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How much do Instagram Ads cost? A complete guide to optimize your ad spend

By Dario Villi | No Comments | 16th November 2020

As the photo-publishing social network Instagram continues to grow popular, with over a billion monthly active users on the platform, advertisers try to make the most of it by sponsoring their products and services. Businesses running ads on Instagram are expected to spend a budget of 8.08 billion by the end of 2020, trying to create the best Instagram Ads to sponsor their content. 

Instagram is a great opportunity for businesses to build brand awareness and target their audience, over the past years over 25 million businesses joined the platform to sell their products and services. According to Instagram, as many as 90% of users follow at least one business on the platform, and around 60% of them have heard about a product and service through the platform. That’s why today running ads on Instagram are almost mandatory for businesses to engage with their audience. 

However, as the platform becomes more crowded and competition increases, so do the cost of advertising. What is the average Instagram Ads cost, and how can advertisers adjust their strategy to lower their spend? 

This article answers both questions by presenting some benchmarks about Instagram Ads cost and by identifying how advertisers can lower their spend by improving engagement and several other strategies. 

How much do Instagram Ads cost?

It’s hard to give an exact estimate of how much Instagram Ads costs, due to the fact that it depends on multiple variables. However, there are some benchmarks that can and should be taken into considerations.  

According to webfx.com the average Instagram Ads cost for CPC is between $0.20 to $2. Socialbakers goes more in detail reporting that the average CPC for an Instagram post in the regular feed is $0.617 and the cost for Instagram Stories is $0.507. 

The CPM (or the cost per one thousand impressions) is on average $1.9 for posts in the feed and $1 for Instagram stories. 

Instagram CPC cost

But how are these costs determined? In order to lower your ad spend is important to understand what influences Instagram Ads costs. The process that Facebook (Instagram) uses to determine which ad it will show to which audience is based on three main factors:

  • the bid
  • the EAR
  • the ad quality

The first factor is the bid, or in other words how much the advertiser is willing to pay to show the ad to a target audience. The second factor is the Estimate Action Rate (EAR), an estimate made by Instagram of how much a particular person will engage with a specific ad. Last but not least is the ad quality, which is measured upon certain standards (i.e. quality of copy and image) and based on feedback from viewers when the campaign is live. The combination of these three factors gives the ad the total value, which directly influences Instagram Ads costs. 

On top of it, there are other things to consider, such as for example how Instagram Ads costs vary by device. Instagram is undoubtedly a mobile-first platform: in the last quarter of 2019, as much as 96.1% of paid ads were seen on mobile devices. More impressively, the average cost per click from Desktop is almost twice as much as the same cost per click from mobile for brands globally. In fact, at the end of 2019, the average cost per click for Desktop was $0.29 and $0.15 for mobile. Just by optimizing their ads for mobile navigation advertisers can significantly lower their Instagram Ads costs. 

There are also other factors to weigh in when calculating Instagram Ads costs, such as seasonality demographics, and industry. During festivities like Christmas for example costs usually go up due to the increased competition to win the user’s attention. Demographics matter too since Instagram’s main audience is female and between 25 and 34 years old

Concerning the industries, some just seem to do better than others in terms of interactions, which as stated before largely impacts costs too. A report by Socialbakers shows that the distribution of interactions across industries sees the Fashion industry leading the group with 25,7% of the pie, followed by E-commerce (16%), Beauty (13,2%), Auto (10,3%) and Retail (9,5%). Other industries such as Services, Sporting goods, and Electronics follow behind.

Engagement by industry_Instagram

There are many variables that ultimately influence how much Instagram Ads cost, some of them are outside a company’s control, but many others are. There are many actions that businesses can consider to actually lower their ad spend. 

How the Instagram ad bidding process work

Instagram ads are set up through the Facebook ads Manager. The Instagram ad bidding works by the auction system. This determines the cost of Instagram ads. It starts by setting a daily budget or over the entire campaign duration. This is the amount you will spend on the ad. The next step is to set the bid, which is the amount you want to spend when a user carries out a specified action on your ad campaign. The auction takes place when an Instagram user sees the ad, such as when a user opens the Instagram app and scroll through the feed. There are always over one bidder. The bidders are the same ads that use the same target audience.

