Guide to Instagram Ads Types and Costs

Have you considered Instagram as an ad platform?

If so – great! Below I’ll cover everything you need to know regarding Instagram ad costs, as well as walk you through the different types, targeting methods and the general set-up process.  

First of All, Why Instagram Ads?

Because frankly, Instagram’s the place to be. As one of the fastest growing social media platforms (brand follower growth increases by 6% to 8% month over month!), it’s an ideal platform to focus on audience and follower growth. And because organic growth is harder to come by, brands will do themselves a favor by focusing on advertising. And perhaps most important, Instagram ads work. Instagram isn’t just for following friends anymore, and users are turning more and more to brands. In fact, Instagram itself found that 60% users say they learn about products and services through the platform, and 75% take action. That means they visit websites, search for a business, or tell their friends about it. Which is exactly the behavior you want in a potential buyer. And of course, there’s the fact that an Instagram study surveying 400 campaigns found that ad recall was 2.8 times higher than the norm. All of the above is enough to peak anyone’s interest in Instagram ads. But before diving in, let’s take a look at what everyone really wants to know: How much will an Instagram ad cost? Instagram Ad Costs Overview There’s really no way to know for sure how much an Instagram ad will cost you. We do, however, know that statistically, some demographics tend to cost more. AdEspresso analyzed several Instagram campaigns over the past year and found that on average, Instagram CPC falls between $.70-$1.00. That number depends on a variety of factors, and their study also revealed that:

• Overall, cost per click (CPC) was highest on the weekend
• Tuesdays had the lowest CPC
• Sunday is the most expensive day to advertise
• CPC tended to get more expensive throughout the year
• 24-34 year olds had the highest CPC, followed closely by 18-24 year olds and 35-44 year olds
• Apple devices had the highest CPC
• CPC for women was significantly higher than men
• Females in the 18-34 age range had the highest overall CPC

Based on the averages above, you can begin to gauge the amount you’ll be spending on your ad, depending on your target. So if you’re target market is women in the 18-34 range, you’ll know to expect your CPC to be a $1.00+. On the flip side, you can expect a far lower CPC if you’re targeting say, senior men.

For reference, according to a Wordstream study the average CPC for a Facebook ad across all industries comes in at $1.72. Now that we know the biggest factors in calculating CPC, let’s take a look at what else could affect your Instagram ad costs.

1. How Your Bid Affects Instagram Ad Costs

When it comes to advertising, Instagram works on a bidding and cost per click (CPC) system. Bidding is exactly the same as Facebook bidding, which means it’s dependent on three important factors:  

1. Your campaign bid – the more you pay, the more your ad will show
2. Relevance score – relevance score is calculated based on negative and positive feedback received from its target audience. More positive reactions = higher relevance score. High relevance scores can:
   1. Lower the cost of reaching people – the higher your relevance score, the less it will cost
   2. Help advertisers test ad creatives – you can test different combinations of images, text, etc. to see which ultimately offer the highest relevance score
   3. Help optimize in-progress campaigns – you can monitor your relevance score as your ad runs, and tweak it if you notice any drops
3. Estimated action rates – These are determined by Facebook, and represents how likely they think a person is to take a given action

In order to “win” the campaign auction and have your ad shown, your ad must have the highest total value. Note: that means that the highest bid doesn’t always win. Ultimately, the amount you’re charged is equal to the minimum amount required to win the auction. Facebook notes that this means two important things:

1. You could be charged less than your highest bid
2. There’s no advantage to setting overly restrictive bid caps

3. How Targeting Affects Instagram Ad Costs

Instagram uses Facebook’s advertising, which means it uses the same targeting methods. Seeing as Facebook is pretty much the best in the biz when it comes to targeting, that’s a major advantage for your Instagram ads. Ads are targeted based on factors including:

• Location – target based on specific locations; especially useful for smaller, brick-and-mortar businesses trying to attract a local clientele

• Demographics – target (or exclude) based on employment, education, age, gender, etc.

• Interests – target based on people’s interests, Pages the like, and their activity on Facebook

• Behaviours – target based on purchasing behaviour, activities, device, etc.

