Cost of Instagram Ads in 2020 – Full Updated Guide

Instagram ad cost
Instagram is one of the best platforms to advertise on because of engagement. But what is the true cost?

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Instagram has more than 1 billion active monthly users. This platform offers your business a significant opportunity to communicate with leads interested in your products or services. You can reach even more leads and grow your business by using Instagram Ads.

Instagram logo.

But how much do Instagram Ads cost?

Instagram Ads cost depends on your bidding model, such as cost-per-click (CPC) or cost-per-impression (CPM).

Typically companies on average pay, $0.50 to $1 per click. In highly competitive industries, for example, apparel, you’ll pay more. The cost of Instagram ads may go up to $3.00 per click

Instagram Ads is still new to some companies that deal with social media ads, so we want to help give your company some strategic tactics. If you’d like to learn more about Instagram ads, continue reading!

This guide will help you navigate the cost of Instagram ads, how it compares to Facebook ads, how the cost is determined, and much more!

How Much Does Instagram Ads Cost?

One of the most pressing questions from advertisers who are interested in Instagram advertising is on Instagram how much does a click or conversion cost?🧐

Let’s take a look at what various resources say.

AdExpresso found that the Instagram average cost-per-click is $0.80.

On average cost-per-click Instagram ads, are between $0.70 and $1.00.
There are however many elements that affect the cost of your Instagram ads.

The cost of Instagram ads ultimately comes down to the audience you are targeting that’s why knowing your Instagram demographics is so critical.

Instagram usage demographics.
Instagram Demographics

As you can see in the diagram above, women are much more active than men on Instagram. This leads to higher CPCs for targeting female audiences. Age demographics, however, paint quite a different picture.

Most Instagram users are under 50. The following image shows the average cost per click (CPC) for Instagram ads in 2017 across all age ranges goes from $0.70 to $0.80, according to AdEspresso. Also, it highlights that the highest CPC age groups are 18-24, 25-34, and 35-44-year-olds.

CPC by Age infographic.
AdEspresso CPC by Age

CPC estimates vary based on the campaign. For instance, ad costs for Instagram will likely rise during major events or holiday like Black Friday, Thanksgiving, Labor Day, and Cyber Monday.

Instagram Ads compared to Facebook Ads

Facebook and Instagram are two of the most successful social media advertising platforms out there, which is why comparing the two makes sense. Which platform offers your business the most cost-effective option, and gives the best network to reach your audience?

Social NetworkCPCCPM
(cost per thousand impressions)
Instagram$0.20-$2.00$6.70
Facebook $0.97$7.19
Comparing Instagram and Facebook Ads Cost

In addition to assessing the expense of Instagram and Facebook Ads, it’s important to look at each platform’s demographics. While Facebook can target almost any age group, Instagram thrives when it comes to targeting audience members who are 25 to 29 years old.

Focus your efforts on the social media platform which provides the most value and best results for your ad campaign. Even if you can advertise on one site for less, you can miss the opportunity to connect with shoppers and leads that matter.

From a study done by Rival IQ, where they analyzed 2,100 of the most engaging brands and companies. As shown in the image below, Rival IQ found that out of all social media platforms, Instagram had the highest engagement rate. This means that even if you have to pay a little bit more, your insights will be better in the end.

Rival IQ Study graphic on Instagram, Facebook, and Twitter engagement.
Rival IQ study

Shopify did a marketing report that shows Instagram users spent $65 on average compared to Facebook, where users only spent $55 per referred sale.

Shopify marketing report on user order value.
Shopify Marketing Report on Average Order Value

How Instagram Ads Cost Is Determined

While determining ad costs, Instagram follows the same guidelines as its parent company, Facebook. This means that you will be launching a worldwide competition for people’s attention when you launch an Instagram ad campaign.

There are four main factors that decide how much you will pay:

Bid Amount

Your bid amount determines how much you spend on an Instagram ad campaign. You have to decide how much you are willing to pay to get leads. The value of your bid also affects how much you pay.

Instagram has higher bid rates; you will want to be ready to pay more for clicks and impressions.

Let’s say you only have $500 in your budget and your bid amount is $2 per click, you get only 250 clicks on your ad. But, a $1,000 budget with a $2 CPC gets you 500 clicks. Having a bid amount of $0.50 in the same scenario would allow even more clicks with those two budget amounts.

Relevance Score

Your ad relevancy score will also affect the cost of your Instagram ads. Your relevancy score is how relevant your ad is to Instagram users who will see your ad.

Instagram strives to give users relevant content in their feed. They’ll base your score on how users respond to your ad.

Estimated Action Rates

The estimated action rates will also affect your Instagram ad cost. According to Instagram, the rate is dependent on the probability of users acting on your ad. Basically, they want to gather how likely your audience will interact with your ad.

These interactions include actions such as clicking and converting. Instagram wants to promote ads they think users will engage with and connect with.

If Instagram believes it’s likely that more people will interact with your ad it will be put first. This means you will get a lower bid amount, which will help you gain more leads and conversions.

Competition

Competition will always affect the price of your Instagram ads. When you try to reach a specific demographic of people, there will always be competitors trying to reach that same group. Your competition could cause the cost of your Instagram ads campaign to change.

If other people are bidding to target the same audience, this can lead to a bidding war. Businesses will need to outbid each other to get the top spot. This means that your CPC might go up trying to bid against competitors.

