Looking to venture into the wonderful world of Instagram advertising?
This is an excellent move for many e-commerce businesses and can prove to be hugely profitable.
But you probably have a few questions about the platform – and if we had to guess, one of these questions is probably:
How much will Instagram ads cost me?
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Knowing the cost of a potential Instagram ad campaign is very important, because you’ll need to budget accordingly and understand the factors that influence your spend.
Luckily for you, this guide can help to shine a light on the subject.
We’ve collated everything you need to know about Instagram ad costs, so you can launch your next Instagram ads campaign with complete confidence and effectively manage your finances.
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As a specialist Instagram ads agency we can help you with your campaigns just get in touch for a free consultation.
Are Instagram ads worth the investment?
Before you start calculating costs, you might be wondering if Instagram advertising is worth the investment.
The short answer? Yes.
The slightly longer answer? Instagram provides e-commerce advertisers with some exceptional opportunities for paid social campaigns.
For one thing, the platform offers a colossal scale. Over 1 billion users are active on the platform every month, giving you access to an enormous audience.
Advertisers can also take advantage of sophisticated targeting strategies and some highly-engaging ad formats. This is a recipe for quality traffic and increased conversions.
Feeling more confident about Instagram advertising? Excellent.
Let’s dig into the nitty gritty and explore the costs associated with buying Instagram ads.
How do I measure Instagram ad costs?
Firstly, it’s helpful to understand the different ways that Instagram advertising costs can be measured. It all depends on the objective of your campaign.
Here are some of the basic cost metrics that you can track:
- Cost Per Click (CPC) – calculating the cost of a click
- Cost Per Engagement (CPE) – calculating the cost of an ad engagement
- Cost Per Thousand (CPM) – calculating the cost of delivering 1,000 impressions
- Cost Per Acquisition (CPA)- calculating the cost of driving a conversion
Different Instagram ad campaign objectives need to be measured in different ways, so you need to focus on the costs that accurately reflect your business goals.
How much do Instagram ads cost?
The average Cost Per Click currently sits between £0.30-£0.53 for all clicks – that includes link clicks, but also likes, comments and shares.
For clicks on a destination URL, the CPC ranges from £0.38-£0.71.
The average Cost Per Engagement currently sits between £0.0075-£0.038.
The average Cost Per Thousand currently sits between £1.88-£2.63.
Your Cost Per Acquisition will vary significantly based on your audience, products and industry – so you’ll need to establish your own benchmarks over time.
It’s worth bearing in mind that ad costs are impacted by several different factors and will fluctuate – the more competitive the industry and audience, the higher the cost.
Now that you’re familiar with the average Instagram ad costs, let’s run through some of the factors that can influence the final price you pay.
So, what influences the cost of Instagram ads?
There are a few different variables that will impact the cost of your Instagram campaigns.
Campaign costs will regularly fluctuate, but if you’re aware of these factors, you’ll be in a better position to effectively manage your budget.
Some of these variables are directly related to your decisions, while others are entirely external – but all of them have the potential to impact your advertising costs.
Target audience
Your audience targeting plays a vital role in determining the cost of your Instagram advertising campaign.
In simple terms, larger audiences are typically lower in cost than more niche audiences.
That’s because there’s less competition for a wider group of prospects, meaning costs aren’t driven up by competing advertisers. There are plenty of users to go around.
If you’re looking to target a tighter demographic audience (e.g. Instagram users in a specific location, or within a narrow age range) then you may find costs creeping up. Why?
Because you’re trying to reach a smaller segment, making those impressions more valuable.
The same logic applies when you’re trying to reach a very specific type of prospect – for instance, a B2B audience in a certain industry. A niche audience means higher costs.
There may be instances where you need to target a very specific audience, depending on your industry and products – just be aware that you may be paying for the privilege.
Budget and bidding
Unsurprisingly, your Instagram ad campaign budget and bidding strategy will also have a big impact on your costs.
When it comes to budget, one major factor to consider is the ‘learning phase’ of any Instagram campaign.
When an ad campaign launches it can take time for advertisers to gather the necessary learnings to make optimisations. That means budget must be spent to harvest these insights.
If your budget is too small to fund this initial learning stage, then you may struggle to optimise. A lack of optimisations can lead to inefficient spending and higher Instagram ad cost.
The amount you’re willing to bid for an impression is also hugely influential on costs.
Finding the perfect bid amount is a balancing act. Bidding too high could mean inefficient spending, but too low could restrict performance.
You’ll need to monitor performance closely to find the right bid, and consider what’s affordable within your budget.
Some business maths might be necessary here too. What is the average value of a customer sourced from Instagram? What percentage of clicks lead to a successful conversion? If you can establish these numbers, they can help to guide your bidding strategy.
Ad performance (Ad Relevance Diagnostics)
The performance of your Instagram ads will also affect your Instagram advertising costs.
That’s right – better performance equals cheaper Instagram ads.
How, you ask?
It all revolves around your ad relevance diagnostics.
Instagram rewards brands who are delivering high-quality and relevant advertisements to their target audience. If your Instagram ads receive positive feedback and drive regular interactions (clicks, video ads views, conversions, etc) then they’ll be deemed as more relevant.
This means you’ll be given a favourable position in bidding auctions and able to deliver Instagram ads at a lower cost.
This is great news for cost-efficiency, so make sure that you’re running quality assets and targeting the right audiences.
If you feel like you’re struggling to deliver against your targets, it’s worth checking your ad relevance diagnostics to figure out the issue – this could be related to your quality ranking, your engagement rate ranking or your conversion rate ranking.
Competition
Active competitors can also throw a spanner in the works when it comes to Instagram ad costs.
(Those pesky competitors, eh?)
You’ll likely be trying to capture the attention of similar audiences, which means a direct competition for ad impressions and conversions.
This can quickly escalate into a bidding war – and if you and your competitors are spending big at the same time, things can get pricey. You’ll need to up your bids to get your Instagram ads out there, so don’t be surprised if your costs rise.
To combat competitor activity, you might expand your targeting to try and reach new segments. If you can successfully diversify your audiences, you may discover new prospects that can be acquired more cheaply.
However, sometimes a bidding showdown just can’t be avoided, particularly during busier times of the year.
If this is the case, just make sure you can afford higher bids.
Seasonality
For many industries, seasonality can also have a major impact on Instagram advertising costs.
Retail-heavy periods in the year (e.g. Christmas, Black Friday) will inevitably drive up advertising costs.
Many advertisers will be pumping significant budgets into the market and trying to reach audiences en masse, so you’ll need to be ready. If you’re planning to compete in these periods, be sure to budget accordingly, or you’ll risk being drowned out.
However, these periods can also be hugely profitable for advertisers.
If you’re looking to take advantage of these busy shopping seasons, you’ll need to have your Instagram strategy nailed down.
Refine your targeting to reach the most efficient audiences, ensure that your assets stand out, and make sure you have sufficient budget available to achieve your objectives.
So there’s the low-down on Instagram advertising costs. As you can see, several different variables can influence how much you’ll spend on a campaign.
However, you can stay on top of your expenditure and manage your budget.
Keep a close eye on how your costs change as your ad campaign progresses. Take note of the audiences and tactics that deliver cost-efficient conversions, and make sure that your bidding strategy is suited to your budget.
Good luck!
