Digital Marketing

The Cost to Advertise on Instagram (And How to Reduce Your Advertising Costs)

Our agency was able to help generate over 280 purchases for our client, in response to their Instagram ads.

They also generated over 450,000 impressions and $10,000 worth in conversion value!

If you are interested in learning about the cost to advertise on Instagram so you can achieve results like this, then keep on reading.

Because today, we’re going to cover everything about the cost to advertise on Instagram.

And this includes who or what dictates how much Instagram ads cost, and how to lower your overall cost on Instagram ads.

Instagram has become one of the most effective and most popular platforms for small business owners.

So, it should come as no surprise that over 50% of small business owners use Instagram for their business.

With over 920 million users, Instagram ads can be a great way to promote your business and achieve your social media marketing campaign goals, let’s dive in!

How much do Instagram ads cost?

The cost to advertise on Instagram can be measured with 3 different metrics:

1. CPC (Cost Per Click)

This measures how much it costs to generate a click, through your Instagram ad.

2. CPM (Cost Per 1,000 Impressions)

This tells you how much it costs for you to deliver your ad 1,000 times.

3. CPA (Cost Per Action)

In this case, this refers to how much it costs for any specific action taken from your Instagram ad.

This relates to anything you may be tracking for your business, like leads or sales.

On average, the cost per 1,000 impressions for Instagram is about $5.14 per 1000 visits.

The cost per click averages between $0.20 cents to $2. And lastly, the average cost per action is around $3.56.

It’s important to remember that these numbers are just general averages from data collected.

Over time, it can fluctuate depending on several factors, which takes us to our next topic.

What Dictates How Much It Costs To Advertise On Instagram?

So, now we know what the average costs to advertise on Instagram are, but how are these prices set?

Who or what dictates how much these prices are?

Well, much like the rest of digital marketing, these prices are always changing. Instagram ad prices can fluctuate depending on a number of factors.

Let’s take a look.

1. Your Ad Relevance Score

Instagram wants to make sure that your advertisement’s quality is high and relevant to its users, and is helpful to their pain points.

They dictate this by giving your ad what is called a “relevance score”.

cost to advertise on Instagram

This is based on a scale of 1-10. If a lot of users click, share, or like your advertisement, your score will increase.

But, if enough people hide the ad or even report it, your relevance score will go down.

cost to advertise on Instagram

You will want to do your best to keep your score above 7.

The higher your relevance score is, the less you will pay. This is because you are getting more clicks and engagement on your ads.

If Instagram users are happy, Instagram is happy. And then you pay less money!

So make sure you keep a close eye on your ad relevance score.

2. Estimated Action Rate

The estimated action rate is the attention or action that Instagram estimates that your advertisement should receive from its users.

Are Instagram users engaging or disengaging?

Instagram will compare your target audience, industry, your ads to other similar ones, and other factors.

It does this to better evaluate your estimated action rate. This gives Instagram a kind of “standard” to compare your ad to.

If your ad underperforms in its estimates, it will lower your relevance score. But if it outperforms it, your relevance score will increase.

We want to keep our relevance score high.

Your estimated action rate will influence how much your Instagram ad costs. If people like your ad content, you won’t have to pay a higher bid amount.

So be sure to provide valuable content to make your ad of use to your target audience.

3. Bid Amount

Your bid amount will determine how much you pay for your Instagram ad and how much you can actually bid.

So with that being said, you want to decide what is the maximum amount you are willing to pay for every user that clicks or views your ad.

For example, if you have a spending budget of $300 and you are bidding $2 per click, then you can generate up to 150 clicks on your advertisement.

So based on your budget, be prepared to spend more or less money on your ads.

As you can see, bid amounts impact the amount of money you will spend to advertise on Instagram.

Bid amount is one of the most important factors in knowing how much it costs to advertise on Instagram.

4. Competition

Like in any other sector of marketing, competition is always going to influence how things change in your industry.

So, another thing that can impact the cost to advertise on Instagram is the number of other businesses bidding on the same audience as you.

Because Instagram ads are built on an auction-based system, the average price it would cost to advertise will more than likely increase.

This is because there are multiple businesses that are trying to out-bid their own competition and show up on their desired target audience’s Instagram timeline.

This is also true for non-industry-specific audiences as well.

For example, many businesses (whether they are your direct competitor or not) tend to target people by their birthday month.

This is so they can offer birthday coupons or discounts in their ads.

So, with audiences like this, you can expect to have to pay a higher bid price as well.

So again, if you are trying to battle it out with your competition for the same target audience, be prepared to pay a little higher than the average.

5. The Time Of Year

Lastly, the time of year can impact the costs of Instagram ads.

During the holiday season, for example, you can expect to see prices jump during this popular time of the year.

We can also see this increase around Black Friday and other holidays.

This is again, because of the bidding system, and the number of businesses trying to advertise to your same target demographic.

More people are looking to buy, so more businesses are looking to sell!

