Are Instagram Ads Effective & Worth The Investment?

Instagram is a hugely popular advertising platform for marketers around the globe. 

This won’t come as a surprise, considering that over 1 billion users log into the app every single month. 

If you’re struggling to put that figure into context, that’s around a quarter of all mobile internet users in the world. Which is pretty mind-blowing, if you ask us. 

The platform also offers advertisers a wide range of effective ad formats, accurate targeting options, and smart optimisation tactics. 

But if you’re debating whether to spend your precious cash on Instagram advertising, you’ll need to know if it’s worth the investment. 

You need real-world statistics, hard performance numbers, and thorough research.

Now, all of that stuff is great, but it does take a fair amount of legwork to pull together. So we’ve decided to save you the hassle by writing this comprehensive guide. 

Let’s explore the ins and outs of Instagram ads, analyse how effective they might be for your business, and explain if they’re worth spending your budget on. 

What are Instagram ads?

Instagram ads are paid placements that can be targeted toward specific audiences on the platform. This enables brands to reach Instagram users based on different demographics, interests, and behaviours. As a specialist Instagram advertising agency we use them to get more leads, sales and revenue for our clients.

Instagram ads come in various formats, including:

• Image ads
• Video ads
• Carousel ads
• Stories ads
• Reels ads
• Shopping ads 

Depending on the format that you select, your ads will either appear in the main Instagram feed or within a specific section of the Instagram app (i.e. Instagram Reels.)

Every Instagram ad type has its strengths and weaknesses, but a well-rounded Instagram strategy will often utilise a combination of different placements. 

Instagram ads look almost identical to organic content, which is a big plus for advertisers because paid campaigns don’t feel intrusive or out of place. 

This helps to encourage Instagram user engagement and interest since ads are consumed in the same way as standard Instagram posts. 

The only thing that distinguishes an Instagram paid placement from an organic post is a small ‘sponsored’ label. 

How much do Instagram ads cost? 

Several different factors can influence the cost of an Instagram campaign, so it’s tricky to estimate exactly how much ads will cost. 

The following variables can all impact Instagram advertising costs:

• Target audience
• Bidding strategy
• Ad quality
• Competitors 
• Seasonality 

Since your Instagram advertising costs are likely to fluctuate, it’s super important to keep a close eye on your campaign reports and track your spend carefully. 

If an aggressive competitor with a hefty budget started bidding against your target audience, for example, then you might find your costs escalating quickly. 

Different types of campaigns will also vary in cost, as you’ll be bidding for specific outcomes or user actions. 

Below are some average costs for different types of Instagram campaigns.

The average Cost Per Engagement (CPE) ranges from £0.0082 to £0.041.

The average Cost Per Click (CPC) ranges from £0.33 to £0.57. 

The average Cost Per Thousand (CPM) ranges from £2.05 to £2.87.

What are the advantages of Instagram advertising? 

Instagram is an incredibly popular platform for global advertisers and is a cornerstone of many social media marketing plans. 

But what makes the platform so useful for digital marketers?

One of the most obvious advantages of Instagram advertising is the mind-blowing scale that it offers. 

With over 1 billion users logging into the app every month, advertisers are almost guaranteed to find a large number of profitable audience segments to target.

This enormous reach is also ideal for improving your brand awareness and strengthening your social media presence. With so many active users available to target, advertisers can quickly increase visibility and grow their organic following. 

As Facebook owns Instagram you can also target audiences using Facebook data.

Instagram ads are also highly versatile and can be used to achieve a range of different business objectives.

Digital marketers can take advantage of various campaign types, ad formats, and targeting tactics to drive specific outcomes. For example, Instagram Shopping ads are ideal for generating sales, while In-Feed ads are super effective at driving cost-efficient reach.

Instagram advertising opportunities are also constantly evolving, which is a major bonus for marketers. 

The platform regularly trials new formats and features to provide brands with more options for their campaigns. This is great for advertisers, as it allows them to experiment with new tactics and improve performance over time. 

What are the disadvantages of Instagram advertising? 

Instagram offers jaw-dropping audience reach, versatile ad types, and innovative marketing features.

What’s not to like?

Well, although Instagram can deliver outstanding results for online advertisers, it’s not as easy as hitting ‘launch’ on a Instagram advertising campaign and watching the revenue pile up. 

Running efficient and effective Instagram ads takes time and resources – two things that aren’t always readily available to business owners and marketing teams. 

If you’re unfamiliar with how the Instagram platform works, you’ll first need to wrap your head around the different processes involved with activating a campaign. That includes setting up conversion tracking, audience targeting, bidding strategies, and more. 

And even once your campaign is live, you’ll still need to invest time into measuring performance and making key optimisations. 

Working with a dedicated marketing agency is the best way to navigate these tasks, as paid social experts will be able to handle every aspect of the process and optimise your ads to maximise returns. 

However, if you choose to run Instagram ads solo, you’ll need to factor in the time and effort required to achieve optimal results.

Are Instagram ads worth the investment? 

The vast majority of brands can benefit massively from running Instagram ads.

Businesses from every industry can use Instagram ads to reach valuable audiences and achieve their key objectives. 

The enormous scale of the Instagram network, combined with its advanced targeting options, provides brands with the perfect opportunity to accelerate their business growth.