So, the auction system looks for the ads that provide value for users and not the highest bidder in monetary terms. The system calculates the value using the advertiser bid, estimated action rates, and ad quality and relevance for each ad. The ads that have these three elements wins and are shown to the users. The winning ad gets the lowest charge required to win the auction. Overall, advertisers pay less for their bids.

Automatic Bidding

Automatic bidding is useful for businesses that don’t have previous data that can provide information on CPC for a campaign. It helps to set the bid amount good for campaigns. When using automatic bidding, ensure you avoid overbidding to run an ad. When there is no data, it is difficult to know the right bid amount for a campaign. This can make you want to bid more than you would do. But with automatic bidding, it sets the right bid amount until you can collect data that helps guide the campaign. This helps to lower Instagram ads cost considerably.

How to optimize your Instagram Ads costs

First and foremost, the best way to lower your Instagram Ads costs is by improving the engagement of your ad creatives, or as Seth Godin would say, by making your ad stand out from the crowd like ‘a purple cow’.

More than 80% of businesses consider engagement to be the most important metric on Instagram, but what is engagement exactly and why is it so important? 

Practically speaking engagement measures how many likes, comments, repost your content generates, in addition to the comment, views, and shares generated through Instagram Stories, IGTV, and live streaming. More in general, engagement measures if your target audience is right and how much they appreciate the content you share. 

This is important for one main reason: Instagram assigns a relevancy score to each one of your ads. When it receives signals that an ad is liked, commented, and clicked on, the relevancy score increases. This will reduce the Instagram Ads cost because the relevance score is one of the main factors weighted to define the CPC, along with the actual bid and estimated action rate. On the contrary, negative feedback from people on your ads, such as when they hide it, will negatively affect your ad relevance score and increase your costs. 

In order to understand how the ad creative influences engagement and therefore the Instagram Ads cost, it’s worth looking at some examples of successful ads.

Best Instagram Ads examples

There are no clear guidelines on how to craft the best Instagram Ads, but we can learn which ad qualities are important from the most successful ones in terms of impressions and interactions. Let’s examine some of the best Instagram Ads for the three main ad formats: photo, video, and Stories.  

Best Instagram Photo Ads

Photo ads are the most popular option for content type posted by businesses running ads on Instagram, with 34% of people in the U.S. saying photos are the type of sponsored ad they like to see the most. 

After all, Instagram is used as a platform to discover and be inspired by things and people that reflect their values, which makes it a great opportunity for businesses to showcase their products and services. As a matter of fact, the best photo ads don’t give the impression that they are regular advertisements, they blend naturally with the rest of the user’s feed. 

The most engaging Instagram photo ads usually either show high-quality pictures that entice the audience, show the benefit of using the product by depicting a striking contrast (if you use the product vs. if you don’t use it), or share sneak peeks of new products people can comment on. 

The following are five examples of some best Instagram ads for photo content. 

1.  Muse

Screenshot_20200514-162650_Instagram

This ad from Muse uses a minimal and elegant picture to showcase its immersive meditative headband. It features a bright white background that highlights the sophisticated design of the product in the middle. More importantly, the ad leverages the concept of “authority” to sell the product. What is Muse? The renowned newspaper The New York Times describes it as “the gift of a sound mind”. The curiosity instilled makes the ad engaging: it’s definitely something worth discovering more about. 

2.   Uber Eats

Photo_Uber Eats

In this ad, Uber Eats does a great job of enticing the audience with a bright, high-quality picture that best showcase the food offer. The caption makes a big promise: “the top restaurant of London delivered to your door”. The emojis do the rest to make this message as friendly and engaging as possible. Overall the ad defines well the customer expectations: the order really does feel only a few clicks away. 

3.    Skillshare

Photo_Instagram_Skillshare (1)

Skillshare goal with this ad was to drive new leads by offering a fun watercolor session. The ad shows a sneak peek of what the session will look like, and a genuine picture of the host of the session which communicates a sense of trust and encouragement to sign up and try it.  

4.   8fit

Photo_8fit

The brilliance of this ad relies on the clear value proposition it showcases. Everyone who wants to get fit wants to see positive results as fast and effectively as possible. The ad compares a classic exercise with a Tabata workout exercise. The grey color and the picture showing fatigue from running contrast with the colored, satisfying picture of the exercise advised by 8fit. On the side the impressive difference in results: in the same amount of time the app helps you burn 336 kcal compared to 95 kcal. The message is delivered: train with 8fit and you will get better results faster. The subtle smile and positivity of the girl in the second picture are infectious to take action.

