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Instagram Ads Cost in 2022

Instagram Ads Cost in 2022

Over the past decade, Instagram has morphed from a photo-sharing app to a fully-fledged online marketplace. During this period, Instagram has become the go-to platform for social media advertisement, often preferred over other Meta products like Facebook and Messenger.

And the numbers back it. As of Q2 2022, Instagram has amassed over 1.4 million users, most of which are brands and young people. So this makes advertisements on Instagram a tempting prospect for any brand that wants to succeed. But the key question remains: how much do Instagram ads cost?

On average, the Instagram ad cost per month is $0.95 per click.

In this article, we explore the cost of placing ads on Instagram more deeply. We’ll also show you how to optimize your budget to maximize the returns of your total ad spend.

How much does an ad on Instagram cost?

Before getting into the cost, let’s discuss factors that affect the amount of money that brands are willing to spend to advertise their products on Instagram.

  1. Audience demographics — 71% of Instagram users are below the age of 34.
  2. Daily usage — Over 500 million people use Instagram daily. At least 63% of these users open the app once a day, while 42% use the app more than once daily.
  3. Engagement post engagement — The average engagement rate on Instagram is 0.96%, which eclipses Facebook (0.13%) and Twitter (0.05%).

All things considered, let’s now explore how much an Instagram ad costs.

According to Wordstream, the average cost per click (CPC) for Instagram ads is around $0.5-$0.75. Your brand’s CPC depends on the products or services you offer.

For example, Hotel ads have a higher average CPC than the maximum CPC, depending on the season. You can read more about average CPC here.

Another cost estimation metric for Instagram ads is the cost per mille (CPM) — a measure of the cost of every thousand impressions. The average Instagram CPM cost for ads is $7.91.

The time of the day, week, or year also affects the CPC. However, the figures often vary depending on the economic situation at the time.

Only the month affects the CPC because it considers a broader scale of occurrences and market sentiments. On average, the Instagram CPC is $0.95, with a peak of $1.45 around October.

As the graph above suggests, the Instagram cost per month increases from Q1 to Q4 as the year progresses.

How is the cost determined?

We’ve mentioned the cost of ads on Instagram without breaking down the pricing mechanics. Time to look at how Instagram generates a cost estimation for your ads.

The following factors go into consideration:

Bid amount

You have to participate in an ad auction—and the more you pay for ads, the more Instagram will invest in pushing your ads. This affects the ad’s total value.

Relevance score

According to Meta guidelines, the ad’s relevance score combines the importance and relevance of the ad to your target audience.

Instagram uses a 10-point scale to grade ad relevance, with 1 signifying minimal relevance and 10 marking the highest relevance. If you are bidding with a competitor with a lower relevance score, you are more likely to win.

Your relevance score will be higher if you have more positive interactions (view, clicks, installs, page visits). But if you have more negative interactions (flags, hides, reports), your relevance score will plummet.

You can view your ad’s relevance score after reaching 500 unique impressions. From this point, the Instagram algorithm will calculate the score based on the expected positive and negative engagement an ad will receive from your target audience.

Estimated action rate

As the name suggests, the estimated action rate on your ad measures the probability of a user performing an action after seeing the ad. In essence, the ad should lead to the desired outcome, like a sales or a page visit.

If Instagram believes your ad will generate more engagement, they will offer you a lower CPC.

Caveat: Meta cracks down on advertisements that use misleading experiences and clickbait content to garner attention.

Target audience

When your brand is in a saturated market, the average cost of placing Instagram ads increases significantly. Why? Because the number of similar brands competing for the attention of the same target audience makes it difficult to come out in front.

Competition and timing

Every ad strategy you implement on Instagram should center around outperforming the competition since you are bidding for the same target audience.

If you end up in a bidding war with a competitor in the same spending bracket and relevance score, you can only beat them by getting your timing right.

For instance, the cost of ads always increases during holidays like Christmas and Halloween. So you must stay on your toes when choosing the time of day or week to beat your competitors to the punch.

If you want to learn how to monitor your competitors using the Facebook ad library, check out this detailed article.

Manual vs. automatic bidding

Marketers can place their ads manually or automatically on Instagram. Manual bidding allows you to specify a maximum target spend to meet a particular outcome. Alternatively, an automatic bid allows you to set the bid amount based on the result.

If you are new to Instagram ads, automatic bidding is a great place to start since it helps you increase engagement at a favorable price range. This bidding method also works well when you don’t know how much the result will cost.

For marketers with experience, placing a manual bid helps them manage their spending on Instagram ads.

It is also important to note that Meta picks a bid amount by default. So, you need to adjust the bid yourself within the specified range.

Instagram ads vs. Facebook ads

Facebook is closer to Instagram than other social networks. Although both Instagram and Facebook are under Meta, both platforms have a similar audience and ad policy. Besides, they use the same ads management system, Ads Manager.

