The Costs of Advertising on Instagram

What Are the Average Costs of Advertising on Instagram?

Estimating the average advertising costs on Instagram can be complex, as these costs depend on various factors. Factors such as the target audience, how popular your chosen target audience is among other advertisers, the time of year, and where you place your post play a significant role.

The cost per click (CPC) typically ranges between €0.20 and €2.00. It’s important to note that these figures should be considered averages, and actual costs may vary. The cost per click means you pay for each click on your ad, which can include clicks on an image, button, name, or comment. Besides cost per click, there’s also the option to pay per 1000 impressions, known as cost per mille (CPM). Instagram uses this to ensure your ad is shown to users, mainly used for brand awareness. Lastly, there’s the option of optimized CPM (oCPM), where the advertiser specifies how much they’re willing to pay for a particular action. Actions can include likes, clicks, or generating reach. Higher costs are often observed in sectors with much competition. It’s wise to consider these dynamic factors when planning your advertising strategy to get a realistic estimate of the costs.

The average monthly costs can vary significantly. For startups still in the experimental phase, considering a smaller budget, for example, around €300 per month, may be advisable. On the other hand, larger enterprises might spend several thousand euros per month to compete effectively or gather sufficient data for their strategic purposes.

What Factors Determine the Costs of an Instagram Ad?

The rates for Instagram ads are determined by five variables. Analyzing these factors helps you generate the optimal return from your ad budget.

Target Audience for Your Instagram Ad

The target audience is a crucial factor in determining the pricing for Instagram ads. Targeting a unique, specific audience can lead to lower advertising costs due to the niche nature of the audience. Targeted targeting often results in reduced costs. Create detailed customer personas that include demographic factors, behaviors, and interests. Then identify the content that most appeals to each persona.

Ad Goal

The intended result of your ad can also affect the costs. Whether you aim to increase likes for your page or want users to click through to your website, each goal has its costs.

It’s important to choose an ad goal that aligns with your overarching business objectives. Whether it’s building brand awareness, increasing website visits, or driving conversions, make an informed choice and develop your campaign around this idea. Selecting a goal that aligns with your broader business goals is crucial for an effective advertising strategy.

Determining Your Ad Budget

Determining your ad budget is a decisive factor. A higher budget increases the reach to a broader audience. It’s not necessary to start with a large budget. It’s wise to start with at least €300 per month for the ads. This provides sufficient room to experiment and learn. As you gain more insight into what’s effective for your brand, you can adjust the budget based on concrete data and results.

The Instagram Ad Auction

The bidding for ads, i.e., the amount you’re willing to pay per desired action (such as a click), is also important. A bid that’s too low can result in your ad not being displayed, while a bid that’s too high can lead to excessive costs.

It’s important to find a good balance. Ensure your bid is not too low and base your decisions solely on factual data. Striving for an optimal ratio between your bid and the value it delivers is a core aspect of an effective advertising strategy.

Advertising on Instagram is appealing because you don’t need a large budget to start advertising on this platform. Instagram itself is free. To create ads, you need a business account, which is also free to set up. From just 1 euro per day, it’s possible to attract a wider audience.

A good amount to start with is around 10 euros per day, costing about 300 euros per month. It’s important to remember that a higher budget does not guarantee success. A campaign that costs 3 euros per day can be as successful as one that costs 20 euros per day.

The quality of the ad. The quality of your ad determines how expensive it is to show the ad to your Instagram audience. The quality of photos and texts must be good. Instagram prefers ad photos in the correct format. Instagram rewards high-quality ads with lower costs and greater reach. Therefore, it’s important to always aim for an engaging and relevant ad.

Ensure your ads are of high quality, meaning they are not only visually appealing but also relevant and valuable to your target audience. High-quality ads tend to perform better and come with lower costs. On the left is an example of a low-quality ad that is not visually appealing. On the right is a high-quality ad that is visually appealing and where the message is very clear.

Ad Placement on Instagram

The location of the ad, such as in the Instagram feed, also impacts the costs. It’s wise to conduct various experiments with different ad placements to find out which placement offers the best return for your ad.

Instagram offers a range of ad placements such as the feed, stories, explore page, and reels page. By testing with different placements, you can determine which is most effective for reaching your target audience and maximizing your brand’s effectiveness.

Prefer to Outsource Instagram Advertising?

After reading this article, you may be certain that you and your company want to advertise on Instagram. It’s understandable if you’re not sure where to start, as this form of advertising can be confusing. It’s possible to outsource Instagram advertising to Merkelijkheid. We specialize in advertising on social media. We know exactly which campaign goals to choose, so we can make your business successful!