Instagram Advertising Cost: Unlocking the Expense

Instagram is the most used app today. It is one of the most loved, rather addictive, social media platforms of all. 83% of Instagram users say that they discover new products through this platform. Instagram influences approximately 75% of users’ buying decisions. Naturally, businesses are more inclined to run ads on Instagram to target their audience. The Instagram advertising price depends upon various factors. 

Are you wondering how Instagram advertising pricing works? It is important to understand the cost of Instagram advertising in detail to advertise on this platform and leverage it to acquire new customers. So, let’s dive in!

Instagram Advertising Cost: The Basics to Know

Instagram advertising pricing takes many factors into account, including your target audience, ad format, and bidding strategy. You may expect to spend a few hundred rupees to thousands per click or 1000 views. 

These components will give you a hang of the cost structures, to help you budget and plan your ad campaigns effectively:

• Bidding Model: Instagram ads mostly work on a bidding system where the advertisers compete for ad placements. You can select any from bidding options such as Cost Per Click (CPC), Cost Per 1000 Impressions (CPM), and Cost Per Action (CPA).
• Ad Objective: The objective or goal of your ad campaign will also determine the cost of Instagram advertising for you. Your objective could be brand awareness, lead generation, or conversions.
• Audience Targeting: Instagram ads offer you a perk of setting your ad’s target audience, considering users’ demographics, interests, preferences, and more. It helps you make your targeting precise and your marketing effort land with potential customers.

Factors Influencing Instagram Advertising Costs

Many factors together make up your total cost for Instagram advertising:

1. Bidding amount

The amount you bid influences how much your Instagram advertising campaign will cost you. You must decide the budget you want to set aside for extracting new leads. Be prepared to shell out more if you want a higher number of impressions and clicks since Instagram bids are usually expensive.

Your bid amount influences your budget, and simultaneously, your ability to spend decides how much you can bid. 

For example, if you have 10,000 rupees and your bid amount is Rs.2 per click, you get only 5,000 clicks on your ad. If you increase the budget to Rs.15,000 at Rs.2 per click, it will fetch you 7,500 clicks. But, in this same case, a lower bid amount of Rs.1 will allow for a higher number of clicks under the same two budget amounts.

2. Estimated engagement rates

The more your audience engages with your ad post, the better the chances of conversions for you. Instagram wants to make sure they promote ads that hook people and compel them to act. 

The platform judges estimated action rates on your ad accordingly. This evaluation is based on how likely are people to take action on your ad, according to Instagram. Interactions like people clicking the ad and converting are considered engagements. 

Your estimated action rate is a part of determining your cost on Instagram advertising. If Instagram sees more engagement potential in your ad as compared to others, it will give priority to your ad. It gives you the advantage of having a lower bid amount and securing more leads and conversions for a smaller fee.

3. Ad relevancy score

Instagram wants to please its users by showing them relevant content on their feeds. So, the platform decides if your ad is relevant to the audience viewing it, and gives you an ad relevancy score based on how those people react to your ad. 

If you get a positive response, in the form of users tapping on, liking, sharing, or commenting on the ad post, your relevancy score will be higher. 

But, if they give a negative response instead, like hiding the ad, you get a lower ad relevancy score. It can hamper your ad’s performance.

This score has an impact on the cost of Instagram advertising. You’ll pay closer to the minimum price with more relevant ads, getting more clicks on and leads from your ad campaign.

4. Competition

Competition is a huge factor when it comes to Instagram advertising pricing. Many people are striving to target the same demographics as you are. Your cost of Instagram advertising can easily fluctuate depending on the intensity of this competition.

If more people are trying to target the same audience group as yours, your CPC will go up and vice-versa.

5. Time and seasonality

The competition is usually higher during the holiday season, as the choice of targeted audience groups clashes among businesses. The valuable lead war between companies shoots up the CPC. So, you must keep this in mind if you’re planning an ad campaign around the holiday season. 

6. Audience gender

The gender of your audience also plays a role in influencing Instagram advertising pricing. You pay more for targeting a female audience than a male one. This is because females have a higher tendency to interact with and engage on the platform.

7. Days of the week

Instagram users are more active and engage more on weekdays as compared to weekends. So, the platform charges you a higher CPC for running ads during the week, and relatively lower on Saturdays and Sundays.

8. Targeted market

Instagram advertising pricing also takes the market you’re trying to reach into account. For instance, It is costlier for B2B companies to run ads because Instagram has fewer businesses on its platform than people. 

How Instagram Ads Function?