Although it takes time and resources to run successful campaigns, the potential returns make the investment more than worthwhile. Instagram can deliver some truly exceptional results for digital marketers, generating cost-efficient returns for brands of all sizes. 

As long as you’re able to manage your ads properly and make regular optimisations, you can invest in Instagram ads with total confidence. 

4 reasons why you should be using Instagram ads 

Still on the fence about spending your marketing budget on Instagram ads?

Let’s take a look at 5 of the most compelling reasons to run campaigns on the Instagram platform. 

1. They’re proven to deliver big results

You’ve probably heard a lot about the superb results that Instagram advertising can deliver.

And that’s great on paper. 

But when you’re parting with your hard-earned cash, you need hard-hitting and tangible results that prove the effectiveness of Instagram marketing.

So that’s exactly what we’ve pulled together. 

E-commerce beauty brand Dear, Klairs used influencer ads and Instagram Shopping placements to drive increased online sales. The company also used the Campaign Budget Optimisation feature to automate their budget management and ad optimisations. 

The result? Dear, Klairs achieved a 45% decrease in its Cost Per Purchase and a 1.8x higher ROAS when compared with other digital marketing channels. 

Placements like Instagram Shopping ads can be extremely cost-efficient when it comes to generating online sales, and these results speak for themselves. 

But what about results at the other end of the funnel? Can Instagram also help brands boost awareness among new prospects? 

You bet. 

Fashion brand Nasty Gal targeted dynamic Instagram ads toward a broad audience to increase brand awareness. These dynamic placements automatically served relevant products to potential prospects, helping to generate interest and engagement. 

The campaign was a huge success. Nasty Gal delivered a 7-point increase in brand awareness in the US, which also translated into a 9-point increase in purchase intent. 

This is a brilliant example of Instagram’s power to reach a wide audience of potential customers while enabling brands to deliver relevant messaging (i.e. through dynamic ads.)

2. You can access data-driven audience targeting 

Instagram offers advanced targeting options that allow brands to reach highly receptive and profitable audiences. The platform contains mountains of valuable user data that can be used to build granular audience segments.

There are plenty of basic targeting options available to advertisers, including:

• Demographic (based on age, gender, language) 
• Location (based on country, region, postcode) 
• Interest (based on specific interests – fitness, business, fashion, etc)
• Behaviour (based on purchase history, device usage, etc)

While these standard targeting tactics can perform well, the most powerful segments available on Instagram are often Custom Audiences.

Custom Audiences are powered by authentic user data, which can lead to exceptional results for marketers. 

There’s no guesswork involved with Custom Audiences – these are segments built around real user actions and behaviours. 

Custom Audiences can include: 

• Customer Files (based on matching your first-party customer data with users) 
• Site Traffic (based on retargeting recent site visitors) 
• App Activity (based on retargeting users who have engaged with your app) 
• Engagement (based on retargeting users who have interacted with your FB ads) 

You can also build Lookalike Audiences that duplicate these high-value Custom Audiences, allowing you to expand your campaign reach while still focusing on quality users.

With these advanced targeting tactics, you can reach, engage, and convert some incredibly profitable audiences on Instagram. 

3. You can run versatile and creative ad formats 

Instagram provides advertisers with a selection of unique ad placements that can all play an important role in different types of campaigns.

This versatile range of Instagram ad formats can help brands to achieve specific business goals, produce creative campaign executions, and engage new audiences. 

For example, Carousel ads enable advertisers to deliver multiple assets and messages within a single placement. 

If you’re keen to promote a wider product collection rather than individual items, why not use a Carousel to display the full selection at once? Or perhaps you’re looking to showcase multiple user testimonials – each Carousel tile could be used to display an individual review.

With the right creative approach and a compelling Call To Action, a Carousel can drive sky-high levels of engagement.

But what if you have a top-notch video asset to promote instead?

Instagram in-feed videos can be used to generate video views and showcase long-form assets. If you have short-form clips or bitesize assets rather than a long-form brand video, Instagram Stories are the perfect environment for driving engagement.

This is one of the biggest strengths of the Instagram platform. Whatever your primary objective or creative message, you’ll find an ad format that can tick all of the right boxes. 

4. You can go head-to-head with the competition 

And one of the simplest reasons that you should be advertising on Instagram? 

Because your closest competitors almost certainly are too.

Instagram is one of the biggest advertising platforms in the world. If you’re not actively targeting and communicating with these audiences, you’re missing out on a huge revenue opportunity. 

Plus, by allowing your competitors to reach valuable prospects, strengthen their social media presence, and build brand awareness, you’re risking falling behind. 

Your potential customers are there for the taking. You just need to make sure that you’re getting your brand and products in front of them. 

Useful resources for Instagram advertising 

Searching for a bit of guidance before you start to advertise on Instagram?

We’ve got you covered. Below are some handy resources that will help you to set up your ads properly and maximise campaign performance. 

• Our step-by-step guide to setting up Instagram campaigns 
• How Much Do Instagram Ads Cost?

Instagram ads are undeniably a worthwhile investment for any brand looking to reach new audiences, accelerate growth, and generate valuable conversions. 

However, you’ll need to invest time into correctly setting up, managing, and optimising your Instagram ads.

The more effort you put into running your Instagram campaigns, the better your results will be!