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The Performance Marketing Guide To Instagram Ads Cost (2024)

Embarking on an Instagram advertising campaign can feel like stepping into an auction room where the highest bidder takes all. However, with the right knowledge, it's less about outbidding competitors and more about outsmarting them. Over the past decade, Instagram has evolved from a simple photo-sharing app to a formidable marketing platform with an ability to foster deep connections between brands and their audiences. In today’s performance-driven marketing world, the top agencies are wizards of efficiency, with the ability to predict (and then manage and mitigate) Instagram ads cost—from the impact of audience targeting to the nuances of crafting high-converting creatives.

Drawing on the expertise of dozens of expert performance marketers with centuries of combined experience—as well as data from billions of social-media ad interactions—this playbook will equip marketers not only to anticipate the costs of Instagram ads but also to strategically lower them. You’ll learn to navigate the cost terrain like an expert, ensuring that every dollar spent is an investment towards a more engaging and profitable online presence.

Which Instagram Ads formats should I use?

At its core, Instagram advertising is about leveraging the platform’s visual interface to engage users. Whether it's through a captivating IG Story or a meticulously curated Feed Post, each ad format is a piece of dynamic creative designed to resonate with your target audience. Instagram offers a number of distinct advertising units:

  • Instagram Stories Ads: Full-screen ads that appear between users' stories, providing an immersive experience.
  • Instagram Feed and Profile Feed Ads: Seamlessly integrated into the scrolling experience, these ads appear as standard posts but with a “Sponsored” tag, and are compatible with image, video, and carousel formats. Profile Feed ads appear within the feed view of public Instagram profiles of people 18 and older.  
  • Instagram Explore Ads: A newer addition, these ads appear when a user clicks on the magnifying glass to browse Instagram’s “Explore,” a grid of new content tailored to the user’s unique interests.
  • Instagram Reels Ads: With the rise of short, engaging video content, Instagram Reels Ads are the platform’s fastest-growing phenomenon — think of them as Instagram’s answer to TikTok. These ads serve in between organic Instagram Reels content and may also show up on the Instagram Explore page. The ads can loop endlessly, which encourages users to spend more time watching the ad.
  • Instagram Reminder Ads: A newer ad type released as an option within Instagram Feed and Instagram Stories, Reminder Ads "help advertisers build awareness, anticipation, and consideration for upcoming moments," according to the platform. Reminder Ads can be run with static images, carousels, and videos. When users opt-in, they receive three subsequent notifications from Instagram, at one day prior to the event, 14 minutes prior to the event, and at event launch.   
  • Instagram Shop Ads: Great for small businesses seeking to reach new audiences, these appear in a user’s Instagram Shop tab home page, and are compatible with image, video, and carousel formats. Ads take users to a page with product info, a CTA, and a selection of more items from the brand.  
  • Instant Experience Ads: Allows advertisers to create an engaging, fast-loading, in-app landing page with a variety of different photo, video, and text elements.
  • Collection Ads: These mobile-friendly units make it easier for mobile users to discover, browse, and purchase. They feature a primary video or image with three smaller accompanying images below in a grid-like layout. Clicking on an image loads an Instant Experience (see above).
  • Carousel Ads: Businesses can leverage this format to display up to 10 images or videos in a single ad, each equipped with a unique link.  
  • Slideshow Ads: Easy to create and edit with low production costs, this format turns static assets into a dynamic creative piece that maintains many of the experiential benefits of video. Easy to spin up quickly, slideshow ads use motion, sound, and text to tell your business’s story.  
  • Advantage+ Ads: Use machine learning to scale ads based on who the ad is being served to. 

In Instagram advertising, the rules of engagement are constantly evolving. Staying ahead means not just following best practices but also being ready to innovate and adapt to the platform's ever-changing rhythms. In the following sections, we’ll break down the cost structure and provide actionable insights to craft campaigns that not only captivate but also convert. Remember: A successful Instagram ad campaign is not just about eye-catching images or clever captions; it's about a strategic symphony of content, targeting, and timing. It begins with understanding your brand’s story and how it aligns with the interests and behaviors of your Instagram audience.

How much do Instagram ads cost in 2024?

