic bidding for your campaign. It’s a painless method of locating the optimal bid for your promotion.
If you don’t have any historical data to inform a good CPC to set for your campaign, automatic bidding can help your company save some money on Instagram promotion prices. It will guide you to the optimal bid for your campaign.
With automatic bidding, your company will never pay too much for Instagram commercials. Without historical information, it may be impossible to determine a fair offer price. There’s a chance you’ll think you have to offer more than you actually have.
Before you have enough data to guide your campaign, automatic bidding can assist you in selecting the optimal bid amount. It’s an excellent method for cutting down on Instagram marketing costs.
#3 Make specific targets
As mentioned earlier, it is essential to target the right group of audience. Therefore, you should define your Ads target accurately to yield a better outcome.
Showing your Instagram advertising to people who are likely to be interested in your products or services can make your Ad more cost-effective because you will get a better ROI from it no matter how much this Instagram ad costs.
You can target your audience specifically based on their location. This might be anything from a country to a more particular identifier, such as a zip code.
Targeting potential customers based on their demographic characteristics is the most prevalent use of demographic data. Gender, age, and racial details are all included.
Interactions on social media provide insight into users’ underlying passions and interests. It’s possible to appeal to certain audiences by catering to their preferences, whether in the realm of crafts or technology.
A lookalike audience is a group of people who share similar traits to those who have already shown interest in your brand. Thus, you may focus on reaching the people who are most likely to benefit from your offerings but are unaware of them.
More people who might be interested in your goods and services can be reached with pinpoint precision. Since this is the case, your ad copy will be more relevant to them, leading to a higher ad rank and reduced CPC. An additional benefit is that it will boost conversions, which will, in turn, reduce the overall Instagram marketing costs of the campaign.
#4 Test Your Ads
Different lines of ad copy and creatives (pictures, videos, etc.) should be tested to see how well they perform with target audiences.
By conducting experiments, you may figure out what makes your target audience tick, increasing your engagement and click-through rates (CTR) and decreasing your Instagram marketing costs, stretching your marketing cost to advertise on Instagram further.
#5 Utilize Automated Processes
Like automatic bidding, employing automatic placements of the ad can reduce your Instagram marketing costs.
Due to increased placement liquidity, the system is better able to use an algorithm to determine where your ads will perform best across both platforms (Instagram and Facebook) and a wider variety of ad placements.
This reduces competition for Instagram’s three existing ad placements and reduces the Instagram ads cost, which you have to pay for those spots.
#6 Make use of Influencer Marketing, a Low-Cost Strategy
Does Instagram advertising cost seem high for your budget but you still want to promote your business on this platform? Why not try influencer marketing?
67% of marketers use influencer marketing to improve their marketing strategies. Instagram influencer partnerships are by far the most effective way for brands to reach new audiences quickly. On average Instagram influencer partnerships have an engagement rate of 3.21%, which is higher than the average engagement rate of 1.5% across all social networks.
Being more cost-effective than Instagram ads is only one of the many benefits of influencer marketing. However, it doesn’t mean that paid Instagram advertising is unnecessary; on the contrary, it remains an excellent method of boosting campaigns and maximizing return on investment. Meanwhile, it is more expensive than influencer marketing.
Because of this, influencer marketing can help you save a lot of money on Instagram commercials. Similarly, influencer marketplaces can ease up the process of finding influencers for brands, and Ainfluencer is one of the best marketplaces at the moment.
Ainfluencer: The Best Influencer Marketing Platform
Ainfluencer is a free Do-it-Yourself marketplace that helps brands and influencers easily find each other and connect. It is a cost-effective method for brands because they don’t need to pay any fee to the platform.
They only need to join Ainfluencer as a brand and create their influencer marketing campaign. Then, using the ‘Find Influencers’ tool, they can search for influencers based on category, location, language, gender, hashtags, or number of followers. As a result, they will see a list of influencers who match their needs.
The following video can explain more about collaborating with influencers on Ainfluecer.
Instagram is expanding rapidly, and so is the variety of advertising possibilities available to businesses using the platform. Instagram ads are among the most effective methods businesses can incorporate into their online marketing. However, Instagram advertising costs might be high for startups. There is a solution for that too.
Using influencer marketing platforms, like Ainfluencer, can help you increase brand awareness and engagement on social media platforms, such as Instagram and TikTok in a more cost-effective way.
Generally speaking, you can run an Instagram ad campaign for as little as 20 cents per click (CPC) and as much as $2 (CPC). The Instagram marketing cost is only going to increase.
Instagram marketing costs range from about $0.20 to $6.70 each day, depending on the bidding system. Advertisers often pay anywhere from $0.20 to $2 per click using a CPC model. In terms of CPM, or cost per thousand impressions, advertisers shell out $6.7. Cost-per-engagement (CPE) pricing ranges from $0.01 to $0.05 for advertising campaigns.
Cost-per-click (CPC) on Instagram ads costs typically ranges from 20 cents to $2. Revealbot shows that the average cost per click (CPC) on Instagram in the United States in July 2021 was $1.28, down from the $1.33 CPC in 2022.
Instagram-sponsored posts costs are far less expensive than other forms of marketing. That’s why it’s a good idea to use this platform to see how well these activities go with your target audience. On the other hand, the daily cost will be merely $1.
If you are just starting testing Instagram ads, it is better to start with a minimum of $10 per day to test different ad formats, such as video, photos, etc. The result will show you which type of ad suits your audience. Then, set a higher budget for that ad to reach a better result.