5.    Albert App

Photo_Albert (1)

This example of an ad from Albert app is effective because it has a striking contrast that captures users’ attention and it simply and clearly explains the benefits of using the app. The fact that they use Comic Sans as a font and a simple “Excel sheet” template makes it very relatable for the audience. The premise of the ad is that by using the app you will automatically have more money in your bank account every month. Overall it captures the attention and gives a friendly feeling of something that will truly help you achieve better results.    

Best Instagram Video Ads

Instagram video ads have the capacity not only to build brand awareness but also to encourage viewers to discover products and drive sales. Also, when it comes to ads users seem to engage better with videos, which generate on average twice as many comments than any other kind of post. According to a Facebook IQ-commissioned study as much as 66% of people interviewed watch videos from brands they like or follow.

In order to grab the user’s attention quickly as they scroll through the feed, companies must create engaging video ads. In fact, Instagram is a mobile-first platform, and research has shown that people consume content 41% faster on their mobile news feed, compared to when they access the same social media platform from Desktop. 

The best Instagram Ads for video are visually entertaining, clear on the message, and bold in their value proposition. Also, since a large percentage of the audience scroll through the feed without the sound on, is key to add text elements to your video ads to preserve their engagement with it. 

The following are five examples of some best Instagram Ads for video content. 

1.   Glossier

Glossier (1)

Glossier’s video ad is a great example of how to keep viewers highly engaged. The model in the ad shows how to use one by one of the three bundle products offered. The video stresses particularly well how easy it is to use them and how they make her look, which is interesting for the person who wants to achieve the same results in terms of makeup. Whether the audio of the viewer is on or off Glossier wisely uses text overlays to better explain the offer to the audience.  

2.   Adidas Runtastic

runtastic (1)

This Runtastic ad is maybe the best example of high engagement. The caption addresses the viewer directly with an appealing offer: “Free training? We got many. Pick your favorite.” The high-pace motivating music, strong transitions, and dynamic footage are a great way to keep the viewer glued to the screen. The overlay text is big and clear, describing the benefits of using the app: only 7 minutes of workout to see results. What makes the ad a winning one is that it makes the goal achievable: the main character is just the average guy who gets fit by using the app at home for a few minutes a day. The last message of the ad is “Start now”, showcasing where the app can be downloaded, which is perfectly combined with the “Install now” CTA of the ad.

3.   Blinkist

Blinkist (1)

Blinkist approach to engaging the users is minimal and aligned with its core offer of book summaries. The colors are tepid and relaxing, giving the ad an intellectual feeling. The text is dynamic to create movement and sustain attention during a clip that users expect to be relatively static. The message pretty straightforward: Elon Musk and Warren Buffet, both extremely successful people, read books copiously. Blinkist users can do that too and (ideally) be as successful. “Start reading like a CEO” is a call to action that points straight to the viewer’s personal ambitions. Besides this lever, in the end Blinkist communicates the benefit of using the app: key insights from books in 15 minutes. 

4.   Slack

Slack (1)

Slack’s ad is short and minimal. It shows a glass marble indecisive on which direction to go as a representation of work-related communication. This suspense instills curiosity in the watcher who wants to figure out what the marble is going to do and why. Eventually, the marble reaches the right person through the right channel: the value proposition is that Slack is something different (and better) than Email. The ad is a winner in terms of simplicity and for the boldness in challenging the common way of working with emails. 

5.   Sleeptot

sleeptot (1)

Sleeptot is an app that aims to solve a huge pain point for new parents. They call it “The Miracle Sleep App” in the caption, already promising almost ‘unreal’ benefits. The ad begins by showing a baby having trouble sleeping and crying out loud. Then a question breaks the sequence and asks parents if they would like to be helped with it, a rhetorical question for many of them. The attention is brought back to the app and its features which have a soothing and calming effect on the baby. In the end Sleeptot displays its mantra: “It’s that simple”. The benefits are too promising not to give the app a try. The brand logo is visible throughout the whole ad and the colors used are consistent with it. 

