If you want to learn how much you should spend on Instagram ads so you can start achieving results like these, keep reading.
Because in today’s post, we will be talking about:
- Why Instagram ads are worth it for your business
- How much Instagram ads cost, generally
- Understanding what affects Instagram ad costs and how they can vary
- Considering your goal (some goals are more expensive than others)
- How much should you spend on Instagram ads (what starting budget do we recommend for most small businesses)
- How to set up Instagram ads in Facebook Business Manager
- How to upload Custom Audiences and make lookalikes
- Instagram ad best practices to help you get the best ROI
But before we get into today’s post, we’ve got some exciting news.
We’ve got new social media ads training course to help you learn the methods we use for our clients every day.
We love this option for small businesses because we know you’re on a budget.
Sometimes you can’t afford to hire an agency, but you need some help from one. This is it.
Let’s now dive into Instagram ad costs to find out how much should you spend on Instagram ads.
- The cost per click is anywhere from $0.50 to $3.50 although there is a range of “normal” when it comes to ad spend on Instagram.
- We’ve noticed that most of our clients start to see real progress and results when they spend at least $750 a month on ads.
- Be sure to always optimize your ads and follow some best practices to improve your ROI and maximize your ad budget.
Why Instagram Ads Are Worth It For Your Business
Instagram is one of the top ranking social media platforms to advertise your business on, especially if you sell anything online.
Here are some of the reasons why we love it for our clients:
Let’s look at each of these reasons in more detail.
1. You get to utilize Facebook’s advanced targeting for your ads.
Instagram has 1 billion monthly active users of its own. And since Facebook owns Instagram…
…the targeting options and customer data available to Facebook advertisers are also available to Instagram advertisers.
One of the best features of Instagram ads is the Custom Audience option.
You can create an audience based on your own parameters using your account activity, app activity, website activity, or customer list.
A customer list can be anything from an email list (like from Mailchimp) to CRM information (like SalesForce).
Once you’ve got a good source audience, you can ask Facebook to find people who look like your existing customers or fans.
These are called Lookalike Audiences and are super powerful when used on Instagram. We’ll show you how to set these up later in the post.
2. Instagram has high engagement rates.
Instagram’s overall engagement rates have fallen in the last year, from 1.60% to 1.22% this year.
Organic engagement isn’t what it used to be (remember the days of 3%?)
However, engagement rates do depend on your industry.
Look at this table: education has the highest engagement, fashion has one of the lowest.
Engagement also varies depending on the type of content you post.
In a recent study, Carousel posts were found to perform best in the feed with an engagement rate of 1.94%.
These engagement stats may not be convincing you…
…but keep in mind that these are organic rates in the feed (you’ll need to pay to play). Instagram’s big winner right now is Stories.
3. Instagram Stories are a big deal.
According to Instagram, 500 million accounts are using Instagram Stories.
And one-third of the most-viewed Stories come from businesses.
Additionally, one in five Stories gets a direct message from its viewers.
Stories are a full-screen mobile experience that nearly every social network has some version of.
Instagram Stories for small businesses should be part of your marketing strategy because:
- Users like IG Stories, so they actively seek them out.
- Instagram offers a lot of powerful options for businesses in Stories, including:
- The ability to link to your website.
- There are shopping stickers so you can tag products in Stories.
- The question, quiz, and message stickers promote customer engagement.
- The ability to go live and interact with customers on the fly.
- Stories is made up of a lot of videos.
And speaking of video…
4. Instagram’s prioritizing video conversion.
Instagram’s head announced last month that Instagram is no longer a photo-sharing app.
They’re prioritizing video and shopping…
… specifically highlighting that they’ll be working on making shopping during live streams a feature in the coming year.
The entire internet is moving to video.
So this move by Instagram shows that they’re paying attention to what people want (and are responding to the overwhelming success of TikTok).
Just like their parent company, Facebook, they’re also prioritizing commerce, which is great news for all small businesses.
We think we all learned in 2020 that we need to have backup (digital) ways to keep our customers happy and sales coming in.
How Much Instagram Ads Cost In General
Before answering the question “how much should you spend on Instagram ads”…
…when you’re just starting out, it’s helpful to know what you can expect from Instagram ads in general.
The cost per click is anywhere from $0.50 to $3.50. As you can see, there is a range of “normal” when it comes to ad spend on Instagram.
And of course, there’s no guaranteed price that anyone can give you. There’s a lot that determines ad cost.
We’ll talk a bit about what factors can affect Instagram ad costs in a few minutes, so stick around for that.
What you’ll need to do is establish what’s normal for your business, but use general numbers as a guidepost.
If your numbers are way higher, you may want to check your ad to see if there’s something off (like audience, targeting, or your destination).
There are some best practices that you can follow to help keep your ad costs as low as possible and increase your ROI.
We’ll go over those in a couple of minutes. But for now, let’s look at…
Understanding What Affects Instagram Ad Costs And How They Can Vary
- Some goals are more expensive than others.
For example, it’s typically less expensive to get a click than it is to get a conversion.
- Your ad placements will affect the cost of your ads as well.
These numbers are from 2017, but they illustrate that you can help bring the cost of your ads down by excluding the most expensive placements.
That is unless those placements also cover the best conversions for you.
- Your targeting options, like age and gender, will affect the cost of your ads.
Some age ranges spend more time on social networks, making them a more desirable audience to advertise to.
The more desirable the audience, the more competition there will be. This means your ads will cost more.
However, sometimes it’s worth it to pay more to reach the right audience.
You’ll figure that out as you go and you watch your ROI and other ad metrics. Let’s look at what else can affect the cost of your ads.
- Time of year can also affect the cost of your ads.
Ads typically get more expensive in November and December when most businesses are advertising for winter holiday sales.
