What is Instagram Advertising Pricing?
Advertising on Instagram is similar to running ads on Facebook. There are a few gaps related to formats, placements, and of course costs.
Instagram ad prices differ from Facebook’s for several reasons. The Facebook platform, which owns Instagram since 2012, has more seniority and a larger user database. There are over 1 billion monthly active users on Instagram in 2022, while Facebook counts 2.9 billion monthly active users.
The price varies due to many factors. Here is a baseline of how much Instagram ads cost:
- Cost Per Click (CPC) is around 0.50 to 1 USD per click.
- Cost Per Mille (CPM) is around 2 to 5 USD per 1,000 impressions.
It is interesting to notice that the CPC is lower on Facebook than on Instagram. This is because Facebook is more text-based than Instagram, which is visual-oriented. On the contrary, the CPM is lower on Instagram than on Facebook, for the same reason.
Of course, businesses must take those averages carefully. If you advertise products in an extremely competitive field such as apparel, it is normal to see a CPC going as high as 5 USD on Instagram.
On the other side, if you run both Facebook and Instagram ads in parallel, and you notice that your CPM cost is higher on Instagram, this should be a red flag. It means your campaign needs optimizations.
In the article below, we will list & explain the main factors that affect Instagram ads costs. After that, we will share valuable tips about how to optimize your Instagram advertising price.
What are the Factors Impacting Instagram Ads Costs?
When running Instagram ads, businesses must consider the following factors:
- Ad relevancy score.
- Estimated action rate.
- Market industry.
- Target audience.
Now, let’s explain in detail how each factor does affect the pricing of Instagram ads.
The bidding amount is how much you are ready to pay for a specific result (ex: a click or a conversion) when running ads.
When launching their campaigns, all businesses must define a bid. Those bidding amounts will compete. Based on various factors, Instagram algorithms will decide how to deliver the ads to the platform users.
To illustrate with a concrete example, let’s say you have a budget of 1,000 USD for running your campaign. If you value one click at 1 USD (meaning your bid is equal to 1 USD), then you can expect to get 1,000 clicks during this campaign.
Ad relevancy score
This factor measures how relevant your ad is regarding your target audience. Every ad published on Instagram (or Facebook) must comply with the ad policies.
The logic behind this is simple. Instagram wants to show content that is relevant to its users. This includes both organic and paid publishing.
Consequently, the platform prefers ads having high relevancy. The better your ad follows the policies & resonates with the audience, the lower bid you will pay.
Make sure to polish your ads. It saves lots of money.
Estimated action rate
Instagram calculates the estimated action rate based on the probability that users will engage with your ads. Engagement means viewing, clicking, converting, etc.
The platform keeps this estimation confidential. Advertisers can only have a sense of it when running ads & following up on the campaign performance.
This important metric influences the cost of the ad. If the rate is high, the bid amount will decrease. Besides knowing the Instagram ad policies, companies can maximize their estimated action rate from past campaign experiences.
Over 200 million businesses have a company page on Instagram. Only 10% of them run ads on the platform.
It means there are around 20 million potential competitors on Instagram. Of course, competition depends on the location and the products.
When advertisers choose a bidding amount for their campaign, the Instagram algorithm confronts this bid to all the others. If a competitor bids high and has a good ad relevancy score, it may force you to pay more during your campaign.
Depending on the business field, Instagram ad costs vary a lot.
This social media network focuses on creative & engaged people. Companies operating Business To Business (B2B) must spend more to activate their ads. On the contrary, Instagram ads cost lower for Business To Customer (B2C), especially for physical products.
Due to serious competition, ad pricing can be more expensive for travel & fashion, which are the top topics on Instagram.
The target audience is all the Instagram users who will see your ads. Their profiles significantly impact the ad costs, such as:
From experience, ads targeting women are more expensive, because they are more likely to engage & shop than men on average.
Instagram ads pricing depends on the moment when the campaign runs. When setting up ads, the business manager lets advertisers schedule their campaign delivery.
Obviously, it costs more to run Instagram ads during holidays or special events, because the competition is fierce.
It is also good to know that Instagram users engage more with organic & paid publications during weekdays versus weekends. Wednesday & Friday are the best days to run ads at a lower cost.
How to Optimize Instagram Ad Costs?
With the information shared above, you understand that having a small budget shouldn’t prevent you from running ads. Low bidding can win if your ad is relevant to your target audience & more appealing than your competitors.
We recommend businesses polish their ad creatives if they want to succeed with Instagram ads. This is more important than the media spending itself.
Besides, Prodima Vietnam is happy to share professional tips to help you reduce your advertising pricing on the Instagram platform:
- Choose the right goal
- Use all data available
- Polish your ad visual & landing page
- Segment your audience
- Do A/B testing
Let’s develop each hint in detail.
Choose the right goal
Many businesses fail at running optimized ads because they do not select the right objective for their campaigns. A few of them even do not have any goals at all & choose randomly.
Take this step seriously if you want to reduce your ad costs.
For example, if you are a newcomer in a competitive market, do not run conversion ads right away. Instagram users have no reason to purchase your products instead of those from well-established companies. In this case, you need to run brand awareness campaigns first.
Once your business has enough visibility & trust, you will consider running ads to sell your products.
Use all data available
The best way to get started with Instagram ads when having no data is to choose the option “automatic bidding.” It will allow the platform algorithm to populate enough information for future campaigns.
Once you have enough data, we recommend you go manual. It requires extra effort, but such involvement always pays off in the long run.
Since Facebook owns Instagram, do not forget that you can use Facebook data (ex: from the Facebook pixel) to run your ads.
Polish your ad visual & landing page
As mentioned above, the ad relevancy score is crucial to reduce your ad pricing on Instagram.
Make sure you create appealing, engaging, interactive, and suitable images & videos for your target audience. The more relevant & creative they are, the more likely you will pay less for them.
To decrease the Instagram ad price, consider videos rather than photos if possible. Instagram users engage more with them.
Think about your Call To Action (CTA) button. You need to make it visible & attractive enough, so your target audience interacts smoothly. Keep the text short (1 to 3 words at max).
Segment your audience
As always when running ads on every digital platform, the smallest you segment your audience, the more accurately you will target.
Create groups of ideal customers, also called “personas”, and design dedicated Instagram ad visuals for all of them.
Consider using custom & lookalike audiences to lower your costs & get more conversions. Custom audiences are users who have already interacted with your brand in the past. Lookalike audiences are people who have not engaged with your business yet but are using the digital platform & have a similar profile to your custom audience.
Do A/B testing
If you run a campaign delivering the same ad visual to all audiences, you prevent yourself from optimizing your performance.
If you run a campaign delivering 2 different ads to the same audience, you can evaluate which one is performing better, then choose the best.
Follow up on Instagram Insights. Create several ads that differ on 1 single factor and optimize as you go. This is the best way, if not a mandatory way, to reduce your ad costs on Instagram.
Is it worth it to run Instagram ads?
Yes, it is. All businesses have an interest in running ads on the Instagram platform, whether they are small or big, with a low or high budget.
It takes time to learn how to run efficient ad campaigns on Instagram. Many businesses are afraid of Instagram ad pricing. If you carefully read this article, you should be more confident now.
Instagram ads guarantee one of the highest Return On Investment (ROI) of all ad platforms, thanks to their engaged community. Instagram users spend more than on any other social media network.
Get started with your ads. Contact our team of Instagram experts now!