Best Instagram Story Ads

Instagram Stories ads enable companies to use photo and video sequences that only last 24 hours after being posted, a concept that has permeated through all most popular social media platforms. A study found out that 68% of people watch stories across multiple apps at least once a week, which includes Instagram Story ads.  

The total ad spend on Instagram Stories has been increasing steadily since January 2018, with as many as 3 million advertisers shifting their marketing budget to this type of ad. But what are some elements of Instagram Story ads that make them stand out from the crowd? 

Generally speaking, the three main characteristics through which brands can capture people’s attention are simplicity, immediacy, and authenticity. These elements make the content feel natural and blend with the rest of the feed. 

On top of that, there are some features that companies can add to their Instagram Story ads to increase engagement. People are naturally inclined to voice their feelings, but they want to do it in an easy and immediate way. Emoji sliders, question stickers, and polling stickers offer a great opportunity in this sense, enhancing Instagram Story ads performance 83% of the time compared to static stories. According to Instagram, in 9 out of 10 campaigns, using the polling sticker encourages people to watch Instagram Story ads longer. Polling stickers also help to lower Instagram Ads cost. The coffeehouse and donut company Dunkin’ Donuts saw a reduction of 20% in cost-per-videoview (CPV) by using a polling sticker, compared to the same ad without it.

If used in a strategic way, stickers can really make a difference in user engagement. However, the creative is what matters most. The following are five examples of the best Instagram ads for Stories. 

1.   Dunkin’ Donuts

donuts

As mentioned above, Dunkin’ Donuts does a great job with this Story ad. It’s simple, dynamic, and highly engaging. The background is split in half, with brand-related colors, and it shows two classic American food choices: donut and fries. The question is one of a million-dollar: the audience is conflicted and deeply involved to give the answer. However, the offer is a mix of both, a third option that can solve the audience dilemma: donut fries. Overall, the ad is a master class in brand awareness and viewer engagement.  

2.   Opel Corsa

opel

In this ad targeted for the Turkish market, Opel Corsa creates a fun and relatable ad. It shows two young people, the ideal target audience, recreating in their living room the feeling of driving the Opel Corsa. They are excited and colorful in their attitude and clothes, and the fact that they act silly is engaging and fun for people to watch. The video then shows the car roaming the streets with charisma. The ad works well because it transmits a powerful and positive feeling to a clear target audience. 

3.   Häagen-Dazs

haagen dazs2

The Häagen-Dazs is an explosive concept, quite literally. The design is colorful but still minimal. The product is vividly shown in the middle as the animation creates tension and entertainment for the viewer until eventually the ice cream explodes in a satisfying splash of salted caramel on the screen. The message right after is straightforward: don’t hold back, indulge in pleasure. Simple, engaging, and highly effective in delivering the message.   

4.   Aaptive

aaptive

Aaptiv does a superlative job with this Story ad. The montage is a simple selfie video in which John, a Master Trainer for the Aaptiv team, talks while walking in a public park about how he got his butt kicked by his own training session on the app. The authentic, straightforward and personal feeling of the video is what makes it so powerful. He is just like you. John also lists some of the training options on the app and stresses the fact that people only need a pair of headphones to follow them. It brilliantly frames the app as easy to use and rich in value. The target? Anyone willing to break a sweat. 

5.   Tropicfeel

tropic feel

This Instagram Story ad for “the ultimate travel shoe” is another great example to consider. The visual is very strong: a person steps in a clear blue ocean with the shoes on backed up by the message “The sneaker you can swim in”. This is something that captures the attention immediately, as sneakers usually don’t do well when soaked in water. The images are beautiful, dynamic, and very appealing to young travelers who are the main target of the campaign. The sneaker is fashionable in itself, but it also solves the problem of not wanting to get your shoes wet and walking on rocks during excursions around the coastline. Of course, the ad aims not to sell the shoe itself, but the feeling of adventure and youthfulness which the shoe can help you feel. 