That’s because more advertisers are on the platform than ever.
This means there’s more competition, which makes ads cost more to show in all placements.
Pro Tip: Plan to increase your advertising budget by at least 50% during the holidays.
Considering Your Goal (Some Goals Are More Expensive Than Others)
Before you run an ad on Instagram (or Facebook), you select an objective, something that tells Instagram how to bid and who to prioritize.
Some objectives will be more expensive than others.
In fact, here’s a look at the cost per click per objective.
As you can see, it varies depending on the objective.
When you’re considering your budget or how well an ad did, don’t just consider cost.
Some objectives will be worth spending a bit more on because a conversion results in a high-value client.
A good example of this is paying more for lead generation, but when a lead converts, they’re worth $10,000.
How Much Should You Spend On Instagram Ads?
So what is the starting budget we recommend for most small businesses?
We know that most small businesses don’t have large advertising budgets.
And that can be stressful when you think you have to dump a bunch of money into advertising every month.
But, because Instagram is so affordable and won’t spend more than what you allow, you don’t need to worry about your budget.
It will take longer, but you can still see results with small daily budgets.
However, we’ve noticed that most of our clients start to see real progress and results when they spend at least $750 a month on ads.
If you can afford it, we recommend starting there.
Here’s what we’d suggest for your first few campaigns:
- Upload a customer list and run a discount code or special promotion to this group of existing customers. Encourage them to follow your page.
- Retarget website visitors and abandoned carts with the products they viewed.
Set up your pixel and upload a product catalog, then build a custom audience to do this.
- Build a Lookalike audience from a custom list (or retargeting audience) and run ads introducing your brand/product to them.
- If you’re starting from scratch, run a Brand Awareness campaign with a video and your best guess targeting.
Then, retarget video viewers with ads to follow your IG account and products/topics that were in the video.
How To Set Up Instagram Ads In Facebook Business Manager
Now that you know how much should you spend on Instagram ads, it’s time to create them.
In order to run ads on Instagram, you need to know how to set up your ads, right? You have two options:
- In the Instagram app
- In the Facebook Business Manager
We suggest using the Facebook Business Manager because if you advertise on one, you should really advertise on the other.
And Facebook is really working on merging the two together, so we think that’s the way it’s going anyway.
So, we’ll show you how to do this in the Business Manager.
How to Set Up Your Instagram Ads in FB Ads Manager
- Click the green Create button to set up your campaign and ad set.
- You’ll create your ad during the third step.
- Select a Facebook Page and Instagram account to represent your business.
(A Facebook page is required to run ads, even if you’re not showing ads on Facebook).
- Select an ad format. Choose from a single image or video, carousel, or collection.
- Choose your media or add a new media.
- Depending on your previous selections, you may be able to add a call-to-action button or choose a pixel.
- Preview your ad and select Publish (You can see previews in the window next to your ads).
When you’re setting up your ads, you’ll choose your audience targeting.
We’ve talked a bit about Custom and Lookalike Audiences, so let us show you how to add those now.
How to Add Custom and Lookalike Audiences
Custom and Lookalike audiences are powerful tools that help you reach your existing customers…
…and the people who look like them (aka new people who are likely to buy).
You’ll create and manage your audiences in Facebook’s Business Manager. These custom audiences can be used on Facebook and Instagram.
- From Ads Manager, go to Audiences.
- Select the Create Audience dropdown, then choose Custom Audience.
- Select Instagram professional account.
- From the dropdown, choose the Instagram account you want to use for your audience.
- Choose the engagement type you want to include.
- Add the number of days you want to include when finding people who have engaged with your account. (Maximum of 365 days.)
- Choose any additional audience types and engagement types.
- Add an audience name and optional description.
- Select Create Audience.
You create Lookalike audiences using a source audience. Let us show you how to do that before we get into best practices.
How to Create Lookalike Audiences
- Go to your Audiences. (You can also create a lookalike audience during ad creation in Ads Manager.)
- Select the Create Audience dropdown and choose “Lookalike Audience”.
- Choose your source. A source can be a Custom Audience not created with your pixel data, your mobile app data, or fans of your Page.
Consider using a group of 1,000 to 50,000 of your best customers based on lifetime value, transaction value, total order size, or engagement.
- Choose the country/countries where you’d like to find a similar set of people.
- Choose your desired audience size with the slide. We recommend sticking with a 1% audience.
The smaller the audience, the more similar the new people will be to your source.
- Select Create Audience.
Now that you’ve got the keys to the power of custom and lookalike audiences, let’s look at some Instagram ads…
Best Practices To Help You Get The Best ROI Possible
Even when you know how much should you spend on Instagram ads and with a set budget…
…you can optimize your ads and follow some best practices to improve your ROI.
Now we’re going to briefly go over some of the most important practices.
1. Use A/B Testing
You want to run ads that work best for your brand and audience.
The only way to figure out what that means for you is by running A/B tests.
Test video versus carousel, long copy versus short copy, products versus people, different audiences, etc.
If you want to know more about A/B testing, then be sure to check out our post on Facebook ad testing next.
2. Use Video
Video performs better than images across the board, even on Instagram.
Plus, Instagram’s announcement about being a video-sharing app means they’ll prioritize showing your videos over your still images.
3. Make Your Ad Look “Native”
This term is used to define ads that look like normal organic content (they don’t pull the user out of the platform experience).
4. Use Stories Ads
Stories see half a billion daily users, and Stories ads perform well. Don’t neglect Stories placements.
Are you implementing these best practices to help maximize your ROI?
If you answered yes but still not getting the results that you aim for, then work with our Instagram advertising company today.
We offer affordable social media marketing services that won’t drain your budget. Get in touch with us today!