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How Much Does It Cost To Advertise on Instagram?

18 min read

MuteSix •

February 7, 2024

How Much Does It Cost To Advertise on Instagram?

Many newer and smaller brands falsely assume they can’t afford to advertise on prominent social media platforms and compete with more-established brands with colossal marketing budgets. However, that’s not necessarily the case! Advertising on Instagram feeds is often cost-effective with the right approach, strategy, and expertise.

What Is Instagram and Who Uses It?

A matter of just 15 years ago, the word “Instagram” meant nothing because it didn’t exist. Fast forward to today, and you’d be hard-pressed to find someone who hasn’t heard of the IG.

According to the brand, Instagram is a “free photo and video sharing app available on iPhone and Android.” It was created back in 2010 as a way for users to keep friends and followers up to date on what they’re doing, but it has expanded over the last 13 years to become so much more.

Here are some of the common uses of the Instagram app:

Share videos and photos with friends
Promote a brand
Sell a product or service
Create informative/educational posts and videos
Promote contests/giveaways
Shoutouts/public endorsements

Because of the different uses of this app, there is a large and diverse user base. However, this popularity skyrockets for users between 18 and 34. Research shows that this age range accounts for over 60% of Instagrams’s user base. So, if you’re looking to appeal to Millennials and Gen-Zers, then Instagram is somewhere you want to advertise.

Additionally, the app skews more males (52%) than females (48%). That’s not a massive difference between the genders, but it is worth noting. When it comes to interest groups, Instagram seems to cover it all, but the favorites of users include:

Fashion
Fitness
Travel
Lifestyle
Food
Art

Though it seems like Instagram is already quite large, there is still lots of potential for expansion.

Demographic Shift

One of how this app expands is through demographics. By creating different features and content catered towards older generations, we would likely see the user base shift away from primarily Millennials and Gen-Zers to attract new users.

E-commerce

Though Instagram has been slowly introducing more e-commerce features to turn the app into more of a shopping platform, there is still room to grow. Because Instagram is so visually-focused, it is ideal for showing products to potential buyers. As Instagram expands its e-commerce options, users will view it as more than just a social network and turn to it for more of their shopping needs.

Videos

Much to the dismay of many users, Instagram has shifted from primarily a photo app to a video app. And it doesn’t seem like that’s stopping anytime soon. IG stories and Reels have proven to be a significant success in competing with other video-sharing apps such as Snapchat and TikTok, and there is still lots of room for expansion when it comes to other forms of video content on Instagram.

Why Should You Advertise on Instagram?

Instagram marketing isn’t cheap, so why spend your tightly budgeted marketing dollars on this platform?

Here are some of the benefits of Instagram worth considering:

50% of users acquire an interest in a brand after seeing an Instagram ad for it
Reels have a 14% reach rate versus other types of media that sit between 9-10%
70% of shoppers turn to Instagram for their next purchase
90% of IG users follow a brand
62.3% of users on Instagram follow and research brands
Instagram generated $43.2 billion in ad revenue in 2022
Instagram users love short narrative-type stories that involve a mix of photos, videos, and text
Instagram is the fifth most visited website across the globe

Instagram is the fourth most prominent social media platform globally, with over two billion users using the app at least once monthly — ranking only after Facebook, YouTube, and WhatsApp.

Instagram accounts offer higher engagement rates compared with other platforms. As of 2023, Instagram users spent about 29 minutes daily on the platform — meaning they were very engaged. This engagement also translates into advertising, wherein Instagram ad engagement is ten times higher than on Facebook.

Finally, Instagram is the place to be if you want to reach a specific age or gender demographic — Generation Z and Millennials. Instagram is also an ideal ad platform for reaching women, as the demographics evenly represent both sexes – 52% male and 48% female.

How Does Advertising on Instagram Work?

If you’re new to advertising on Instagram, the process often seems confusing and overwhelming. The good news is that MuteSix is here to guide you through it so that you have the ability to create fantastic advertising campaigns to promote your brand and products.

Essentially, advertising on Instagram involves paying for your content to appear to specific groups of users. You pay for your ads through a bidding model wherein you compete with other brands for the exact ad placement. You choose your group of users through targeting mechanisms. From there, users interact with your ad, providing leads and, hopefully, conversions.

What Are the Different Instagram Advertising Formats To Choose From?

