With 800 million monthly active users (and growing), Instagram is becoming a highly sought-after advertising platform. Instagram offers robust ad targeting options and flexibility, making it an accessible advertising option for businesses of practically any size.
But how much do Instagram ads cost, and what strategies can you use to lower your total ad spend?
How Instagram ad pricing works
Instagram is pulling in billions of dollars in net advertising revenue. In 2016, the platform’s net mobile ad revenues were $1.86 billion, and in 2017, revenue rose to $3.64 billion. In 2018, projections indicate that Instagram’s net mobile advertising revenue will nearly double to hit $6.84 billion.
So how much do Instagram ads cost? The short answer: it varies – widely.
Because Instagram is owned by Facebook, you create Instagram ads using the same tools that you’d use for Facebook advertising. There are two main ways to create Instagram ads:
- By promoting a post from within the Instagram app
- Using the Ad Creation tool in Facebook Ads Manager
This also means that you can manage your Instagram ad costs in the same way that you manage the cost of Facebook ads:
- Create a campaign
- Choose your ad objective – what you want users to do when they see your ad – click-throughs, downloads, etc.
- Define your target audience – the characteristics of the users you want to see your ads
- Set a budget and a bid – the maximum amount you’re willing to spend for a click (CPC) or per thousand impressions (CPM)
Screenshot via Facebook Ads Manager
Your ads will run within those parameters until you’ve exhausted your budget.
The average cost-per-click for Instagram ads
AdEspresso analyzed $300 million in Instagram advertising spend over a 12-month period to establish some benchmarks for Instagram ad costs.
(Because Instagram is owned by Facebook, ads for both platforms are managed seamlessly via the Facebook Ads Manager and advertisers can easily balance their spend across the two platforms. For this reason, some of the information below relates to both Instagram ads and Facebook ads.)
Several factors influence the cost-per-click (CPC), such as country, age groups, ad location (desktop newsfeed, right column, Instagram Stories, etc.), time of year, and other variables. On Instagram, your placement options include the newsfeed or Instagram Stories, while desktop and right-column placement is available for Facebook ads. Some important findings:
- The average cost-per-click by country in 2017 was about $2.40
- In the U.S. (the third most expensive CPC), the average CPC was $3.56.
- CPC increased across all age brackets in 2017, with the highest being the 25-34 bracket, with an average CPC of $1.07.
- CPC for various placements (desktop newsfeed, right column, Instagram Stories, audience network, and main mobile feed) vary significantly throughout the year. Desktop newsfeed and right column placement had the largest cost spikes in Q4 2017, due to the holiday shopping season.
- Average CPC for right column and main mobile feed placements was about $1.20 for 2017, while the average CPC for Instagram Stories was $0.75.
- Seasonal fluctuations result in shifting CPC throughout the year, with the highest costs in the fourth quarter (thanks, again, to the holiday shopping season), followed by May through July. Overall, CPC tends to rise as the year progresses.
- Engagement is highest on weekdays, so ad costs are higher during the week, as well. Wednesday had the highest CPC in 2017, an average of about $1.03, followed by Tuesday at $0.98. Thursday and Friday round out the top four at an average CPC of $0.92 on both days.
- Average costs tend to be higher for ads targeting female users.
Screenshot via Facebook Ads Manager
Overall, the average CPC for Instagram ads falls somewhere between $0.70 and $1.00. Some ads have a CPC of $3.00 or more. The average CPM hovers somewhere around $5. Both of these figures can vary substantially based on the factors above and more.
How to estimate and lower Instagram ad costs
Use AdEspresso’s benchmark data to refine your campaigns and get the biggest ROI for your ad spend. When setting your budget, you’ll choose one of two bidding options:
- Manual – you specify the dollar amount you’re willing to pay for each click or thousand impressions
- Automatic – Instagram determines how to spend your total budget, including adjusting the CPC or CPM
With manual bidding, you know upfront precisely how much you’ll be paying for your ads. You can lower your ad costs by setting a low manual bid, but that can actually work against you. Why? It’s an auction, and Instagram determines which ads to show based on several factors, including the value of the ad to the target audience and the bid amount – meaning you’ll likely lose out to higher bidders, and your ads will be shown less frequently.
With automatic bidding, you still get to set your total budget, but you don’t know exactly how much your CPC or CPM will be. The best way to estimate these costs is to look at benchmark data and, if you’ve been advertising for a while, analyze your historical campaign costs. Keep in mind that because several factors go into the cost, your ad costs will change over time. If you notice that your costs are creeping higher, there are several ways to lower your costs:
- Adjust your schedule. Change your schedule to advertise on days of the week with a lower average CPC.
- Define a narrower target audience. Considering a different age bracket could lower your costs. That said, you shouldn’t advertise to users that don’t fit your target customer profile just to lower your ad costs – those users are less likely to engage with your ads, and the resulting impact on your ad quality and relevance scores could hurt you in the long run. Narrowing your target audience, however, can result in lower costs and even a better ROI.
- Adjust your ad placement. For example, if you’ve been advertising in the desktop newsfeed and your costs are growing as the year progresses, switching to Instagram Stories placement in the fourth quarter can help to lower your costs.
- Change your optimization. When setting up your campaign, you’ll tell Instagram what to prioritize when delivering your ads. Options include the number of impressions (showing your ads to as many users as possible), conversions (targeting users who are most likely to convert), engagement (targeting users who are most likely to like, comment, or share your ad), clicks (targeting users most likely to click on your ad), and so on.
- Focus on ROI. Rather than get hung up on how much your CPC or CPM is, focus on your results instead. You might be paying more for clicks or impressions but generating twice as much revenue, making the higher cost worthwhile.
Finally, don’t forget to add Instagram follow buttons and social media share buttons to your website to grow your audience and drive more engagement from users who click on your ads, not only on Instagram, but across all your social media platforms.
Instagram has quickly become a sought-after advertising platform, particularly for B2C companies. Take advantage of Instagram’s robust targeting options and campaign flexibility to generate a healthy ROI from your social advertising campaigns.