Instagram ads function through Facebook’s ad platform since Facebook is its parent company. The platform uses the same targeting capabilities and ad formats as Facebook. You just need to have a Facebook business page to create campaigns by selecting objectives, defining target audiences, setting budgets, and designing ads. 

You don’t need an Instagram account to run ads, the Facebook business page does the job. But it’s best to have an Instagram account to familiarise your audience with your brand content. 

Instagram ads are paid content popping up in the feeds and stories of users. These ads aim to grab the attention of people who’d most likely be interested in your products.

The strategy is to camouflage the ads in a way that people see them as posts, to make it a part of their effortless scrolling without disturbing the flow. Instagram users see these ads based on their demographic data and interests.

Usually, people get to know that a post is a paid ad in two ways: either it says “sponsored” and/or there is a call-to-action, like “learn more” or “shop now”, at the bottom of the image or video. 

Instagram Advertisement Expenses

Let’s break down the Instagram advertising pricing structure to get a clearer picture: 

• Monthly Instagram Advertising Costs

The monthly expenditure on Instagram advertising can differ for companies, depending on their size and spending capacity. 11% of marketers spend over $5000 per month on Instagram ads. On average, small businesses might shell out between $100 and $500 per month, while larger firms may invest more. 

Other factors that decide your monthly cost of Instagram advertising may include the scale of your campaigns, the number of ads you run, and your chosen target audience’s competitiveness.

• Cost per Click

The average cost per click for Instagram ads can range from US $0.40 to $0.70, depending on various factors like industry, audience, and ad relevance. However, 19% of marketers spend over US $2.00 per click. 

For ads with destination URLs, Instagram cost per click may be between US $0.50 and $0.95. Moreover, you have to pay higher CPCs for high-demand niches such as finance.

• Cost per 1000 Views

Cost per 1000 views, or CPM, usually ranges from US $2.50 to $4.00. Brands focusing on awareness and reach are mostly interested in adopting this model to maximise visibility within budget constraints.

• Cost Per Interactions

Cost per interaction or engagement includes likes, shares, and comments on your ads. These costs may fall between US $0.03 and $0.08 per interaction on average. However, higher engagement can lower overall costs for you since the algorithm favours engaging content.

Instagram Ads Cost in India

Instagram advertising charges are usually lower in India as compared to the Western markets. The average Instagram-sponsored ad CPC can range from Rs.36.69 to Rs.146.75.

However, here’s  the bifurcation of the average Instagram advertising pricing in India:

• CPM (cost per 1000 impressions): Rs. 7 to Rs. 13
• CPC (cost per link click): Rs. 0.45 to Rs. 3
• CPV (cost per view): Rs. 0.3 to Rs. 2
• CPI (cost per install): Rs. 30 to Rs. 100
• CPL (cost per lead): Rs. 3.5 to Rs. 1500
• CPA (cost per acquisition): Rs. 42 to Rs. 2000

These lower costs make Instagram an attractive platform for Indian businesses. However, Indian Instagram advertising pricing can vary depending on who you’re targeting and the quality of the ads.

Instagram Ad Costs Worldwide

The cost of Instagram advertising can differ for various countries. It’s important to consider the regional Instagram advertising pricing variations while planning your ad campaign. 

For example, in the US, you may pay a CPC ranging from US $0.70 to $1.20, but get a slightly lower rate in European countries, and an even lower one in Asian countries. Similarly, you may find mid-range CPC with high engagement rates in Australia and New Zealand. 

Setting Aside Your Instagram Ad Budget: How Much to Spend?

It’s a good idea to start by keeping aside a small budget for initial testing and gradually increasing it as you recognise what works best. Scan these factors before you finalise your Instagram ad budget:

• Ad Campaign Objectives

Your campaign goals can automatically spike or lower your cost of Instagram advertising, depending on what your objective is and how it relates to where your target audience stands in the funnel.

For example, you may want to do a campaign to create brand awareness, do lead generation, or get sales. The cost will differ for you depending on what you pick. 

• Audience Size

Mostly, larger and broader audiences require a higher budget to achieve your desired reach and engagement through the ad. 

Setting niche audiences, like the ones in specific age ranges or other factors, may cost you more as the competition is more intense here. Retargeting audiences are also small, focused groups and often incur higher costs when running retargeting campaigns.

• Click-through Rate

You and Instagram want these ads to resonate with the target audience and CTR is a strong indicator of the same. 

So, if your CTR is low, then you may pay higher since Instagram might assume there’s a gap between your targeted audience and the message your ads portray. Try to have a healthy CTR, about 2% to reduce your cost of Instagram advertising.

