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 be wondering what are the costs for Instagram Ads and how to create a successful ad campaign resulting in a satisfying ROI.
With 7 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 to know 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:
- 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
The Average CPC (cost per click) for Instagram Ads is about $0.70. Ad prices go up in competitive industries and may be higher 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 $2.81 billion dollars just on mobile ads alone.
Instagram Ads Revenue 2017 – Image Source
Since Instagram is growing at a considerable rate, it must be bringing in some incredible cash for businesses.
Cost Per Click + ROI
There are many sources online that 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 males
Instagram Ad Costs by Day – Image Source
Although Instagram Ads fall under Facebook’s Advertising services, you might be surprised to know that ad costs are much higher on Instagram than 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 which have significantly higher averages than Facebook.
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 really worth it?
According to Salesforce, they saw higher conversions on their Instagram Ads (1.5% CTR) in comparison to their Facebook Ads (0.84% CTR).
Simply Measured produced an Instagram Industry report and found that photos result in a higher engagement rate than videos.
Also, this report on Instagram shows that Instagram 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 important 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 much the same.
When you publish your Instagram ad campaign, you’ll be accessing the worldwide auction for user’s attention.
How are Instagram costs determined?
There are 3 factors that determine the costs of your Instagram ads, they are:
- Your campaign’s bid. The more you’re willing to pay, the more your ads will be delivered.
- 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.
- Estimated action rates. Using Facebook’s algorithms, your ads will have an estimated action rate which measures a variety of factors and affects how much your ads will cost.
This is just a brief overview of how the bidding system works for Instagram and Facebook ads. Keep reading to dive deeper into bidding and how to determine 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 advantages are:
- Scalable pricing
- Self-serve and instant advertising
- Enhanced insights and reporting
- Highly targeted and refinable audience
For those of you reading and have never created an ad on Instagram before, 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 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 go to 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. What this means for you is 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.
When creating your Instagram Ads, the first step is to establish your budget. This is completely customizable based on your own needs. Here are the two types of ad budgets you can choose:
- Daily budget. Facebook spends up to the pre-selected amount to deliver your ads daily until your campaign expires.
- 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:
- Run my ad set continuously starting today
- Set a start and end date
If you’re just running a brand awareness campaign, using 2. would be the go-to choice. Any kind of special offer or limited time deal, use 1.
Advanced Scheduling & Budget Options
There are a few advanced features you can choose 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 have the ability 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 amount of ads Facebook delivers to people most likely to convert.
- Link Clicks. You are charged for the amount of ads Facebook delivers to people most likely to click.
- You are charged for the amount 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 amount 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 set up you created earlier. If you choose standard, which is recommended, it will follow the scheduling parameters you selected in the beginning of you 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 and this can lead 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. Automatic bidding will keep costs low while Facebook’s algorithms work to reach as much as your target audience as possible. Manual mode does have the potential to maximize an ad budget but it may not reach 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 recommendations, 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 chose to optimize the delivery of your ads for conversions, you’ll 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 to go 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 learn the most effective ads over time. This way, you can get the most out of your budget.
Smartly.io summarizes the key 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 some effecting promotions this way.
Step 1. Create your promotion. Just like adding a new post or image to your Instagram page, you can choose to create a new post or promote one of your previously published posts. You can also choose to create promotions for your Instagram stories, too.
Step 2. Choose your destination. You have 3 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 automatic.
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 approve 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:
- Experiment with bidding options. If you’re new to Instagram advertising or you haven’t started an ad campaign before, use Automatic Bidding to keep bidding costs low. Once you have gained some experience and obtained some data on your ad performance, you can begin to experiment with Manual Bidding to really optimize your Instagram ads.
- Always optimize ads for conversions. You can choose from a variety of optimization settings and choosing “conversions” will set you up for getting the most out of your campaign. Typically, Facebook takes control of your ads and will automatically optimize your campaigns 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 own ads by improving your Instagram ad designs.
- Minimize ad frequency. If you decide to optimize your ads based on Reach or Brand Awareness, you’ll have the option to control “Frequency Capping”. To prevent your audience from getting bored and losing interest in your ads, try to minimize your ad frequency to 3-6 days.
Want to take your customers on a conversion focused journey? Get in touch.