If you want to connect with Instagram’s 1 billion active users per month, you’re going to need a solid strategy. Organic traffic can certainly deliver a lot of benefits. However, it’s often difficult to gain a huge following when you’re first getting started on Instagram.
Unless you have an excellent influencer, campaign lined up, or a fantastic cross-platform marketing strategy, you may need to pay to play – at least for a little while.
Instagram’s advertising options give smaller businesses and lesser-known brands the chance to ramp up their reach on social media. However, just like any marketing campaign, you’ll need to make sure that you’re using Instagram ads correctly to see a great ROI.
If you’ve been wondering “How much does it cost to advertise on Instagram?” then the first thing, you’ll need to know is that the cost of your marketing campaign can vary drastically. The price of an Instagram promotion will depend on factors ranging all the way from your bid price and budget, to your industry.
Here’s your guide to calculating and reducing the price of your Instagram ads in 2020.
Calculating your Ad Spend: The Cost of Advertising on Instagram
“How much does it cost to advertise on Instagram” is one of the most important questions that any social media marketer will ask in 2020. Unfortunately, there’s no one-size-fits-all answer to this query. The price of your ads will depend on things like your market or industry, your bid prices, and more. According to AdEspresso’s studies in 2017, the average cost-per-click for Instagram ads is around $0.80.
The cost per click for an ad on Instagram usually ranges between $0.70 and $1. However, it’s worth noting that something as simple as the age group that you want to reach can have a huge impact on pricing. For instance, the highest CPC age groups are 18-24 year olds, and 25-34 year olds.
Additionally, Facebook ads typically cost more when you’re targeting women. The same rules apply to Instagram too – which is owned by Facebook.
It’s also worth noting that although Facebook and Instagram belong to the same parent company, analyses show that Instagram is generally more expensive for ad placement.
How Does Instagram Calculate Ad Cost?
If you want a complete answer to the question: “How much does it cost to advertise on Instagram?” then you’ll need insight into how Instagram calculates ad cost. The good news for those familiar with Facebook, is that Instagram calculates prices in a similar way to its parent company. The following variables will impact how much you need to pay for your ad:
- Bid price: The bidding amount that you set for your ad will tell the platform how much you’re happy to pay for your ad. Manual bidding will tell Facebook and Instagram the highest price you pay. Some companies use automatic bidding, which has Facebook choose your bid to get you the best price for the most engagement.
- Ad quality and relevance: Facebook will also give a score to your ads based on how relevant they are to the audience that you want to target. Your relevancy score will increase when people react positively to your content, and it will decrease when people respond poorly. For instance, if people hit the “hide this” button when they see your ad, your relevancy score will decrease. Ads with a higher relevance score get a better placement than their counterparts.
- Estimated action rates: This is a number that represents how much Facebook and the Instagram team think that people will perform the action your ad is optimized for. For instance, you might be making an ad that encourages someone to visit your website.
- Time of year: There are certain times of year when it seems as though countless companies are fighting for ad space at the same time. This is often the case around the holidays and Black Friday. Consider the variable of “seasonality” when you’re asking, “How much does it cost to advertise on Instagram?”
Other Factors Affecting Ad Cost
Other factors that affect the cost of your Instagram ads can include:
- Audience targeting: The cost of your Instagram advertisements will go up when other people are competing for the same audience. Keep the kind of people that you’re targeting in mind and think about whether other people will be trying to land the same spot as you.
- Placement: Allowing Facebook and Instagram to place their ads in other networks, such as the primary Facebook platform, and the Audience network, may reduce the cost of your ad.
- Optimization of ad: Just like the other ad platforms available online today, Facebook and Instagram give you the option to optimize your ads for the kind of results you want. Make sure you have a targeting plan in mind to ensure that your ads appear in front of the right people at the right time. The more targeted your advertising is, the better your ROI will b
Does Instagram Advertising Pay Off?
You’ve got to spend money to make money. Unfortunately, that’s a statement that’s true in the social media marketing world – just like any other advertising environment.
The good news? While you might spend a little more on Instagram campaigns compared to typical Facebook advertising options, Instagram ads have higher engagement levels. In fact, according to leading analyst Forrester, Instagram ads have the highest engagement rate of any digital placement.
A high engagement rate often means that you can afford to pay a little more for your placement because you’re getting better results in return.
It isn’t just Forrester that thinks Instagram advertising pays off either. Shopify also conducted a marketing report to examine the efficacy of Instagram ads. The company found that Instagram users tend to spend around $65 per referred sale. In comparison, Facebook users will spend an average of $55 per sale. Instagram posts also have a very high conversion rate of approximately 1.08%.
While Instagram’s overall conversion rate is a little lower than Facebook’s at 1.85%, it’s much higher than the conversion rate on Twitter or Pinterest.