Now that you have a better understanding of how Instagram advertising works, let’s discuss some of the different advertising formats to choose from to help you develop an effective and affordable campaign:

Photo Ads: Square, landscape, or vertical single images placed in a variety of different locations
Video Ads: Square or landscape videos that placed in a variety of different locations for a more engaging and interactive approach
Carousel Slideshow Ads: A series of images or videos that users swipe through to see several different products or experience a brand’s story
Instagram Story Ads: Image or video ads that appear in the “Stories” feature of the application where users tap through temporary posts from followed accounts
Shopping Ads: Image or video ads that take users directly to a product on Instagram Shopping when interacting with
Reels Ads: Short video advertisements shown within the “Reels” feature of the application where users swipe through creative and engaging content to learn about a brand

How Much Do Instagram Ads Cost?

Instagram advertising costs vary based on several different factors. That said, the average cost-per-thousand impressions (CPM) for an advertising campaign on Instagram is about $9. At the same time, the average cost-per-click (CPC) for an advertising campaign on Instagram is $1.28. Here are some of the different factors that determine the ad budget and cost of Instagram ads:

Factor 1: Bid Amount

Like Facebook, Instagram ads use a bidding auction method when determining ad costs.

The bid amount is the first factor determining the cost of advertising on Instagram. This refers to the amount you’re willing to pay to obtain either clicks or impressions on the platform. You choose between automatic bidding and manual bidding during a bidding war, which will also affect the overall cost of your ad.

For instance, say that you have a budget of $1,000 to spend on Instagram advertising with a bid amount of $0.20 — on the lower end of the average spectrum. With this amount, perhaps you obtain 5,000 leads with your campaign. On the other hand, if you have higher bid amounts, you’d only obtain 500 leads with the same budget of $1,000.

Factor 2: Ad Relevance Score

Your ad relevance score is the second factor determining the cost of advertising on Instagram. This refers to how relevant Instagram thinks your ad will be to its viewers. Instagram wants to please its users, meaning they want to place relevant content that users are interested in rather than irrelevant and annoying content.

If your ad is relevant and engaging — leading users to engage with it — your ad relevance score will increase, and your ad will acquire more placements. On the other hand, if your ad is irrelevant or uninteresting — leading users to hide it — your ad relevance score will go down, and your ad won’t be placed as much.

Factor 3: Estimated Action Rates

The estimated action rates are the third factor determining the cost of advertising on Instagram. This refers to how many users Instagram thinks will act on your ad. Instagram wants to promote engaging ads, so it prioritizes ads with high estimated action rates. When your ads are prioritized, you obtain lower bid amounts.

Factor 4: Competition

The fourth factor that determines the cost of advertising on Instagram is competition. Since you’re bidding to obtain ad placements, you’re effectively competing with other brands for the same ad slots. If tons of different brands bid to reach the same subset of users, you will see higher advertising costs. By this logic, retailers will pay more for Instagram ads around Black Friday, Cyber Monday, Christmas, or other significant shopping holidays. On the other hand, if you are trying to reach a unique or niche group of users, you will see less competition and, therefore, lower advertising costs.

Additional Factors To Consider

In addition to the factors listed above, your Instagram advertising costs also run higher during holidays and events when competition is fiercer. Targeting females is also more expensive than males since this demographic is more in-demand and competitive.

The day of the week also affects how much Instagram ads cost. Believe it or not, it’s more expensive to advertise on Instagram during the week than on the weekend since users engage more with the platform on weekdays.

Is Advertising on Instagram More Expensive Than Advertising on Facebook?

Facebook owns Instagram, meaning the two platforms are connected in more ways than one. But how do advertising costs compare with two of the largest social media platforms in the world? Generally speaking, Facebook has slightly higher advertising costs than Instagram ad campaigns since it has more users.

The average cost-per-click for Facebook ads is $0.97 compared to $0.20 to $2.00 on Instagram. The average cost-per-million impressions for an advertising campaign on Facebook is $7.19 compared to $6.70 on Instagram.

The average cost-per-click for Facebook ads is $0.62 compared to $1.28 on Instagram. The average cost-per-million impressions for an advertising campaign on Facebook is $9.46 compared to $9 on Instagram. The more relevant your ad is to the audience, the less your CPM and the more it’s shown to users.

