Instagram Ad Costs

Instagram’s paid advertising features offer a powerful marketing tool for businesses looking to reach new customers. If you’re reading this article, you might wonder what the costs are for Instagram Ads and how to create a successful ad campaign resulting in a satisfying ROI.

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With seven types of Instagram ads to choose from, the amount you’ll spend on Instagram Ads can vary significantly. So, let’s break down everything you need about Instagram advertising and how you can conquer the bidding wars while keeping your costs low.

As you read through this article, you will learn about the following:

• Instagram advertising costs
• Instagram ad bidding structure
• Instagram ad budgets and how to bid
• Ad delivery optimization
• Setting Up Ads in the Instagram App
• Keeping Instagram ad costs low

QUICK FACT

The Average CPC (cost per click) for Instagram Ads is about $0.70. Ad prices rise in competitive industries and may increase in audiences in the 18 to 24, 25 to 34, and 25 to 44 ranges.

Instagram Advertising Costs

Before spending any time or money on Instagram Ads, there’s a burning question in any marketer’s mind: is it worth it?

Research from eMarketer revealed year-after-year growth in revenue for Instagram from their ads. In 2017, advertisers and marketers spent a total of .81 billion dollars on mobile ads alone.

Instagram Ads Revenue 2017 – Image Source

Since Instagram is growing considerably, it must bring incredible cash for businesses.

Cost Per Click + ROI

Many online sources have analyzed and studied the trends and costs of Instagram Ads. Let’s take a look at the most recent findings.

Here are some of the average CPCs in 2017 for specific industries reported by Brand Networks Inc:

• Media & Entertainment – $6.44
• Financial Services – $5.70
• Telco & Tech – $6.55

Research by AdEspresso found these interesting averages from 2017:

• Overall average CPC ranges from $0.70 to $1.00
• Apple devices have the highest CPC
• CPC for females is much higher than for males

Instagram Ad Costs by Day – Image Source

Although Instagram Ads fall under Facebook’s Advertising services, you might be surprised that ad costs are much higher on Instagram than on Facebook.

Just take a look at the average costs based on ad placement:

Instagram vs. Facebook Ad Costs by Placement – Image Source

Did you notice the far left and right columns? Those are the costs for Instagram ads with significantly higher averages than Facebook.

However…

Instagram ads typically receive far more engagement than Facebook ads as well as other platforms providing ad services (i.e., Google+, Pinterest, LinkedIn, and Twitter):

User interactions by social platform – Image Source

So, are Instagram ads worth it?

According to Salesforce, they saw higher conversions on their Instagram Ads (1.5% CTR) compared to their Facebook Ads (0.84% CTR).

Measured produced an Instagram Industry report and found that photos have a higher engagement rate than videos.

Also, this Instagram report shows that users who see photos from a person rather than a brand have a 4.5% higher chance of converting. This rate increases to 9.6% if they interact with that photo.

These are all essential facts to review when considering your Instagram Ad campaign. However, something to remember is that higher conversions come with a price. This is also crucial when bidding for ad prices.

Instagram Ad Bidding Structure

Since Instagram Ads is based on the Facebook Ad platform, the ad bidding structure is very similar.

When you publish your Instagram ad campaign, you’ll access the worldwide auction for the user’s attention.

How are Instagram costs determined?

3 factors determine the costs of your Instagram ads, they are:

1. Your campaign’s bid. The more you’re willing to pay, the more your ads will be delivered.
2. Relevance score. All ads’ receive a relevance score which will impact to cost of your ad as well as how Facebook prioritizes the delivery in the bidding wars.
3. They estimated action rates. Using Facebook’s algorithms, your ads will have an estimated action rate which measures various factors and affects how much your ads will cost.

This is just an overview of how the bidding system works for Instagram and Facebook ads. Keep reading to dive deeper into bidding and determining the best budget for your campaign.

Instagram ad budgets and how to bid

There are many advantages to Instagram ads, especially when setting up your ad budget and spending it on bids. The main benefits are:

• Scalable pricing
• Self-serve and instant advertising
• Enhanced insights and reporting
• Highly targeted and refinable audience

For those of you reading and who have never created an ad on Instagram, you’ll have to link your Instagram account to your Facebook page. To do that, you’ll have to log in to your Ads Manager account in Facebook Business.

Once your billing account is created in the Ads Manager, you can link it to your Instagram account to create promotions and ads from the app. Alternatively, you can stay in the Ads Manager or use the Power Editor to create new ads.

Setting Up Instagram Ads

Instagram’s bidding system is a part of the Facebook advertising network. This uses an auction system that predetermines prices. This means that once you set your ad campaign budget (either by day or for the entire duration of the campaign) and your bid, this will determine the maximum amount you will spend to achieve your ad objective.

The first step in creating your Instagram Ads is establishing your budget. This is entirely customizable based on your own needs. Here are the two types of ad budgets you can choose:

1. Daily budget. Facebook spends up to the pre-selected amount to deliver your ads daily until your campaign expires.
2. Lifetime budget. The total amount you will spend during the entire campaign duration.