How to Set your Instagram Ads Budget
While there are many things that affect how much you spend on your Instagram ads, few things are more essential than your ad budget. Through Facebook – the environment that companies use for purchasing and managing their Instagram ads, you can set a budget in different ways. Either you’ll set your budget on a daily basis or choose a budget for the entire lifetime of your campaign.
With daily budgeting, you’ll determine exactly how much you want to spend each day. Once you reach your limit, Facebook doesn’t place any more ads until the next day begins. Minimum budgets for your Instagram ads will be calculated as a daily amount. Generally, you’ll need at least $1 per day for ad sets that aim to build impressions.
On the other hand, if you want engagement like video views, clicks or likes, you’ll need around $5 a day minimum. Finally, if you want to acquire low-frequency events like app installs and offer claims, then you’ll be spending a minimum of around $40 per day.
If you choose to opt for lifetime budgeting, you’ll be deciding how much you want to spend over the duration of your campaign. Facebook averages your budget out for you. The performance of your content will often impact how frequently your ads are placed and how much they cost.
How to Reduce Instagram Ad Cost
Creating a budget for your Instagram advertising campaign isn’t easy. As well as asking “how much does it cost to advertise on Instagram?” you’ll also need to think about how you can lower your cost. For instance, one of the best ways to keep fees to a minimum with Instagram advertising is to opt for automatic, instead of manual bidding. Automatic bidding is excellent for companies that don’t have any prior data telling you what kind of CPC works for your brand. Automatic bidding helps you to set the bid amount that’s most lucrative to your company.
Facebook and Instagram’s approach to automatic bidding prevents companies from overspending on an ad. What’s more, you’ll have a greater opportunity to set the right bid amount until you’ve collected enough data to properly guide your campaign.
Other ways to reduce the cost of your Instagram ads include:
1. Be Careful with your Targeting
When you establish ads for your Instagram campaigns, your goal will be to reach the people who are most likely to be interested in your services or products. To achieve the right outcomes for your campaigns, you’ll need to use precise targeting to reach the correct audience. This ensures that all the money that you spend goes towards building your profits. With Instagram, you can target people via:
- Location data: Choose to target people based on where they live if you’re trying to draw people to a specific location or offline store.
- Demographics: Target leads based on useful user persona information. For instance, you might target your audience based on their gender, age, and even their education levels.
- Interests: Most people on Facebook and Instagram show where their interests lie by following particular groups and people. Targeting based on interest is a good way to make sure you reach the right kind of audience for your company.
- Custom audiences: Instagram and Facebook allow businesses to create specific audiences unique to their business. With a custom audience, you can target the people that you believe will be most interested in your products.
- Lookalike audiences: When you already know the kind of people who are interested in your products or services, you can create lookalike audiences. This means that you target people who share a similar set of characteristics to your existing audience.
Precise and focused targeting ensures that your each people who are interested in your services and products. You’ll get a higher ad rank and a lower cost per click as a result. What’s more, you could improve your chances of conversions too.
2. Set Goals in Advance
Another excellent way to potentially reduce the cost of your ads on Instagram, is to set goals for your campaigns. When you start marketing online, it’s important to have targets in place for what you hope to accomplish with your advertising efforts. Your goals will keep you focused on reaching the right results with your ads. For instance, when you’re wondering how much does it cost to advertise on Instagram, your goals may be:
- Awareness: Social media campaigns that focus on awareness concentrate on drawing attention to your business, app, product, or brand. The idea is to expose as many people as possible to your company, and therefore boost familiarity. Most awareness campaigns are run with CPM strategies, where you pay for impressions instead of clicks.
- Consideration: If your goal for an Instagram ad is to earn consideration, you’ll be concentrating on educating your audience. This means providing your customers with information that makes them more likely to convert. You’ll need to focus on earning clicks, views, and building reach with this goal.
- Conversions: if your goal is to get people to use a service, download an app or buy a product, then you’ll be aiming for conversion. When you focus on conversions as your goal, you’ll be concentrating on building copy that gets your audience to purchase your services or products.
Setting goals allows you to build a more cohesive and focused campaign. You know what you want to accomplish with your marketing strategy which allows you to earn more engagement and conversions.
3. Keep Testing and Evolving
Finally, if you want to lower the price of your Instagram advertising campaigns, then you need to be willing to put your ads to the test. Whenever you create ad copy, it isn’t going to be the best version of your ad. However, you can continue to improve your results by learning from your Instagram insights and other social media marketing tools.
Testing your ad will help you to create copy that’s more relevant to your target audience. As mentioned above, the cost of your Instagram ads will be dependent on your relevancy. The more relevant your content is, the higher your ad position will be, and the lower the cost per click becomes. Keep testing and growing as your brand evolves on Instagram.
Remember, you can also reduce the price of growing on Instagram by getting the right support. Help from socialfollow.com will develop a stronger social following without the excessive ad spend, or an overwhelming marketing schedule.
Contact our team today to find out more!