How Much Does it Cost to Put an Ad on Instagram?

cost to put an ad on Instagram

Instagram is one of the fastest-growing social media platforms, with over 80% of marketers using it for their businesses in 2023. It is now one of the most used apps to advertise products and increase sales by reaching a wider audience and staying ahead of the competition.

Instagram ads increase lead generation and eventually profit businesses in the long run. Therefore, advertising on the platform is highly profitable and understanding how it works can help increase visibility significantly for companies. So, how do Instagram ads work?

What Are Instagram Ads?

Instagram ads pop up on the ‘For You Page’, stories, and while scrolling through different profiles. These ads are usually aligned with the user interests for maximum click-through rates (CTRs) so that businesses can find potential clients and the ad campaign is successful.

The ads on Instagram are managed at the same place as Facebook, the Ads Manager by Meta. While the two may share the same management, Facebook has more data in its algorithm as compared to its newer modern version Instagram. This makes Instagram a more expensive alternative to Facebook.

But with its popularity, Instagram ads have already seen a 12.2% increase in audience in 2023. This demographic indicates how essential they are for business growth in the upcoming years.

Thus, analyzing the cost of putting an ad on Instagram becomes crucial so that you know if you can afford these ads and how the pricing model will affect your company’s budget. Here is how much it will cost to advertise on Instagram in 2024.

So, How Much Does it Really Cost to Put an Ad on Instagram?

The costs of Instagram ads depend on the marketers as they can select between the daily or lifetime budgeting model. Here are the primary three categories that Instagram ads can be divided into and how much each of these comes down to:

  • Cost Per Click (CPC): The price of these is between $0.40 and $0.70, depending on the link clicks, likes, comments, and other actions.
  • Cost Per Engagement (CPE): The price of these ads falls between $0.01 to $0.05.
  • Cost Per Thousand (CPM): These are between $0 and $4.00 per 1000 impressions.

CPM is the one that is costlier on Facebook, while the CPC model is pricier on Instagram. Understanding these different models can help you analyze how much you should invest in your ad campaign.

Instagram ad costs vary for every marketer, and there are a few things that can influence these prices. Understanding these factors can help you gauge how much your campaign can cost you and identify the pain points of the costing models to lower prices.

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Factors That Affect the Cost of Putting an Ad on Instagram

Like any other platform like Facebook or Twitter, Instagram ad costs depend on several factors. Here are some of them:

1. Ad Campaign Goals

Business ads can have several end goals, and pinpointing a particular one helps finalize the campaign’s budget. The pricing model will depend on how low or high up the desired eng remains on the funnel.

Setting goals is pretty crucial and a defining factor that Meta Ads Manager asks for early on in the ad-creating process. The platform shows the several goals you could be looking to accomplish with your ad campaign and how it can help you reach those goals.

Your campaign can lead to increased brand awareness, in which case, the ad will be less pricey. But if your campaign is heading towards increased sales, the prices may spike up a little because then you would be using more ad facilities.

Try to shorten your target audience. This can help create a consumer base that will return for future purchases and determine the success of your ad campaign. It will also increase engagement, which will enhance the relevance score and lead to lower the cost of putting an ad on Instagram.

2. Company Budget

As of 2022, it is common for businesses to invest 2% to 5% of their annual revenues in advertising. However, this number can vary depending on the size of the company and the funding available.

Finalize a target audience and understand the types of ads you want to invest in. Also, understand if this ad model falls under your company’s pricing point. This ensures that you invest properly and lowers the chances of the ad campaign failing.

Understanding the budget and types of ads you want to work with also ensures that you will not hamper your company’s overall budget and that your company can function properly even with the ad campaigns.

3. Bid Amount

The amount you bid for your ads campaign can determine the amount you can spend on your ads. If you bid higher on an ad, you will need a bigger investment for more clicks and, in turn, more conversion rates.

Additionally, it is a good idea to remember that Instagram is a little costlier than Facebook. If you have been using Facebook ads for a while, be prepared to spend more on ads. A good way to lower the cost of putting an ad on Instagram is to start at a smaller bid amount so you can get more clicks and action on posts.

If you have a large audience base who are aware of your brand and you are looking to convert them to clients, CPC and CPA (cost per action) price models may help. If you want to include video ads, the CPC will rise compared to image ads.

4. Competition

If you are in a saturated industry like e-commerce, tech, or beauty industry, the bidding will likely be tough. There are several competitors for each ad and the bids keep getting higher because more marketers try reaching the same target audience.

Similarly, if the market is limited for an industry, the costs can spike up too. Understanding how to spend on ads in a competitive atmosphere can help you invest better and get sufficient clicks to stay ahead of the competition.

5. Action Rates

You have invested in a certain ad campaign, and now its conversion rate is slow. Will this hamper ad costs? Unfortunately, yes. 

Instagram usually prioritizes ads from companies that the platform believes will perform well.

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So, if Instagram’s algorithm thinks your posts can do well and garner high action from the audience, it will show your ads at the top. The estimated performance of your ads thus becomes crucial.

Similarly, if the CTR is not good, you will have to pay more for your ads. Instagram tends to believe that there is a gap between the way you present your ads and your target audience. Try to maintain a 0.5% to 1% CTR, which is the average rate, and this can help you lower costs, too.

Final Thoughts

Understanding the cost of putting an ad on Instagram can help you understand the exact ad models that your company can invest in for maximum returns. It can help you figure out the best way to get the most out of your ad campaign investment and have a more successful campaign as you keep using Instagram ads.

Want to create compelling ad content that will grab the attention of your target audience? Use Predis.ai today for the most unique branded content that will get your company increased click-through rates (CTRs) and help grow your business by grabbing more attention.

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Tanmay Ratnaparkhe

Co-founder @Predis.ai, 2X Entrepreneur, tech enthusiast, and SaaS expert, specializing in Instagram marketing and AI. With a knack for leveraging technology for marketing success, they share valuable insights and strategies to boost your digital presence and productivity.