But remember, even though the pricing of Instagram ads may vary, that doesn’t mean you shouldn’t invest.

There are so many benefits of Instagram ads like higher engagement and increasing user growth.

But there are also many ways to save money and maximize your ads on Instagram.

How To Lower Your Overall Cost Of Instagram Ads?

Social media advertising doesn’t have to be expensive.

There are many ways that you can lower your cost of Instagram ads, and make the most out of your social media budget.

And we’re going to share tips on how to do that right now.

Tip #1: Incorporate Call To Actions In Your Ads

For one of our clients, our agency created attractive landing pages aimed at increasing more sales.

We created highly visual landing pages with clear call-to-actions for their target audience.

cost to advertise on Instagram

Using our strategy of…

  • interest-based targeting,
  • retargeting,
  • custom audiences, and
  • call-to-actions

…we were able to generate over 2,300 leads and 4 million impressions.

Our clients also increased their followers by 561%!

CTA or call-to-action ads help increase your relevance to your target audience and help increase engagement.

So with this, make sure to clearly define the value of your product or service, and offer a call to action for your audience.

This will make it easier for them to be attracted to your ad, and find value in your product or service.

cost to advertise on Instagram

From there, they will know exactly where they are going and what to expect after they click your ad.

Tip #2: Test Your Ads

One of the best ways to know that something works is through trial and error.

That is why our agency recommends using A/B testing for your ads.

A/B testing is an experiment that marketers conduct to compare two different variables- A and B.

a/b testing

The test is to see how the audience will react (or not react) to each variable. In the end, we compare both variables to see which one performed better.

So, if you are trying to decide between using images or videos for your social media marketing campaign, consider running an A/B test…

…to see which piece of content reels in more consumers.

Make sure you keep everything else the same so that the only differences are the variables you’re testing.

From there, you can understand what your audience wants to see more of, and what grabs their attention.

This makes it simple to understand the results of your experiment.

A/B testing will save you money in the long run.

And it’s because then, you can efficiently run ads that maximize the best parts of content that your audience wants to see.

Tip #3: Refine Your Audience

This method is not only great for lowering your cost to advertise on Instagram but also with digital marketing as a whole.

You can refine your audience by demographics like age, gender, interests, location, behaviors, and more.

The more specific, the better.

You will want to put your ad in front of people who are the most likely to buy from you.

This is better than advertising to vague groups of people who don’t necessarily fall under your target audience.

If you put your ad in front of a large audience that is not likely to be serious about buying from your business…

…then all the money you put into your Instagram ad goes down the drain.

Don’t let that happen!

Also, the more specific you make your audience, the less competition you will have. 

This means you will have more time to spend advertising to your audience.

This also saves money because you don’t have to outbid another company which would raise the average price to advertise.

When you refine your audience, your ad content will do better because your audience will consist of people with similar traits to your customers.

This means they will be more likely to engage with your content, generating a lower cost-per-click.

If you don’t know where to start and would like some help, consider working with an Instagram marketing agency like LYFE Marketing.

Tip #4: Placement Matters

The placement of ads is extremely important, especially on social media.

When it comes to Instagram ads, it’s crucial to think about where you want your ad to go, and where you want it to show up to your audience.

There are many places to advertise on Instagram. You can create:

cost to advertise on Instagram

cost to advertise on Instagram

cost to advertise on Instagram

cost to advertise on Instagram

  • Reels (though you don’t need to pay to create these)

cost to advertise on Instagram

Some places on Instagram are better to advertise on than others.

According to a recent study, Instagram Stories for business generate 35% of impressions.

And, 29% of total Instagram advertising spend for brands.

So, if you want to see some money-making results, which we know you do, take time to plan out where you want your ads to show.

This placement strategy will end up saving you a lot of money from having to re-run campaigns in the end.

Tip #5: Set Clear and Defined Goals

Setting well-established goals is a great skill to practice in all parts of running a business. And with Instagram ads, it definitely applies here.

Setting social media goals for your Instagram ads can help you stay focused on what it is you are trying to achieve for your business.

It can help you create better copy than if you were going into it blindly.

Set aside time to hit the drawing board and figure out what exactly you want to accomplish with those ads.

Do you want to obtain more leads, higher conversions, brand awareness, or something else?

Final Takeaways

Most importantly, take the time to create a plan for your Instagram ad campaign.

Doing this will create a more cohesive ad campaign, which can translate to higher leads and conversions.

This can save you money because you won’t be “shooting in the dark” with your content. You can maximize your results by taking a clear and focused approach.

So as we mentioned earlier, working with a social media management company like us will help you maximize your budget.

And of course, the results you generate from your social media ads.

You can start by getting in touch with us today!

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About EagleView Consulting

EagleView Consulting is a full-service consulting agency that helps brands, retailers, and manufacturers launch, grow, and scale on Amazon. We create beautiful brands and help Amazon Sellers to dominate on the Marketplace.

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