• Ad Duration

You’ll need a denser budget for longer campaigns. If the budget is small, it can take longer for a new ad campaign to come out of the learning phase. 

The ad may be expensive for you at first when Instagram is still unaware of your campaign type and goals, and how your ad performs with the targeted audience. If you get good engagement on your ads, Facebook and Instagram are likely to offer you lower prices over time.

Managing Your Instagram Advertising Costs: Strategies to Lower the Expenses

Pen down these strategies to kickstart your journey with optimised Instagram advertising expenses:

1. Automatic Bidding

If you’re a newbie, your best bet in Instagram advertising is to use automatic bidding to get the most suitable bid for your campaign. It’s helpful to use this strategy when you don’t have any previous data for a tried and tested CPC. 

Applying automatic bidding prevents you from overbidding to run an ad campaign. With no trace of any previous data, you may easily assume that you need to bid more than what you require.

Using automatic bidding helps you reduce your cost of Instagram advertising by fetching the right bid until you do enough bidding trials to understand the perfect amount for your campaigns. 

2. Smart Targeting

When you set up your Instagram ads, your goal is to tap into an audience that will like and purchase your products. Instagram allows you to reach your potential customers in many ways. 

Instagram allows targeting by location, ranging from broad regions to specific postal codes, and by demographics such as gender, age, and race. You can even target people based on their interests, like jewellery, fashion, technology, art, etc., which you’ll know through their interactions on social media. 

You can use custom audiences that enable you to import data like email addresses of individuals already interested in your products while leveraging lookalike audiences helps you to reach people with similar characteristics to your existing customers. 

Using precise targeting techniques makes your ads more relevant, which improves ad rank, lowers CPC, and increases conversions, thereby offsetting campaign costs.

3. Set Objectives

It’s important to tie your ad campaign to a specific goal for better, concentrated results. If you know what you’re trying to achieve, you’ll know exactly which audience to tap. 

Bring your focus to these three goals when designing your Instagram ad campaign: awareness, consideration, and conversions.

Awareness focuses on making people aware of and familiar with your products/services, or brand. Consideration is about educating your audience further about your offerings in different ways. Conversion means you want Instagram users to buy your products/services, or download your app through your ad. 

4. Relevant Landing Pages

Having more relevant landing pages can also help you reduce your cost of Instagram advertising. You’ll find many eCommerce businesses directing leads to their home page, which is a mistake. It cuts their engagement rates because people land on the wrong page. You need to bring customers to the landing page directly to make them act. 

For example, if you’re selling t-shirts online, then your audience must immediately be able to shop for the item you’re advertising in the creative. The link must bring them to the landing page where they can add it to the cart or explore more t-shirt options.  

Thus, make sure the creative and ad links are cohesive when you put out your Instagram ad. Relevant landing pages also get you more conversions. 

5. Ad Testing

Another potential way to decrease your ad costs is by testing your ad and being thorough about what works. 

It will help you create a more relevant ad copy, leading to Instagram placing your ad higher and ultimately a lower CPC.

Is Instagram Advertising Worth It?

Instagram advertising can give you substantial reach and engagement rates. Out of all ad spend networks, Instagram has the best performance rate for CTRs. About 130 million users tap on Instagram’s shopping posts every month.

Nearly 75% of Instagram users take action, like visiting the brand website, after looking at an Instagram ad post. Instagram leads the race with Facebook when it comes to engagement rates, offering ten times better engagement rates.

When you have people engaging with a network, your business can benefit from advertising on that platform with those ads targeting the right users. 

Besides high engagement rates, Instagram also champions conversion rates. About 76% of marketers are happy with the Return on Investment (ROI) they get from Instagram advertising. Getting the best out of Instagram is all about creating a lucrative ad campaign. 

Moreover, the ability to precisely target audiences and measure ad performance further increases this social media platform’s value proposition. 

Facebook vs. Instagram Ad Expenses

When you compare Facebook and Instagram advertising pricing, you’ll see some similarities and differences. Both social media platforms might use the same advertising interface and auction system but Instagram ads generally have a higher CPM due to their younger and more engaged audience.

Average Cost of Instagram Advertising: 

• CPM: US $7.19
• CPC: US $0.97

However, Facebook offers more diverse ad formats and broader audience targeting options, which can result in lower CPCs. 

Average Facebook Ad Costs:

• CPM: US $6.70
• CPC: US $0.20 – $2.00

So, you must consider your target demographics and ad goals while choosing one of the two platforms or deciding to use both.

