Instagram remains one of the top social media apps and a popular paid ad platform for any business hoping to acquire new customers. With 500 million active users every day, everything from local businesses to global eCommerce enterprises can reach new customers on the platform.
However, it’s vital to understand what will impact the cost for Instagram Ads so you can design the perfect ads, choose the right ad type, and target the right audience to avoid spending too much and not getting the results you expect.
The average cost for Instagram Ads varies by two major ad types — Cost per Click (CPC) and Cost per Mille (CPM). CPC campaigns bill you every time someone clicks on your ad, whereas CPM campaigns are billed per 1,000 people who see your ad.
One report indicates the following averages:
It’s crucial to highlight that these are the overall averages for all advertisers on the platform. That means it includes every industry, from lawyers looking for high-value leads to an eCommerce site with lower profit margins.
So you need to drill down into industry-specific benchmarks to have a better understanding of what you can expect to pay. And yet, finding up-to-date information data can be a challenge.
Fortunately, Varos gives you real-time competitor benchmarks into ad costs and results specific to your industry, so you can anticipate costs and take corrective action if you’re spending too much.
You can see below how Varos compares your results right alongside your competitors. Our real-time benchmarking lets you identify any issues or advantages, so you always know how you stack up.
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Many advertisers wonder if they should choose Instagram over Facebook or vice versa. There is some overlap in the user base, and both use the same Ad Manager, so it makes sense to evaluate both options before deciding.
Facebook Ads costs are calculated similarly to Instagram, which we’ll explore more below. But that doesn’t mean they’ll be the same; it’s estimated that the average CPC for Facebook is $0.46, a significant drop from Instagram.
So does that mean you should advertise on Instagram? Maybe, but keep in mind the core difference between these platforms — visuals vs. text. The text ads included in Facebook’s average CPC drop the amount, but a video ad may still have a similar rate as Instagram.
Additionally, many products are better suited for video and image ads and may have better results on Instagram. Like many advertising decisions, it comes down to understanding your objectives and experimentation.
You can use a third-party Instagram Ad cost calculator to help estimate your ads, and the Ads Manager will also estimate your costs before you launch your campaign. However, it’s valuable to understand how your ad costs are determined so you can minimize costs and maximize results.
So let’s break down the various factors involved in your total costs so you’re prepared to make the most of your ad spend.
The campaign objective is one of the first things you’ll decide when setting up an ad. When considering the other factors involved, your chosen objective will significantly impact total costs.
For example, if you choose a brand awareness campaign, you’ll spend less than a conversion-focused campaign that’s striving to make sales. A brand awareness campaign uses a CPM structure and isn’t expected to drive revenue directly, while a conversion objective is a CPC structure that aims to make sales.
Meta offers a wide variety of objectives that greatly affect pricing structure and costs — make sure your ad creatives are designed to complement these objectives.
Instagram Ads uses an auction system to determine ad placement. Once launched, your campaign will compete with others when an ad space is available. You’ll select your bid amount and bid strategy when configuring your campaign, which is a major factor in overall costs.
You’ll set a total budget for your campaign, daily spending limits, and bidding strategy. All of these factors, combined with ad relevance (we’ll discuss this below), determine the cost of placing the ad in front of a user that meets your audience targeting criteria.
Your target audience plays a significant role in determining costs in a few ways. Targeting those who might be interested in your product or service is crucial to avoid paying for impressions or clicks from those who ultimately won’t convert.
However, the audience plays a vital role in how the platform treats your ads while the campaign is running. If you choose a large demographic, such as everyone in the United States, your costs may be lower. As you focus and target more precisely, costs may increase. Even though you may want to target a broad segment, you’ll almost always want to focus down to the right audience for the best results.
Additionally, remember that your competitors are likely targeting the same demographics. That means more (or less) competition for winning the ad bid, directly affecting costs.
Your possible competition means different industries will have varying prices, even if every other factor is the same. For example, real estate agents and lawyers are fiercely competing for high-value leads, making their ads cost much more than the average.
An ad’s relevance score focuses on how relevant your ad is to the audience you’re targeting. Instagram uses a straightforward 10-point scale, with one being the least relevant and 10 being the highest.
A high relevance score is determined by positive reactions from users who see your ad: likes, comments, clicks, views, installs, and so on. These engagement metrics indicate your ad is relevant to your audience — exactly what Instagram wants.
An ad is scored after reaching 500 unique impressions. After that point, it’s continually re-evaluated based on interactions.
How does this come into play? If your ad has a relevance score of 7 and you’re bidding against others with lower scores, you’re more likely to win the ad placement without spending more.