Instagram Advertising Best Practices

Include a bulleted list of best practices, following in the footsteps of the Pinterest article; additionally, include tips, including the best times to post, scheduling content, honing your messaging, and continuously tracking performance through Instagram analytics.

Set goals. It’s not wise to just run ads on Instagram without a plan. First, you need to start with establishing a set of clear and measurable goals. These include building brand awareness, driving sales, engaging with the audience, etc.
Engage with the audience. Speaking of engagement, remember that Instagram isn’t just a platform for advertising – it’s social media. You can’t just put out content and sit there waiting for users. You have to engage with your content and others’ content as well. Whether you do this yourself, hire a team, or hire an agency to help, it is crucial always to keep the communication lines between your brand and your following running both ways.
Tag products. Because Instagram is becoming an important place for shopping, it’s essential that, as a brand, you tag your products. Studies show this helps to boost sales by 37%.
Schedule content. Planning content is a great way to save time and money. By creating a content calendar and getting everything set up to post ahead of time, you batch your creative content and have time to catch any errors before posts go live.
Test. Testing is critical to a successful ad campaign. You want to try different hooks, offers, and types of advertising content to see what works best (UGC, videos, photos, live videos, different video lengths, etc.).

Instagram Photo Best Practices

Use quality images that are relevant to your ads.
Consider using photos of users holding your product (that boosts purchase desire by up to 78%)
Be consistent with your visuals (choose a look or vibe and stick with it)
Edit as much of your photo in-app as possible – Instagram wants you to use their features, so it will favor content that is created in-app

Instagram Reels Best Practices

2.3 billion users interact with Reels monthly
Aim for a resolution of 1080 x 1920 pixels for your Reels
Stick with the 9:16 aspect ratio for vertical videos and avoid horizontal videos
Choose trending sounds by using the Reels Explore Page or Instagram’s Reels audio library
Use Instagram tools but don’t use too much text and fillers – they distract from the effectiveness of your ad
Create auto-captions for your videos so as not to lose out on the users who view Reels without the sound on
Aim for captions that are at least 30 words in length
Try to keep your videos under 20 seconds to keep the audience’s attention
If possible, sync your visuals with the audio to establish a smooth experience for viewers
To save time on creating Reels, take advantage of the app’s Templates feature that allows you to simply add your photos/videos

By pairing these best practices with the tips below, you set yourself up to get value from advertising on Instagram.

How To Get the Most Bang for Your Buck When Advertising on Instagram

While advertising on Instagram isn’t “cheap,” follow these eight tips to maximize your advertising budget and get the most bang on this incredibly valuable platform.

Tip 1: Choose the Right Ad Formats and Objectives

First, choose the proper ad formats and objectives for your Instagram advertising campaign. We’ve already covered ad formats, but Instagram also lets you choose an ad objective of brand awareness, reach, traffic, engagement, lead generation, conversions, app installs, and more.

Focusing on brand awareness would be smart if you’re starting a new brand. On the other hand, if you’ve already worked to establish your brand and just launched a new line of products, you’ll want to focus on an objective like traffic, lead generation, or conversions.

Tip 2: Target Your Advertisements Correctly

Ensure your campaign reaches the right users once you have the correct ad format and objective. A campaign with the proper format and objective won’t be effective if the right users don’t see it! This involves figuring out who your target audience is and how to reach them on the platform.

The good news is that Instagram offers many advanced targeting mechanisms to reach users who want and need your products. You often target users based on location, demographics, interests, and behavior. There are also lookalike audiences, custom audiences, and retargeting on the platform.

Tip 3: Test Your Advertisements Before Launching

Testing your content beforehand is still essential, no matter how excited you are to launch your Instagram advertising campaign. Choose a small test group based on your target audience and set a limited budget. Then perform A/B or split testing by developing several ad versions, showing them to these groups, and monitoring their performance.

Select the strongest-performing iterations of your ad based on your tests and combine them for a guaranteed effective campaign.

Tip 4: Switch From a Manual Bidding Strategy to an Automated One

While many brands wish to maintain complete and total control over their Instagram advertising campaign from start to finish, this is often not the wisest approach. Doing things manually is beneficial in some cases, but when it comes to Instagram, there’s so much technology to take advantage of.

Specifically, consider an automated bidding strategy that allows you to set your maximum bid work and let the algorithm do all the rest. This approach will help you win the strongest ad placements for the lowest costs.