Once you have determined your budget, the next step is to select your ad’s duration. You have two more choices:

1. Run my ad set continuously starting today
2. Set a start and end date

If you’re running a brand awareness campaign, 2. would be your go-to choice. For any special offer or limited-time deal, use 1.

Advanced Scheduling & Budget Options

You can choose a few advanced features when setting up your Instagram ads. For example, you can optimize your delivery style so that your ads are displayed either once per day or multiple times.

Once you choose your ad placement, you’ll be able to edit these delivery methods: Conversions, Link Clicks, Post Engagement, Impressions, Brand Awareness, and Daily Unique Reach. Each option has a different billing system.

• You are charged for the number of ads Facebook delivers to people most likely to convert.
• Link Clicks. You are charged for the number of ads Facebook delivers to people most likely to click.
• You are charged for the number of impressions you obtain.
• Post Engagement. You are charged for impressions or post engagements (i.e., likes, comments, shares, etc.).
• Brand Awareness. You are charged for the number of ads Facebook delivers to people who would be most interested in your business or brand.
• Daily Unique Reach. You are charged for the amount of new.

Standard or Accelerated Instagram Ads

Next, you may have the option to set up Standard or Accelerated ads depending on the setup you created earlier. Choosing the recommended standard will follow the scheduling parameters you selected at the beginning of your ad set up.

However, if you want your ads posted more frequently and whenever Facebook can push out your ad, the accelerated option is best for you. If you do this, your ad budget may be used quickly, leading to a very costly campaign.

Sticking with the Standard delivery type will ensure your ad budget gets used evenly throughout each day.

Manual or Automatic Bidding

Again, new Instagram advertisers should start with automatic mode before experimenting with Manual mode. Automated bidding will keep costs low while Facebook’s algorithms work to reach as much of your target audience as possible. Manual mode does have the potential to maximize an ad budget, but it may not get as many people.

• Automatic Bidding. Use this if you aren’t sure how much your campaign will cost or how quickly you want to use your ad budget. Facebook will automatically optimize your budget to keep ad costs low and results high.
• Manual Bidding. If you have the data and experience to change the metrics for your bids or you’re trying to achieve a specific goal, this is it. You can see Facebook’s recommendations while you experiment with metrics to seek a bidding strategy that fits your goals. Remember, you don’t have to follow Facebook’s suggestions; try bidding on the low end and collect your data to make better decisions for your business.

Optimizing for Conversions: Maximum or Average

If you choose to optimize the delivery of your ads for conversions, you’d see two more choices for bid amounts: Maximum or Average. This will determine the pacing of your ads.

Experiment with both options to get the best ROI – Image Source

• Maximum Bid. Facebook’s algorithms will maximize your ad delivery without risking the cost of going over the amount you bid.
• Average Bid. Facebook’s algorithms will pace your budget to give you an optimal ROI.

Facebook’s unique pacing algorithms will teach the most effective ads over time. This way, you can get the most out of your budget.

Smartly.io summarizes the critical difference between Maximum and Average Bid types – Image Source.

Setting Up Ads in the Instagram App

If you want to quickly and easily set up Instagram ads, you can do so directly from your Instagram account. You’ll have less control over some of the features offered on the Facebook Ad platform, but you can create effective promotions this way.

Step 1. Create your promotion. Like adding a new post or image to your Instagram page, you can create a new post or promote one of your previously published posts. You can also choose to begin promotions for your Instagram stories, too.

Step 2. Choose your destination. You have three choices for sending a click to your ad: Your Profile, Your Website, or Your Direct Messages.

If you choose “Your Website,” pick a call to action that fits the destination of your URL:

Step 3. Select target audience. The next step involves choosing between automatically targeting similar followers of your Instagram account or creating a custom audience. If you don’t have much experience, choose automatically.

Step 4. Decide your ad budget and duration. Here you’ll notice two sliding scales which adjust your ad’s Budget and Duration. Above, you’ll see Instagram providing you with an automatic estimate as to how many people your ad will reach.

Step 5. Review and approve your ad. That’s it! If you’re satisfied with your ad setup, you can support the ad and review insights shortly after it goes live.

Keeping Instagram Ad Costs Low

Now that you have all this knowledge on Instagram ads, here’s how you can put it all together and keep your ad costs low when using Facebook’s Ad Manager:

1. Experiment with bidding options. If you’re new to Instagram advertising or haven’t started an ad campaign, use Automatic Bidding to keep bidding costs low. Once you have gained experience and obtained some data on your ad performance, you can begin to experiment with Manual Bidding to optimize your Instagram ads.
2. Continually optimize ads for conversions. You can choose from various optimization settings, and selecting “conversions” will set you up to get the most out of your campaign. Typically, Facebook takes control of your ads and will automatically optimize your movements so you can get more results at a lower cost. Facebook’s algorithms have become extremely powerful at delivering ads to the right people. However, there’s always room to optimize your ads by improving your Instagram ad designs.
3. Minimize ad frequency. To prevent your audience from getting bored and losing interest in your ads, try to minimize your ad frequency to 3-6 days. If you decide to optimize your ads based on Reach or Brand Awareness, you’ll have the option to control “Frequency Capping.”

Want to take your customers on a conversion-focused journey? Get in touch.

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