In February 2024, the average CPM (cost per thousand impressions) for Instagram ads is currently $5.98. The average CPLC (cost per link click) is $0.60. And the average LCTR (link click-through rate) is 0.99%.

Instagram, February 2024

Avg. CPM: $5.98

Avg. CPLC: $0.60

Avg LCTR: 0.99%

Table: Instagram Current Advertising Costs, Updated in February, 2024. Source: Gupta Media Social CPM Tracker 2024. 

Ad rates can also vary by ad format. In December 2023, the average CPM for Instagram Stories Ads was $7.58, with a $0.97 CPLC and a 0.78% LCTR (Link Click Through Rate). And the average CPM for Instagram Reels Ads is $5.77, with a $1.45 CPLC and a 0.$0% LCTR. 

As seen in the graph below, ad costs rise and fall throughout the year due to seasonality and other factors. (For more information on Instagram ad costs during Black Friday and the holiday season, including a calendar of Instagram and Facebook ad rates drawn from over 5 billion ad interactions, consult our deep-dive on Social Media Ad Costs.)

Screenshot 2023-12-14 at 11.47.20 AM

Graph: Instagram Advertising Cost Trends, Updated in February, 2024. Source: Gupta Media Social CPM Tracker 2024.

Navigating the fiscal waters of Instagram advertising requires a marketer to be part financial strategist, part social savant. In this section we’ll peel back the curtain on the factors impacting ad cost — and how to launch, optimize, and maintain a robust Instagram ad campaign.

The Price of Engagement on Instagram

When you step into the arena of Instagram advertising, your budget is the armor that you don. It’s crucial to understand the common financial metrics that will guide your bidding strategies:

  • Cost Per Link Click (CPLC): Some marketers use CPC (Cost Per Click) as a KPI, but “clicks” can include a user expanding a post, selecting the Like button, or other actions that don’t drive them to your desired destination. For that reason, we recommend focusing on Cost Per Link Click (CPLC), reflecting the price you pay each time a user clicks through on your ad. On Instagram in 2023, we’ve seen CPLC range from $0.54 to a high of $1.19 during the more expensive holiday season.
  • Cost Per Thousand Impressions (CPM): This is the cost for every thousand eyes on your ad. In 2023, we’ve seen CPMs range from a low of $6.21in January—when ad rates are typically lowest—to as high as $8.80 during November, when prices are highest due to the holiday shopping premiums around Black Friday and Cyber Monday.

These figures provide a benchmark but remember, the ebbs and flows of competition and audience behavior can cause these numbers to shift.

Cost Factors of Instagram Ads

Understanding the cost of Instagram ads isn't just about asking, “How much?” It's about understanding: “Why?” The platform operates on an auction-based system where a number of factors dictate the cost:

Target Audience: The more niche your audience, the higher the cost may be due to increased competition for that segment's attention.

Ad Quality and Relevance: Instagram rewards ads that resonate well with audiences by—theoretically, at least—lowering costs.

Time and Day: Seasonality can affect costs, with peak times often commanding higher prices.  

Bid Strategy: Automatic or manual bidding strategies can significantly influence your ad spend. 

Financial Anatomy of an Instagram Ad

The adage ‘you have to spend money to make money’ holds particularly true in the context of Instagram ads. Here’s what you need to consider when allocating your ad budget:

Minimum Ad Spend: Instagram, much like its digital brethren, sets minimum spend thresholds to keep the advertising playing field level. You can expect to commit at least $1 per day on impressions and upward of $5 for clicks, likes, or views.

Value of Visibility: Your budget isn’t just about meeting minimums; it's about maximizing visibility. A competitive bid in the right ad format can amplify your brand’s voice above the digital din.

Platform Comparisons: Instagram's cost landscape is unique, diverging from other platforms like TikTok or Twitter in both CPLC and CPM metrics. This variance underscores the importance of platform-specific strategies.

Strategic Levers Influencing Instagram Ad Pricing

Embarking on an Instagram ad campaign is like setting sail on the high seas of digital marketing: the winds that fill your sales are the myriad factors that affect ad costs. Understanding these can make the difference between drifting aimlessly and charting a course for successful engagement and conversion.