And that’s just the beginning. Using Facebook’s powerful ad platform, you also have the option to target based on audience. Your audience options include:

• Custom Audience – an existing set of contacts you can upload

• Custom Website Audience – a list of people who have visited your website in the past (extremely effective way to use remarketing, but requires the installation of the Facebook Pixel on your site)

• Lookalike Audience – an audience that looks like one you’ve already created (can be created based on a custom audience, website visitors, or from fan pages)

The targets you choose will come down to your campaign goals. But keep in mind, if there are many other brands and competitors targeting the same audience, your costs are likely to be higher. Generally speaking, the more popular the target audience, the more the ad costs. Based on the data above, we know that if your target is 20-something women, you’ll be paying more. With that in mind, it’s important to keep your target on point, and not sacrifice any targeting options for the sake of saving. After all, these targeting methods are in place to help you find the right audience (ie the ones most likely to convert).  

1. Time of Year and Instagram Ad Costs

Timing is everything, even when it comes to Instagram ads. Specifically, peak times during the year will result in higher costs. This is true of any advertising platform, as competition tends to increase around major holidays and events. When it comes to Instagram, the most expensive days for CPC are: Christmas, Black Friday, Cyber Monday, Labor Day, and New Years Eve. As you can see, holidays are huge. If you’re planning on advertising on or around any of them, know that you will like likely be paying more than average.

Setting Up Your Instagram Ad

Now that you have an idea of what affects the cost of your ad, let’s take a look at the actual set up process. Though there are many ways to set up your ad, one of the most powerful and popular is through Facebook’s Ad Manager. The process is extremely similar to creating Facebook ads. To begin, you’ll first need to choose your ad objective.

Choosing Your Instagram Ad Objective

With Instagram ads, you have 8 options to choose from when it comes to outlining your objective. They are:  

• Brand Awareness – this one is pretty straightforward: it will be shown to those most likely to be receptive to it to help increase awareness of your brand.

• Reach – this maximizes how many people see your ad.

• Traffic – this objective helps send people to your website. If you choose this one, you’ll need to specify where you want to send the traffic

• Engagement – this promotes engagement. You can also specify what kind of engagement you’d like: post engagement, page likes, offer claims, etc.

• App Installs – this sends traffic to the app store so they can download your app (you will need to specify which app and which app store to send them to)

• Video Views – this promotes a selected video

• Lead Generation – this is meant to collect information from potential leads (this will require you to use a lead form)

• Conversions – this helps prompt people to take action on your site (you will need to specify the website and install the Facebook pixel to track conversions)

  The goal you select will depend entirely on what you’re trying to accomplish with your ad campaign, and will likely change over time. For example, if you’re a newer business looking to promote, your best bet initially is brand awareness. Once you have a good audience established, your goals will likely shift towards gaining customers. For that, you’d be better off with conversions or lead generation as your ad objective. After you’ve decided on your overall objective, you’ll be asked to choose your audience. This is where you’ll choose your targeting options (covered above).

Select Your Instagram Ad Placement

Next up is placement. This determines where and how your ad will appear. Note that if you only want your ad to appear on Instagram (not Facebook) you will need to select Edit Placements and unclick any boxes in the Facebook category. Under the Instagram category, you can then choose if you want your ad to appear in user’s Instagram feed or as a Story.

How to Set Up Your Instagram Ad Costs and Budget

And then comes budget. This is listed directly below your Placement options in the Budget and Schedule section. There, you choose between two types of budgets:

• Daily budget: This is an average amount you’re willing to spend every day during the campaign’s duration
• Lifetime budget: This is the entire amount you’re willing to spend during your campaign’s duration

You can also choose between manual and automatic bidding. With automatic, Facebook will set the bid for you that helps you get the most link clicks with the best price. Using manual bidding, you place the bid amount based on what amount link clicks are worth to you. Your choices don’t end there. You’ll also be asked to choose whether you want to be charged by CPC or CPM.

• Cost per click (CPC) – You pay each time a user clicks on your ad
• Cost per Impressions (CPM) – You pay for every thousand impressions your ad receives

Which you choose will be tied directly to the optimization option you choose.