Tip 5: Develop Better Landing Pages

Even with an outstanding campaign, ineffective landing pages often squash your advertising efforts. After spending all that money on your drive and doing all this work to acquire clicks, you don’t want potential leads to get turned off by your landing pages. So, in addition to investing in paid advertising, you also need to invest in website design.

Ensure that your landing pages make sense for the ad in question. From there, make the page as straightforward as possible with minimal distractions. Include a solid call to action (CTA), helpful information, and an irresistible offer to convert users from potential leads to paying customers through Instagram.

Tip 6: Continuously Monitor Your Campaign

To ensure that your campaign is performing as you intended, you can’t just set it and forget it. Instead, you need to continuously monitor your campaign throughout its life. Specifically, you need to monitor key performance indicators such as click-through rate (CTR), return on ad spend (ROAS), cost per impression (CPM), and cost per conversion (CPA).

At the beginning of your campaign, set ambitious yet realistic goals for what you want to see in your KPIs. If any metric is falling short at any point during the campaign, take action to correct it and get your campaign back on track.

Tip 7: Work With Influencers

While not technically advertising with Instagram, influencer advertising is viral on the platform. This advertising method involves partnering with influential accounts or personalities on the platform to promote your brand and products. You will need to select influencers that make sense for your brand and target audience, as each influencer tends to have their own niche.

For instance, there are fitness influencers, lifestyle influencers, cooking influencers, fashion influencers, parent influencers, pet influencers, and so much more. When choosing your influencer partners, remember that follower numbers aren’t everything. Instead, ensure the partnership makes sense for your brand image and personality. We know the world of influencer marketing is overwhelming. That’s why an omnichannel digital marketing agency like MuteSix has a dedicated Influencer Marketing team to assist our clients in their Influencer Marketing strategy.

Tip 8: Work With an Instagram Ad Agency

A lot of work goes into cost-effective advertising on Instagram. As an entrepreneur, you likely don’t have the time or energy to follow these tips and guidelines to create a successful Instagram campaign. The good news is that you don’t have to, thanks to Instagram ad agencies like MuteSix.

MuteSix is an excellent performance marketing agency that helps brands scale with cross-channel, data-driven creative content. We help you with everything from range to targeting to analytics and everything in between, just as we have helped brands like Morphe, Ring, Honey, and more. So reach out to us today for a complimentary marketing consultation.

Using an Instagram Advertising Agency for Increased Success

Are you looking to boost your Instagram advertising game in 2023? The best way to do this is by partnering with an Instagram ad agency. Instagram offers many great tools to help create ads, but those tools constantly evolve as new features get added, complicating the task of creating ads.

Leave those complications to a leading performance marketing agency like MuteSix. MuteSix works with brands to create full-funnel advertising solutions that result in award-winning creative and media buying strategies backed by up-to-date data that drive serious results.

MuteSix guides brands to maximize Instagram’s advertising potential by delivering high-quality creatives and scaling profitability with top-tier measurement solutions.

Our expertise and proven track record speak for themselves. Take a look at Rinse, for example. We developed and A/B tested creative on segmented audiences to determine influential audience and messaging. By doing this and utilizing Instagram’s best practices, we boosted social engagement by 15% while driving down Rinse’s CPC by a whopping 20%.

Rinse is just one success story amongst many of how we make Instagram advertising work for you. For more success stories, check out our client case studies and testimonials.

The Final Rundown on Instagram Advertising

While advertising on Instagram isn’t cheap, you must consider your ROI. With this hugely popular and engaging platform, you acquire the leads and conversions you’ve been looking for with an Instagram advertising strategy developed by the marketing experts at MuteSix.

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Biggest social media platforms 2023 | Statista

How Social Media Is Influencing Purchasing Decisions | Global Banking and Finance

Head of Instagram Adam Mosseri Reflects on Instagram’s Birthday | Instagram for Business

The Ultimate Guide To Instagram Ads I Statusbrew

Ads Management for Facebook, Instagram | Meta for Business

The 29 Instagram Statistics You Need to Know in 2021 | AdPresso

11 Key Instagram Conversion Rate [2023 New Data] | BusinessDIT

Facebook Ads Cost (2023) | Business of Apps.

How to Advertise on Instagram in 2023: A Complete Guide | Oberlo

Advertising on Instagram | Instagram for Business

The 2021 Guide to Instagram Ad Costs | HubSpot