1. Audience Targeting: The Bullseye of Your Ad Campaign

The precision with which you can target your audience is a sharp arrow in your quiver. Instagram provides the tools to pinpoint your ideal customer based on demographics, interests, behaviors, and more. The specificity of your targeting can significantly impact costs—aiming for a broad audience is generally less expensive, whereas honing in on a niche can drive up the price due to increased competition.

2. The Timekeeper’s Tale: When to Cast Your Digital Net

Just as fishermen know the best time to cast their nets, savvy marketers understand the importance of timing their ads. Certain days of the week or specific hours can see higher engagement rates, which in turn can influence ad costs. Launching campaigns during peak times may require a higher bid to stand out from the crowd. 

Below, we show how Instagram ad rates and CPLC can change depending on the day of the week:

Weekday

Instagram Avg. CPM

Instagram Avg. CPLC

Monday

$6.58

$0.73

Tuesday

$6.96

$0.74

Wednesday

$7.11

$0.76

Thursday

$7.12

$0.75

Friday

$7.20

$0.77

Saturday

$7.06

$0.71

Sunday

$6.69

$0.72

Table: Instagram Average COM by day of the week, 2023. Source: Gupta Social Media CPM Tracker. 

3. The Campaign's Compass: Setting Your Instagram Ads Objective

Your campaign's North Star is its objective—what you aim to achieve. Instagram's ad system prioritizes objectives differently, which can affect cost. Aiming for broad brand awareness can be less expensive than targeting specific conversions like app installs or online purchases. Your campaign's objective not only guides your creative strategy but also informs the bidding algorithm of the value you place on different user actions. Beginning in January 2024, Instagram is simplifying your choices for advertising objectives from 11 down to the following six:

  • Awareness: Reach the maximum number of users most likely to remember your ad.
  • Traffic: Maximize the number of visitors to an online location of your choosing, including a website, e-commerce store, or app.
  • Engagement: Optimizes for people to take a desired action on an ad or page , which can include watching a video, sending a message, or interacting with content.  
  • Leads: Whether you’re looking to drive newsletter signups or find your next B2B sale, this objective optimizes for people who share their contact info via messages, phone calls, or signups.
  • App promotion: Gives priority to driving an app download or specific actions within an app Sales: Optimize for people most likely to purchase your goods and services. 

4. Creative Content: Crafting a Siren’s Song

The allure of your ad’s creative content can be as enticing as a siren’s song to your audience. Instagram rewards engaging content with better ad placement and potentially lower costs. An ad that receives high engagement rates can signal the platform that it's worthy of being shown more often, possibly at a reduced cost. And increasingly, Instagram is signaling that fresh and varied creative will equate with expanded reach. At Meta’s 2023 Performance Marketing Summit, Facebook and Instagram rolled out a new slogan to help marketers understand the best ways to utilize the platform in 2024: “Creative is the new targeting.” One important tip: No matter what, make sure you understand “safe zones” for your Instagram ad designs.

5. Navigating the Bidding Waters: Auction Dynamics

At the heart of Instagram ad costs is the auction system, where businesses bid for ad space. Whether you choose automatic bidding to let Instagram's algorithms guide you, or manual bidding for greater control, understanding how to navigate these waters is crucial for optimizing ad spend. 

6. External Forces: Seasonal Trends and Industry Currents

Certain times of the year, like the holiday season, can see a spike in competition and costs. Additionally, industry trends can play a significant role; for example, fashion and beauty brands may face stiffer competition and higher costs due to the visual nature of the platform.

7. Charting Your Course: Budgeting Tactics

With an understanding of these factors, you can chart a course for your Instagram ad spend. By adjusting your sails—the targeting, timing, content, and bidding strategy—you can navigate through the fluctuating costs and optimize your ad budget. In the next section, we'll explore how to trim the sails and tighten the rigging to achieve cost-efficiency without compromising on performance.

Mastering Cost Efficiency in Instagram Ad Campaigns

Cost efficiency is the golden thread that can bind a campaign together. It’s about crafting a strategy that not only captures attention but also conserves resources, stretching every dollar for maximum impact. Follow these seven steps to keep your growth campaigns strong:

1. Embracing Automatic Bidding: The Algorithm Advantage

Automatic bidding is akin to setting the autopilot on your ad campaign, utilizing Instagram's sophisticated algorithms to find the most cost-effective bid. For marketers embarking on their first campaign or those without historical bidding data, this can be a savvy move. It prevents overbidding and helps you gather valuable data to refine future campaigns.