There are a few additional factors:

  • Holidays and events: Competition during holidays, especially Christmas, is significantly high. More businesses are competing to achieve desirable leads that push CPC upwards. You will need to recognize holidays and events around the time when you run your ad and budget for it.
  • Day of the week: Instagram users engage more on weekdays than on the weekends. This means you should plan to pay more for running an ad on a Tuesday compared to a Sunday.
  • Gender: Advertising to females ends up costing more than males. Females are more likely to interact with and engage on Instagram, so getting to female viewers will cost you more.
  • Target Market: The market that you aim to reach for influences the cost of your Instagram ad. It’s more expensive for B2B companies to run ads because Instagram has fewer businesses than people. Due to high competition some industries, such as apparel, are more expensive.

Even though Instagram ads are more expensive, advertisers do have control over how they allocate their budgets. You can choose, for example, between a daily budget to restrict the amount spent every day or a lifetime budget, which is when you set up your ads to run for a specific length of time before the budget is gone.

How Do Instagram Ads Work?

Instagram ads are paid content that appears in Instagram stories and news feeds. Instagram ads are aimed at users that are likely interested in your product or services.

People see Instagram ads that are based on their demographics and interests. Such advertisements are designed to effortlessly blend in to the point that users don’t even recognize them as advertisements

There are two indicators that posts are paid advertisements. The first indicator is the world “sponsored” that is under the company’s name.

Leo Designs Chicago example of a paid advertisement with the word "sponsored."
Leo Designs Chicago sponsored ad

The second indicator is the call-to-action (CTA) seen at the bottom of the post. Typically, these have phrases like “shop now,” “learn more,” or “book now,” depending on the goal of the campaign.

Biossance call-to-action paid Instagram Ad.
Biossance call-to-action ad

How To Lower Instagram Ads Cost?

When it comes to social media advertising, you want to do whatever you can to reduce advertising costs. Below are a couple of best practices that can help you reduce the expense of your Instagram ads and maximize your return.

1. Use Automatic Bidding

If you haven’t used Instagram ads before, using automatic bidding for your campaign is beneficial. For you, it’s a simple way to get a bid that’s right for your campaign.

Automatic bidding is the best way to go if you don’t have any historical data informing you of a good CPC to set for your campaign. This will help you determine the bid amount that matches your campaign.

By using automatic bidding, you are preventing your company from overbidding to run an ad. The shortage of previous data can make it tough for you to know the right bid amount. You might bid more than you need to.

Automatic bidding is a smart way to minimize the expense of your Instagram ads.

2. Use Precise Targeting

When setting up your Instagram ads the goal is to target people who would be interested in your products or services. Use precise targeting to reach your desired audience

Instagram lets you target people by:

  • Location: You can target people based on their geographic location. It can be as broad as a country or as specific as postal code.
  • Demographics: The most common way to target leads is through demographic information. This information includes gender, age, and race.
  • Interests: As people communicate on social media, you see where their interests lie. Whether it’s design or tech, you can target people directly based on what they like.
  • Habits: When someone takes particular steps to browse your website, based on those behaviors, you can target them.

By using precise targeting, you will reach more people who are interested in your products and services. This means that your ad copy will become even more relevant to them, helping you get a higher ad rank and a lower CPC. This would also result in a rise in sales which will help cover the costs of running the campaign.

3. Set Goals

Setting goals will help maintain focus on what you want to accomplish with your advertisement.

There are three main goals you should focus on attaining with your Instagram Ads:

  • Awareness: You should concentrate on growing awareness about your company, brand, product, app, or service through an awareness campaign. You want to call attention to it, and help people be familiar with it. For this goal, you will focus on running a CPM campaign.
  • Consideration: If your goal is consideration, then you will focus more on educating your audience. You’ll want to give more persuasive information to your audience, which will get them to convert. To this end, you will focus on earning clicks, views, and leads.
  • Conversion: Many businesses aim to get their customers to buy their goods, install their apps, or use their services. If you focus on conversions for your campaign goal, you want to have a persuasive copy that will get your audience to buy your products or use your services right away.

You will have a much more cohesive campaign, by setting goals. Effective ad copy leads to greater interaction and conversions.

4. Make Relevant Landing Pages

Most businesses make the mistake of directing leads to their home webpage after clicking on their Instagram ad. This does not promote engagement, since, people are not led to an ad-relevant landing page. If a user is taken directly to the product they see in the ad, they are more likely to convert.

When a customer is taken to the product directly, they are more likely to convert. This will help recoup the costs of running your campaign.

5. Test Your Ad

You must test your ad to make sure you put out the best version possible. Testing your ad lets you make a more relevant copy of the ad. Relevant ad copy means you will have a higher ad spot, leading to a lower CPC.

How To Launch Instagram Ads

There are three ways to start running ads:

1. Instagram App

You can share posts that you’ve already generated on Instagram by accessing ads in the Instagram app. You go into the app and choose the post that you want to promote. Once the post is selected, it can be launched as an ad.

You can start monitoring how many people see your post and engage with it once you have launched your promoted post.

2. Ad Manager

Instagram Ads uses the same Ad Manager tool as Facebook. It’s simple and secure if you’d like to run ads through this program.

By using Ads Manager, you can organize your campaign, make adjustments to your campaign, and measure the progress. It’s a good way to run an advertising campaign for Instagram.

3. Instagram Partners

If you do not have a lot of time or need extra support, you have the choice of using Instagram partners. You’re working with proven experts with Instagram partners, who are vetted by Instagram. They’ll help you purchase ads and deliver valuable creative results. For companies that don’t have the experience, it is a perfect alternative.

Iphone gif of Instagram.

Check out our list of Killer Instagram Ad Examples of 2020 for some inspiration and more tips for your future ad campaigns.

If you’re ready to begin earning more valuable leads with your Instagram ad campaign and maximize your Instagram advertising costs, don’t hesitate to reach out to our Instagram ad agency.

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