What are the costs of advertising on Instagram?

Instagram is a powerful platform to increase your brand awareness, boost engagement, and drive sales. Naturally, questions arise about the costs of advertising on Instagram and the factors that influence these costs. In this article, we will answer these questions, with a clear focus on the business impact and practical considerations for entrepreneurs and professionals.

What are the average costs of advertising on Instagram?

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

The cost per click (CPC) typically ranges between €0.20 and €2.00. It is important to note that these figures should be considered averages, so actual costs may vary. Cost per click means you pay for each click on your ad. A click can include clicking on an image, button, name, or comment. Besides cost per click, there is also the option to pay per 1000 impressions, called cost per mille (CPM). Instagram uses this method to show your ad to users. This way of advertising on Instagram is mainly used for brand awareness. Lastly, there is the option of optimized CPM (oCPM). With this option, the advertiser indicates how much they are willing to pay for a specific action. Actions can include likes, clicks, or creating reach. Higher costs are often observed in sectors with high competition. It is therefore wise to consider these dynamic factors when planning your advertising strategy to get a realistic estimate of the costs.

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

What factors determine the cost of an Instagram ad?

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

Define the 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, behavior, and interests. Then identify the content that resonates most with each persona.

Advertising objective

The intended outcome of your ad can also influence costs. Whether you aim for more likes on your page or want users to click through to your website, each goal comes with its own costs.

It is important to choose an advertising objective that aligns with your overarching business goals. Whether it is building brand awareness, increasing website visits, or driving conversions, make a well-considered choice and develop your campaign around this idea. Selecting a goal that aligns with your broader business objectives is an important aspect of an effective advertising strategy.

Determine your advertising budget

Determining your advertising budget is naturally a decisive factor.
A higher budget increases reach to a broader audience. It is not necessary to start immediately with a large budget. It is wise to start with an investment of at least €300 per month for ads. This provides enough room to experiment and learn. As you gain more insight into what works effectively for your brand, you can adjust the budget based on concrete data and results.

The Instagram ad auction

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

It is important to find a good balance. Make sure 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.

The ad space on Instagram costs money that you as an advertiser must pay. This process is also called the ad auction because you compete with other companies who also want to show their services or products to the same audience. This process runs automatically. The highest bidder wins the auction. It is possible to win the auction with 1 euro, but it is often advisable to place a higher bid.

What makes advertising on Instagram so appealing is that you do not 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. Starting from just 1 euro per day, it is possible to attract a broader audience.

A good amount to start with is around 10 euros per day. Per month, this costs about 300 euros. It is important to remember that a higher budget does not guarantee success. A campaign costing 3 euros per day can be just as successful as one costing 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 is important to always strive for an engaging and relevant ad.

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

Ad placement

The location of the ad, such as in the Instagram feed, also impacts costs.
It is wise to conduct various experiments with different ad placements to find out which placement yields 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 different placements, you can determine which is most effective for reaching your audience and maximizing your brand’s effectiveness.

Prefer to outsource Instagram advertising?

It may be that after reading this article you are sure that you and your company want to advertise on Instagram. It is understandable that you may not yet know where to start, as this form of advertising can also seem confusing. It is possible to outsource Instagram advertising at Merkelijkheid. We specialize in social media advertising. We know exactly which campaign goals need to be chosen so that we can make your company successful!