2. Targeting Precision: A Laser-Focused Approach

Sharpening the focus of your targeting parameters is a double-edged sword. While ultra-specific targeting can increase costs due to higher competition, it can also improve the relevance of your ads to the selected audience, boosting engagement and potentially lowering costs in the long run. Striking the right balance is key; use data analytics to fine-tune your targeting without narrowing the field too much.

3. Goal-Setting: Charting a Clear Path

Clear goal-setting anchors your campaign. Whether your aim is awareness, consideration, or conversion, setting specific objectives enables you to tailor your ad creative and targeting more effectively. This alignment can increase engagement and conversions, leading to a more cost-effective campaign.

4. Landing Page Relevance: The Destination Matters

The final stop for many ad clicks is a landing page. Ensuring that your landing page is highly relevant and engaging to the ad's viewers can improve the user experience and conversion rates, thereby increasing the overall return on your ad spend (ROAS). A mismatched or generic landing page can lead to a quick exit and a wasted click.

5. Creative Content: The Draw of Distinction

A captivating creative can reduce costs by naturally increasing engagement. Instagram tends to favor ads that perform well with its users, so investing in high-quality, relevant, and visually appealing content can lead to lower costs per engagement over time.

6. Testing Waters: The Iterative Improvement Process

Continuous testing and optimization are the compasses by which you navigate the ad seas. Iterative A/B testing allows you to compare different ad elements, from imagery to copy to calls-to-action (CTAs). This data-driven approach hones your ad strategy, helping to reduce costs by identifying the most effective elements that resonate with your audience.

7. Navigational Aids: Utilizing Analytics and Feedback

Arm yourself with the insights provided by Instagram's analytics tools. Understanding which ads perform best and why can guide your budgeting decisions, allowing for adjustments that prioritize high-performing content and discard underperforming elements. 

Maximum Impact: Advanced Instagram Ad Capabilities

How do you make a good Instagram ad even better? The answer often lies in keeping up with new developments and advertising features, which can juice engagement rates and drive up your return on ad spend (ROAS). 

Directing Traffic: The Power of Link Integration

Ask any organic social media manager about Instagram’s limitations, and they’ll tell you the whole story in one phrase: “Link in bio.” The lack of a click-through option on organic feed posts has long been a barrier to conversion. But Instagram’s ability to include direct links in your ads is a game-changer. This feature turns your engaging visuals into portals, guiding potential customers straight to your website or landing page. Utilizing this feature to its full potential can be a significant factor in increasing the conversion rates of your ads, providing a seamless transition from interest to action.

Interactive Storytelling: Stickers That Stick

With features like CTA link stickers for Instagram Stories ads, Instagram empowers brands to transform a narrative into a shopping experience. This interactivity enriches the user journey, allowing viewers to make purchases while being immersed in your brand story. The question, quiz, and message stickers further enhance this interaction, providing a direct line of communication with your audience and fostering engagement that feels personal and immediate.

Embracing the Video Trend: Engaging Content for the Win

Instagram’s push towards video with features like Reels is not just a trend—it’s a strategic move. In an online world where short-form video content reigns supreme, these features offer marketers a compelling way to capture attention and hold it, leading to deeper engagement and stronger connections with the audience.

Advanced Targeting: The Art of Audience Refinement

Beyond basic demographics, Instagram allows for nuanced targeting based on behaviors and interests, down to a granular level. This precise targeting ensures that your ad spend is being directed towards users who are most likely to be interested in your products or services, increasing the likelihood of engagement and conversion.

Harnessing the Full Suite: A Holistic Approach

The real value to Instagram advertising lies not in any one of these features, but in their combined power: Utilizing the full suite of Instagram’s advanced ad features in concert can create a symphony of engagement. Each element plays a part in the overall strategy, from the first note of an ad impression to the crescendo of a conversion.

In the following sections, we'll dissect how these features can be woven into the fabric of your ad campaigns, creating a rich tapestry of content that engages, converts, and ultimately, delivers a return on investment that resonates with the rhythm of your business goals. 