That means audience targeting is even more important than it initially seems. Of course, you want to reach people who might become a customer, but the right targeting can even make the ads themselves cheaper. Keep refining your audience targeting as your campaigns evolve to increase relevance and cut costs.
Similar to the relevance score, Instagram evaluates how many users take the desired action when they see your ad, such as clicking the ad or installing an app.
Instagram wants your ad to generate engagement, so once your ad has a high action rate, you may be rewarded with a lower CPC.
This rate is calculated differently than relevance, but it’s a very similar result that drives home the importance of crafting high-quality ads and choosing the right audience.
You’ll decide on timing when configuring the campaign, which also plays an important role in your overall costs. Typically, advertisers want to reach people when they have free time and might be open to learning about a new product or service. So peak hours are generally after business hours when it’s expected users will be home and scrolling.
And while peak hours can be amazing for your ad’s results, you’ll also face more competition vying to win ad bids in the same time frame.
You need to consider the time of day and day of the week when looking for ways to optimize the results of your ads while minimizing ad costs. You’ll generally pay less to advertise at 3 AM, but you also might get worse results from your campaigns.
It’s tempting to think optimizing ads costs happens exclusively when configuring the campaign. While it’s absolutely necessary to choose all the right options for your campaign’s goals, you also need to have ads that convey the right message and connect with potential customers.
Let’s quickly touch on some tips for creating engaging Instagram ads:
Both ad creation and campaign configuration will likely take time to get perfect, so don’t be afraid to experiment to determine what works best for your business.
Optimizing your marketing budget relies on properly managing Instagram Sponsored Ads Cost and tracking your ROI. Now that you know more about how Instagram determines the final cost of your ads, you can take strategic action to reduce costs and maximize their results.
Varos is a unique platform that gives you real-time competitor benchmarks to help better control your Instagram Ads costs. You’ll have more data about how your ads perform with the complete context of your industry, allowing you to understand if you’re spending too much or too little to get the results you expect.
Below, you can see how our platform displays your ROAS right alongside your peers’ results. You’ll be able to see if you’re falling behind, so you take action and catch up.
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Are you ready to unlock the full story behind your results to optimize your Instagram Ads costs? Contact our analytics experts today to book a demo and learn more.
About the Author
Yarden Shaked
Co-founder & CEO at Varos
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Bottom line: I’m recommending Varos to you all because it’s FREE (for now) and it’s already added a ton of value for myself and my clients.Check it out 👇
I would definitely recommend checking out Varos. With Varos you can easily see how your peers are performing, for free. You get insights into not only TikTok Ads benchmarks, but also similar data for Facebook Ads, Google Ads, and more. #VarosAmbassador
Varos allows thousands merchants to upload anonymize marketing data across meta and google and aggregating it to show what the average is across different categories and ad spend
With varos.com, I can see exactly how our performance across channels stacks up against our competitors in our space.
Compare your ad performance to benchmarks of companies just like yours, anonymously.
I would've killed for this tool years ago and now it's here and oh it's free. Amazing.
I've been seeing some content about @Varos_com so we decided to check it out.
One underrated feature of theirs is the Shopify Benchmarking, which is FREE btw.
Literally impossible to access this data anywhere else. Check out what we're seeing at @my_obvi 👇
I'm loving what @Varos_com is doing with providing much more relevant benchmarks for #ecommerce... especially since it shows that we are absolutely DOMINATING @Elumynt on #facebookads!
This is in the Baby and Children vertical.#fbads #ppcchat #retail #dtc
Bottom line: I’m recommending Varos to you all because it’s FREE (for now) and it’s already added a ton of value for myself and my clients.Check it out 👇
I would definitely recommend checking out Varos. With Varos you can easily see how your peers are performing, for free. You get insights into not only TikTok Ads benchmarks, but also similar data for Facebook Ads, Google Ads, and more. #VarosAmbassador
Varos allows thousands merchants to upload anonymize marketing data across meta and google and aggregating it to show what the average is across different categories and ad spend
With varos.com, I can see exactly how our performance across channels stacks up against our competitors in our space.
Compare your ad performance to benchmarks of companies just like yours, anonymously.
I would've killed for this tool years ago and now it's here and oh it's free. Amazing.
I've been seeing some content about @Varos_com so we decided to check it out.
One underrated feature of theirs is the Shopify Benchmarking, which is FREE btw.
Literally impossible to access this data anywhere else. Check out what we're seeing at @my_obvi 👇
I'm loving what @Varos_com is doing with providing much more relevant benchmarks for #ecommerce... especially since it shows that we are absolutely DOMINATING @Elumynt on #facebookads!
This is in the Baby and Children vertical.#fbads #ppcchat #retail #dtc
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