More strategies to lower your Instagram Ads Costs

1.    Improve the engagement of your ad creatives

Improving your ad creatives to foster engagement is not the only strategy to lower Instagram Ads cost. More strategies concern best practices around the campaign setting and planning. More specifically, companies running ads on Instagram can work with these three different levers:

  • Improve their landing pages
  • test different campaigns

  • leverage automatic bidding

2.    Improve the landing pages

Many companies dedicate lots of focus to creating the best Instagram Ad and then underestimate the importance of crafting a user-friendly landing page. Sometimes companies sabotage their own conversion rate by linking a generic landing page (like the homepage) and not directly to the sales page related to the product or service sponsored in the ad. Since most clicks come from mobile navigation, the landing page should be optimized to be as frictionless as possible to facilitate the payment, or else many people will abandon it. Instagram is rolling out new solutions such as checkout on Instagram to facilitate users in buying products. However, they are not fully available to all advertisers, so for the time being companies should focus on crafting effective landing pages to foster conversions and lower Instagram Ads costs.

An example of a beautiful landing page is from WebinarNinja. Find it below.

Below is the Facebook ad.

instagram-landing-page-webinar-ninja-ad

This is the landing page below:

instagram-landing-page-webinarninja

3.    Test different campaigns

Companies should also test different ads. It’s impossible to know which ad creative will perform better since many times the numbers show advertisers counterintuitive answers. Testing different ad creatives will help to identify which one is performing better, stop the ads which are not, and overall lower your costs.

Testing different copies of your ad ensure that you have the best copy out there. It also helps to create relevant ad copy. When your ad copy is relevant, it will be placed in a higher position and this can lead to a lower CPC.

4.    Leverage automatic bidding

Finally, another option is to leverage automatic bidding, setting a defined budget for a campaign, and letting the algorithm do the rest. The Facebook Ads platform offers several bid strategies that are designed to maximize your particular costs strategies, such as lowest cost, target cost, or highest value. Learn more about the specifics of each strategy here.

5.    Use storytelling

Instagram is all about visual storytelling. You can tell a story using a single image or a series of images. When you post an image that evokes emotions and makes users see themselves in your story. This can generate engagements for your post. Help your audience see themselves in the image doing what they like to do. Find an example below.

Airbnb example

Airbnb provides great visual storytelling by posting images to help users visualize themselves in the scene. The image above shows a beautiful, clean environment where users can lodge.

6.    Run a Contest

Contest is one of the most effective ways to get more returns on ad spend. This is because Instagram users love competition and free stuff. It is a great way to get users interested in your brand. However, you must ensure that it is relevant to your target audience so they can easily click on it for an opportunity to win. The prize can be one of your products, a service upgrade, and any valuable prize your audience loves.

For example, you can ask people to submit a themed photo with the contest hashtag or to take a selfie photo of themselves with your product and tag it. Other examples include scavenger hunt contest, like or comment to win, tag a friend, Trivia or skill-based, etc.

Find an example of an Instagram contest below.

valdo

Valdo asks their Instagram followers to describe a Valdo Prosecco cocktail recipe, upload the video with a hashtag and follow them on Instagram to win a trip to Venice, Italy.

7.    Use more hashtags

Using more hashtags on your Instagram ads/post makes it more discoverable by your audience. However, you must not overuse it. According to TrackMaven, 9 hashtags is the right number for the highest post engagement. They also discovered that long hashtags work better.

ideal-number-of-instagram-hashtags

However, don’t just hashtag irrelevant words. Carry out research to find the best hashtags people are searching for in your niche.

Conclusion

In summary, Instagram is a great opportunity for businesses to showcase their products and services, build brand awareness, and drive sales. But as advertising becomes more competitive, marketers should find ways to lower their Instagram Ads costs. 

Engagement is by far the most important metrics for the large majority of businesses, and by improving the ad creative it is possible to positively impact Instagram Ads costs.

The three most popular ads format is photos, videos, and Stories. Photo Ads are still the most popular choice for advertisers, but videos have twice the number of comments, and Stories are becoming increasingly popular. 

The best Instagram ads for photos are high-quality pictures that strikingly depict the benefits offered, whereas for videos dynamicity is key. Stories are a different game and elements such as moji sliders, question stickers, and polling stickers make the ads perform better. 

Finally, advertisers can play with other levers to lower their Instagram Ads costs, such as improving their landing pages, test different campaigns, and leverage automatic bidding.

 

Learn how to Mirror Your E-commerce Platform with Checkout on Instagram

Dario Villi

I am passionate about marketing and writing. I also like to make videos. I create content for a living!

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