Did you know that there are nearly 1.5 billion active users on Instagram?
This makes it one of the most popular social media platforms on the Internet. This also means that it has tons of potential when it comes to digital marketing. However, not everybody understands how much they should budget for Instagram ads.
Let’s take a look at everything you need to know about the factors that influence the price.
Relevance Score
is one of the most important factors in setting the price for Instagram ads.
The higher your relevance score, the cheaper your ad will be. The relevance score is based on how well your target audience engages with your ad.
If you have a high relevance score, it means that your target audience is interested in what you’re offering.
Clickthrough Rate (CTR)
Another factor that comes into play is your ad’s clickthrough rate. The higher your CTR, the lower your cost per click will be.
Your CTR is determined by how often people who see your ad end up clicking on it. If you have a high CTR, it means that your ad is relevant and interesting to your target audience.
Target Audience
If you have a large target audience, you’ll likely have to pay more per ad. This is because you’ll need to reach more people in order to get your message across.
On the other hand, if you have a small target audience, you’ll likely pay less per ad. This is because you won’t need to reach as many people in order to get your message across.
Advertiser Competition
The amount of competition for your ad will also influence the price.
If there are a lot of other advertisers targeting the same audience as you, you’ll likely have to pay more per ad. This is because you’ll need to outbid the other advertisers in order to get your ad seen.
If there isn’t a lot of competition, you’ll pay less per ad.
Your Bid Amount
The amount you’re willing to pay per click will also influence the price.
As you might assume, a higher cost per click will mean that you spend more on your overall ad campaign. Be sure that you keep this in mind, as your bid amount will be one of the largest contributing factors to the overall price.
Estimated Action Rates
The estimated action rate is the percentage of people expected to take action after seeing your ad. The higher your estimated action rate, the more you’ll have to pay per ad.
An ad with a high estimated action right will be more effective and will reach more people. In contrast, ads with low action rates will cost your business much less.
How Do Instagram Ads Work, Exactly?
Now that we’ve covered the factors that influence the price of Instagram ads, let’s take a look at how they work. Instagram ads are purchased through an auction system.
This means that advertisers compete against each other to have their ads shown to users. The amount you’re willing to pay per click is called your “bid.”
The bid is just one of the factors that are used to determine which ads are shown to users. When a user opens Instagram, the app looks at all of the available ad space and determines which ads should be shown.
It takes into account the bids of the advertisers, as well as the relevance scores and estimated action rates. The ads with the highest bids and the highest relevance scores are more likely to get shown.
Once the Instagram app has determined which ads should be shown, it displays them to users. When a user sees an ad, they have the option to engage with it or ignore it. If they engage with it, they may click on it or like it. If they ignore it, they may scroll past it or close it.
As previously mentioned, ads that do not receive a lot of engagement will cost less. Although this can save you money, it also means that you won’t have very many people interacting with your digital ads.
However, if you have a strong understanding of your audience and the people who do interact are likely to make a purchase, this could still prove to be effective.
It’s generally best to err on the side of caution, though. More often than not it’s in your best interest to maximize the number of people who interact with your ads and avoid running campaigns with low engagement.
So, How Much Do Instagram Ads Cost?
As you might expect, the answer to this question will heavily depend on the above factors.
In general, though, you can expect to pay anywhere from $.50 to one dollar per click. This could prove to be a higher amount if you are operating in a highly competitive niche, however.
So, you should be prepared to spend more if you are operating in congested industries like fashion, real estate, etc.
Instagram Advertising Is Easier Than It Seems
Although it may seem difficult to understand at first, the cost of Instagram ads is relatively straightforward. Just be sure that you keep the above guidelines in mind so that you can make the decision that is best for your marketing campaign.
Want to learn more about what we can do? Be sure to reach out to us today and see how we can help you succeed.