Evaluating Instagram Advertising Returns

To evaluate the returns on your cost of Instagram advertising, you must focus on key performance indicators (KPIs) like:

• Return on Ad Spend (ROAS): Measures the revenue you’ve generated for every dollar or rupee spent on Instagram ads.
• Cost per Acquisition (CPA): Calculates the cost to acquire a new customer.
• Engagement Rate: Gauges how effectively your ads are engaging your target audience.
• Conversion Rate: It gives you the percentage of viewers, who take the desired action on your ad, like buying the product or signing up for your newsletter.

Regularly analysing these metrics will show you how effective your Instagram ad campaigns are, allowing you to make the necessary adjustments.

Instagram Advertising Models

Instagram has many advertising models to cater to different business needs:

• Photo Ads: These ads are simple yet effective and use high-quality images to capture attention. They may cost you nearly (CPC) US $0.20 to $2.00 per click or (CPM) US $5 to $25 per 1,000 impressions on average.
• Video Ads: Instagram video ads are very good at conveying complex messages while keeping your viewers captivated. Their Instagram advertising pricing can be around US $0.50 to $3.00 CPC or US $6 to $30 CPM. 
• Carousel Ads: These dynamic ads allow your users to swipe through multiple pictures or videos in a single ad. Similar to photo and video ads, carousel ads may cost you between $0.20 to $2.00 CPC and  $5 to $25 per 1,000 CPM on average.
• Stories Ads: These are full-screen ads that show up in between stories when users are viewing the stories of their Instagram friends or connections. The average cost range of story ads is approximately US $0.50 to $3.00 per click or US $6 to $30 per 1,000 impressions. 
• Explore Ads: They appear in the Explore feed, targeting users looking for new content in the Explore section of Instagram. Explore ads can cost you anywhere from US $0.30 to $2.50 per click or US $6 to $35 per 1,000 impressions.
• Instagram Shopping Ads: Shopping ads allow you to tag products in your organic brand posts and stories, making it easy for your Instagram followers to shop directly from your handle. Their CPC and CPM range is around US $0.20 to $2.00 per click and US $5 to $25 per thousand impressions, respectively.
• Branded Content Ads: Branded content includes posts that influencers or other partners create with your product or about your brand, and you promote them as ads. 

On average, branded content cost per post on Instagram may range from $100 to $2,000, while some influencers may charge more.

Instagram Paid Promotion and Instagram Organic Handling: The Contrast

Instagram Organic Handling

Instagram Organic Handling is when you grow your Instagram presence naturally without spending any money on promotions. It focuses on getting genuine Instagram followers who like or relate to your products or content. 

In this approach, your success depends on creating high-quality, engaging content to lure and retain followers. It’s more sustainable in the long term since this way you build a loyal community for your brand.

Organic handling requires consistency in posting and more time to increase your visibility and engagement. It may take time, but this approach is cost-effective and gives you some loyal followers or customers.

You mostly rely on Instagram’s algorithm to push your posts to the right users. However, if it strikes the right chord with the audience, it can give you more visibility and organic growth.

Instagram Paid Promotion

Instagram Paid Promotion involves investing money in sponsored posts or ads to get better visibility. It gives you immediate exposure to your desired audience, which is useful for time-sensitive promotions, like holidays or other occasions, or for quickly reaching a broader audience.

This approach allows you to target the demographics, interests, and behaviours you want. It ensures that the right audience sees your ad or post, the ones that are likely to take interest in or buy your brand or products. 

These ads offer you proper analytics to measure the return on investment of your paid promotions. You can track valuable metrics like reach, engagement, and conversions to have insights into the impact and performance of your ad campaigns.

Paid promotions also give you a competitive edge by cutting the slow growth that comes with organic methods. You can quickly establish a presence on Instagram and effectively compete with other brands. 

The Choice Between Organic and Paid Instagram Promotion

Go for Instagram Organic Handling in these cases: when you want to build a genuine following, have a limited budget, desire long-term credibility and trust from people, your content needs a niche audience, and you’re ready to give time and patience to your growth strategy. 

But invest in Instagram Paid Promotion if you need these things: quick exposure to greater audience groups, targeted audience reach, or want to launch your product/service, beat the competition, and have a measurable ROI.

Consider using a combination of these strategies for a more holistic approach. It’s called an ‘integrated strategy’ that many successful Instagram accounts use. Adjust your goals based on what resources and budget you have and your brand’s and Instagram’s evolving nature.

Conclusion

Instagram continues to grow rapidly and its advertising options are only becoming stronger by the day. This space is not yet saturated and you can assume that more ad placements will soon come our way.

Give Instagram advertising a go and see how well it works for you. It may become an important link in your funnel to increase brand awareness, engagement, leads, and conversions, or generate more revenue.