Here are some differences between Facebook ads and Instagram ads.

  • The CPC value for Facebook is $0.46 and $0.75 for Instagram.
  • Facebook has a 3.06% average CTR, while Instagram has only 0.68%.
  • Facebook caters to an older audience, while Instagram has a younger demographic.

Does Instagram fit your audience?

As discussed earlier, 71% of Instagram users are below 34 years old. So, if you want to capture a younger demographic, Instagram is the perfect fit. Other social networks that cater to younger audiences include Snapchat and TikTok.

And not only that, Instagram attracts more active engagement because the platform focuses primarily on visual content, unlike Facebook, which prioritizes written content.

How much should your brand budget for your Instagram ads?

So you now know about bidding, you understand how the pricing works, but you still don’t know how much to budget for your ad campaign. This is where we bring it all together to tell you how much you should table for Instagram ads.

Let’s explore a typical scenario.

You are a small business owner looking to gain 1000 unique clicks on your eCommerce website—and the cost per click for Instagram ads is $0.75. In this case, your budget should hover around $750 to $1000 per month.

But it doesn’t end there; you need to monitor the ad’s performance to spot avenues for improvement. And that’s why you should adopt A/B testing practices before finalizing your daily or lifetime budget.

Other factors to consider when budgeting for your ad campaign include competitiveness, timing, and the site’s conversion rate. For testing purposes, you can reduce the overall ad expenditure by 40% ($450 to $600 per month).

How to decrease Instagram Ads costs

With the information you have about ad spending, budgeting, and bidding, the next step is to figure out a way to decrease the cost of Instagram costs. We’ve gathered tips to help you save money and increase conversions.

Align your goals with your budget

Before setting up your Instagram ad campaign, you must define your goals. What do you want to achieve with this campaign?

Common goals for Instagram advertisement include:

  • Increase engagement
  • Sell a product
  • Reach a wider audience

Your goals will define your budget. The available budgeting options include a Daily budget and a Lifetime budget. You can set up your budget in the “Budget and Schedule” section in the Ads Manager.

Start with automatic bidding

As we mentioned, automatic bidding is the best strategy for advertisers with limited experience. Resist the temptation to play around with the many CPC settings, even if you have the data. Reason: every ad campaign is unique.

Even if you opt for a manual bid, ensure the amount you choose falls within the suggested price range. This will save you a lot of money.

Optimize for conversions

When setting up your ad campaign, you should select “Conversions” as the optimization criteria. This feature gives Meta the leeway to optimize your ad’s placement and target audience in order to boost conversions.

You can also set the conversion window according to your brand’s timeline for gauging success. Use data from your competitors and previous campaigns to specify the frequency cap for your ad campaign.

Use precise targeting

Some marketers often rely on the shotgun approach to reach a wider audience: the wider you cast your net, the bigger the catch.

But things don’t work like this in Instagram advertising. Expanding your target audience will just cost you extra money that you won’t recoup in conversions. So you should use precise targeting strategies to reach a specific audience pool.

To get a better understanding of the target audience, you need to conduct extensive analysis and surveys to figure out your user demographics.

Focus on their interests, habits, and location. You can also drill down to micro information like active hours and peak times to narrow your focus to specific targets.

Test your ads

In the highly competitive arena of Instagram marketing, getting things right can make a massive difference for your brand in terms of conversion and exposure.

Before placing an ad, test different copies to see which one works the best. From there, you can optimize future (and ongoing) campaigns to boost performance.

For instance, you can create two versions of product-relevant landing pages to see which one drives more conversions. Online tools can help you create multiple versions of the same ad.

Use automation to improve performance

Speaking of online tools, automation is an ever-growing presence in Instagram advertisements. With tools like AdBraze, marketers can do the following:

  1. Provide an interface for the omnichannel campaign launch, seamless creative upload, and customizable templates in one UI.
  2. Monitor KPIs for your marketing efforts.
  3. Highlight the creative concepts that demonstrate results and prioritize them over the existing backlog.
  4. Combine all your workflow in one interface, from the creative task assignment to campaign launch.
  5. Get fast access to references of previously prepared concepts.
  6. Easily modify, upgrade, and launch variations of highly-performing creatives.
  7. Transfer creatives seamlessly from Dropbox or Google Drive directly to Facebook by simply providing the link to data storage.
  8. Structure data for easy access on a central dashboard.

You can also use other tools to monitor and optimize your spending on Instagram ads, as well as to determine your target audience.

Outro

Advertising on Instagram is highly competitive because of the sheer number of brands vying for a limited audience pool. By using the right bidding format and targeting the right people, you can reduce your expenses and increase your ROI. If you don’t have enough data and experience to configure your bids, use automatic bidding settings to your advantage. Most importantly, use automation to test variations of the same ad to improve your chances of success.

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