Advertising has come a long way from sending one-way promo messages over TV or newspapers. Today, you can utilize social networks for extremely accurate audience targeting and maximize the profitability of each campaign.

Instagram has become a particularly important advertising tool because it hosts more than a billion users globally. As the fastest-growing social platform, Instagram gives you a perfect chance to raise awareness and expand the base of online customers. 

The only problem you might face is how to calculate the cost of Instagram advertising. It’s a complex calculation with multiple variables, so we have to start from scratch and show you everything there is to know about Instagram advertising campaigns. Let’s take a look!

How Instagram Advertising Works? 

If you are new to Instagram advertising, you should learn how it works before moving on to other details. The content you pay for shows up in Instagram stories or in users’ newsfeeds. 

Jake Gardner, a custom writing expert at the assignment writing service, explains that ads have a priority, but the ultimate goal of Instagram marketing is to make the promo content look natural and non-intrusive: “It should fit in seamlessly and look like any other organic post.” 

However, attentive users can recognize Instagram ads simply by reading the “Sponsored” sign below the official account name. Besides that, ads come with a call to action (CTA) such as:

  • Register
  • Save 20% by shopping now 
  • Get your tickets
  • Learn more

You can use four main types of Instagram ads. First of all, there are traditional photo ads followed by the CTA button. Secondly, you have video ads that can last up to a minute. Thirdly, there are Instagram stories that go full-screen and disappear after 24 hours. 

Finally, you can exploit carousel ads to promote multiple products at once. Each of these options has its pros and cons, so it’s up to you to choose the right format and increase conversion rates. 

Another important detail you need to learn is how to launch ads on Instagram. You can do it in three different ways:

  • Instagram app: Using the official Instagram app, you can sponsor the existing post and immediately begin monitoring its impact on the target audience. 
  • Ads Manager: If you are using Facebook Ads already, you know how this tool works. The Ads Managers tool allows you to choose between three sorts of audience groups – core, custom, and lookalike. 
  • Instagram Partner: If you want a third-party to run ads on your behalf, feel free to use the Instagram Partner solution. 

Instagram Advertising Facts and Statistics

Now that you know the essentials of Instagram advertising, we can finally discuss the price of launching promo campaigns on this platform. 

One thing we have to be clear about here is that you cannot calculate the cost of Instagram ads well in advance because it depends on what you want and which goals you wish to achieve. In other words, we can only reveal the average amounts based on market studies.

According to the report, the average cost-per-impressions (CPM) is about $6, while a typical cost-per-click (CPC) goes from $0.56 to $0.72. Of course, prices vary drastically from niche to niche, but there are many other factors that will influence the total budget of your Instagram advertising campaign.

Although it may look too vague and suspicious, don’t let the first impression discourage you. Here are other reasons why you should take advantage of Instagram advertising:

  • Instagram’s median engagement rate is 1.6%, which is 17 times higher than Facebook posts and 33 times higher than tweets. 
  • Almost 75% of US teens say Instagram is the best way for brands to reach them about new products or promotions.
  • After seeing a product or service on Instagram, 79% of users search for more information, 37% visit the retail store, and 46% make a purchase.

Factors That Determine the Price of Instagram Ads

As we mentioned already, various factors influence the final price of your Instagram ads. You should analyze each parameter in order to calculate costs and find a combination that suits your business goals and your budget. Here are the major factors you ought to consider:

  • Bid amount and budget: The cost of Instagram advertising mostly depends on a bid amount and the budget. For example, your bid amount can go to $3 per click and the budget may reach $1,200. This means you want your ad to be clicked 400 times. 
  • Relevancy score: If your ad is highly relevant to the target audience, you can expect it to perform much better and ultimately pay less for your campaign. But if users neglect or hide your ads, you will pay more for subpar results. 
  • Estimated action rates: Instagram will automatically calculate the likelihood of users taking action based on the content of your ads. If the content appears to be relevant, the price per click or impression will go down.
  • Competitors: Don’t forget that you are not alone in the Instagram universe. Other brands will fight for the same target group, which can sometimes skyrocket the cost per campaign. The situation is particularly troublesome in highly competitive fields like B2B, fashion, and law.
  • Seasonal events and holidays: Almost every business is trying to approach customers during holidays or important events, so advertising prices go wild in this period. 
  • Day of the week: Another thing you need to remember is that different days of the week require different advertising budgets. For example, users are much more active on Tuesdays than Sundays and it really makes a major impact on the price. 
  • Gender: Ladies prove to be more engaged on Instagram, which means that it usually costs more to target women than men. 

How to Reduce the Costs of Instagram Advertising?

Experienced marketers know how to minimize the costs of Instagram advertising. You can embrace the same methodology and reduce advertising budgets using these mechanisms:

  • Automated bidding: In case you don’t know the average prices in your niche, you should make use of automated bidding to find the right balance between investments and savings. 
  • Target ultra-precisely: If you target the audience precisely, you will eliminate budget-waste and increase the overall profitability of your campaigns. 
  • Define goals: When you define the goals of Instagram advertising, you can craft better copies and drive the desired action accordingly. 
  • Improve landing pages: Instagram ads redirect users to the website, so you better make sure to improve your landing pages and welcome visitors with relevant content.

The Bottom Line

Instagram advertising is a powerful promo tool for your business, but the cost can quickly escalate if you don’t pay attention to all of the pricing parameters. There is no direct answer on how to calculate the charge for Instagram ad campaigns, but you can use our instructions to make a detailed plan and set the right budget. 

Have you already used Instagram advertising for brand promotion? Share your experiences in the comments and ask questions if you have any uncertainties – we are here to help you figure it out!

AUTHOR BIO

Alice Jones is a digital marketer and a blogger from San Francisco, California. She is a specialist in social media, email marketing, and online advertising. Alice is a passionate traveler and a devoted yoga practitioner.

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