Optimization Options for Instagram Ad Costs

In the set-up process, you’ll be prompted to choose a delivery optimization option when you input your budget. According to Facebook, the method you choose: “to get you as many/much of that result as efficiently as possible…For example, if you optimize for link clicks, your ads are targeted to people in your audience who are most likely to click the ads’ links.” The option you choose will be directly tied to whether you end up paying by CPC or CPM. Your options are:  

• Conversions – your ad will be shown to those most likely to convert. With conversions, you’ll pay by CPM.

• Post Engagement – your ad will be shown to those most likely to like, comment, or share your ad. It’s paid by CPM.

• Impressions – Your ad will be shown to as many as people as possible within your budget. It’s paid by CPM.

• Link Clicks – Your ad will be shown to the people most likely to click on it. This is paid by CPC.

• Daily Unique Reach – Your ad is shown to users once per day. This is paid by CPM.

  Keep in mind that the delivery method you choose will likely end up affecting your costs. It not only will determine who sees the ad, but your relevancy score will be affected by how many people actually complete the action you choose. For example, if you choose Link Clicks as your delivery method but don’t receive many, your relevancy score will decrease, meaning your costs will increase to compete in the ad auction.

Types of Instagram Ads and Ad Costs

Last but certainly not least, it’s time to choose your ad format and create your ad. Instagram ads come in four styles:

• Carousel Ads
• Single Image
• Single Video
• Slideshow

They’ve also recently rolled Instagram Stories ads, which appear in between people’s Stories as you move between them. They come in two options:

• Single Image
• Single Video

1. Carousel Ads

Carousel ads are ads with two or more images or videos. When people see your ad, they can swipe through each image or video. This option is best for shops that sell multiple products, or any art or design niches that have multiple images to show. Facebook has a full overview of carousel ads and how to use them here.

1. Single Image Ads

This one is as standard as they come – an ad that shows a single image. You simply upload the photo you would like to use and fill in the text that should run in the caption (Facebook recommends 125 characters). Depending on your ad objective, you can also choose to include a URL to send traffic to a specific location and include a call to action.

1. Single Video Ads

Similar to single image, single video ads are ads that feature a single video. For this one, you’ll select and upload your video and choose a thumbnail. Then, fill in your text and specify a URL if needed for your objective.

1. Slideshow Ads

These ads appear as slideshows – images that appear one after the other. Unlike carousel ads, users don’t swipe between the images, they move on their own. For these, you can use an already existing slideshow or easily create your own. Then, continue as usual to the text field and optional URL field.

1. Instagram Stories Single Image

This option allows you to use up to six ads, each with one image. It will appear full-screen, just like non-ad Instagram Stories.

1. Instagram Stories Single Video

Single video ads let you upload a video that’s up to 15 seconds long. Again, it will appear as any other story (with a small Sponsored at the bottom). And that’s it. Once you’ve selected your format and uploaded all the necessary images and information, your ad is ready to go. So, Are Instagram Ads Right for You? So far, the evidence says yes. But let’s take a deeper look. While Instagram does boast an impressive audience, keep in mind its largest group is 18-34 year-olds and primarily female. If that fits your target, then so far so good. Beyond that, it’s important to keep quality in mind. Really ask yourself if your company has the time and know-how to create ads focused primarily on visuals. That doesn’t necessarily mean fancy equipment (in fact, there are plenty of ways to make stunning ads on a serious budget), but it does mean a time commitment and an eye for detail. And of course, your Instagram ad costs will factor into your decision. Though Instagram tends to be on the higher end of ad costs, users are more likely to engage with brands on the platform. As you experiment, make sure you’ve calculated the cost of conversions and how much you’re willing to spend for each. Instagram Ad Cost Tips Here’s a few things to keep in mind when dealing with Instagram ad costs:

• Show off your product – 65% of top-performing Instagram posts feature products.
• Instagram photos with faces are 38% more likely to receive likes and 32% more likely to receive comments.
• Keep an eye on your ROI – and make sure your campaign has a positive one
• Always test your objectives and creatives, and tweak when necessary
• Check your relevance score often

Wrapping Up Instagram Ad Costs Advertising on Instagram is a powerful way to connect with customers and promote your brand. And while there’s no way to know exactly how much you’ll spend, there are known factors that will play a part in your overall CPC. Knowing what they are and how they’ll affect your ad spend will help you budget accordingly and set up for success.