How To Read the Metrics: Judging Your Instagram Ad's Success

In Instagram advertising, we measure success not in likes or follows, but in tangible returns and actionable data. This section is your compass to navigate the seas of metrics and analytics, ensuring that your investment is not just recovered but multiplied.

Defining Success: Beyond Vanity Metrics

While likes and comments are the applause of social media, the standing ovation comes in the form of conversions and sales. Defining clear KPIs (Key Performance Indicators) is essential in measuring the true impact of your Instagram ads. These KPIs could range from click-through rates to lead generation numbers and actual sales figures, depending on your campaign objectives.

ROAS: The True Measure of Ad Spend Effectiveness

The ROAS (Return on Ad Spend) of your Instagram ads is the lighthouse guiding your marketing ship. Focusing on ROAS reveals opportunities that stay hidden for brands that focus only on CPM and CPA (cost per acquisition). Why? Because smart campaigns can also drive up AOV (average order value) during key sales seasons. By looking at your overall return, ROAS reveals your True North for growth marketing. It also requires a little more work: Tracking this metric requires integrating your Instagram analytics with your sales data to draw a clear line from ad spend to revenue.

Analytics in Action: Interpreting Data for Future Campaigns

Instagram provides a treasure trove of analytics that can offer a snapshot of your ad campaign’s performance. From here, you can interpret user behavior, engagement rates, and the effectiveness of different creatives and calls-to-action. This data becomes the map for future campaigns, allowing you to replicate success and avoid past pitfalls.

A/B Testing: The Scientific Approach to Ad Optimization

A/B testing is not just a tactic; it’s a philosophy. By methodically testing different versions of your ads, you can scientifically determine what resonates best with your audience. This could be different images, ad copy, or even CTAs. The results of these tests can lead to incremental improvements that boost overall campaign performance and ROAS.

Leveraging Third-Party Tools: Expanding Your Analytical Reach

While Instagram’s built-in analytics are powerful, third-party tools can expand your analytical reach. These tools can provide deeper insights into the customer journey, from impression to purchase, and help attribute conversions to specific ads more accurately. At Gupta Media, we built a proprietary advanced-analytics platform, Report(SE), to allow our analysts and clients to monitor omnichannel performance in real-time, allowing for lightning-fast optimization.  

The Final Tally: Assessing Ad Performance

Holistically In assessing your Instagram ad performance, it’s crucial to take a holistic view. This means looking beyond the immediate campaign to understand the long-term value of the customers acquired through Instagram ads, considering factors like customer lifetime value and brand loyalty

In the final section, we will synthesize these measurement strategies into a cohesive blueprint for continuous improvement, ensuring your Instagram advertising campaigns are not just a cost but a capital investment in your brand’s growth. 

Building A Strategy for Instagram Advertising Success

Your strategic toolkit for growth through Instagram advertising should have three pillars:

  • Cost Insights: Grasping the intricacies of ad costs sets the groundwork for efficient budgeting.
  • Strategic Adjustments: Leveraging advanced ad features can create a more engaging and interactive experience for your audience.
  • Analytical Precision: Measuring success goes beyond surface-level metrics to focus on ROAS and long-term value.

From that foundation, you’ll want to relentlessly optimize over time. Our analysts advise you to keep these tips in mind:

Embrace Flexibility in Your Campaigns: In the fluid world of social media advertising, rigidity is the adversary of progress. Adaptability must be a core characteristic of your strategy, allowing you to pivot and iterate based on performance data and changing market dynamics.

Look Beyond the Horizon: As Instagram continues to evolve, so too should your advertising efforts. Stay attuned to the platform's updates and emerging trends. Foster a mindset of continuous learning and experimentation to keep your brand at the forefront of digital innovation.

Your brand's journey on Instagram is unique. With the insights and strategies from this guide, you’re now equipped to carve a path that not only resonates with your audience but also drives meaningful business results. Remember, the ultimate goal of your Instagram ads should be to create genuine connections with your audience, turning viewers into loyal customers and loyal customers into brand advocates.

As you move forward, carry with you the understanding that every ad is an opportunity to tell your brand's story, every click a chance to connect, and every campaign a step towards achieving your business dreams on this vibrant platform. Now, set sail with confidence, creativity, and the courage to create Instagram ad campaigns that truly make a difference. 

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