What Is Instagram Advertising? Costs and Benefits

Instagram advertising is the paid method of publishing sponsored content on the Instagram platform to reach a larger, more targeted audience. There are many reasons a business or an individual may decide to advertise, but Instagram ads are mostly used to increase brand exposure, drive website traffic, generate new leads, and move existing leads down the funnel.

How does Instagram advertising work?

Since Instagram is a visual platform, text ads are not essential here. To reach your audience with an ad you need an image, a set of images, or a video, which can be sent along with text.

Similar to Facebook ads, putting some budget behind a post gives your brand more exposure and also gives you more control over who sees it.

Do Instagram ads actually work?

In March 2017, over 120 million Instagrammers visited a website. Over 4 billion people used social media in 2022, and during this period Instagram reached 1.3 billion users. In 2024, Instagram had 2.4 billion active users.

People got directions, sent an email or sent a direct message to learn about a business based on an Instagram ad. According to Instagram, 60% of people say they discover new products on the platform, and 75% of Instagrammers take action after being inspired by a post.

How much do Instagram ads cost?

This is a difficult question to answer, because costs depend on a range of factors and not all of those factors are disclosed by the platform. The model is based on CPC (cost per click) and CPM (cost per impression), and prices are determined by Instagram’s ad auction.

As Andrew Tate of AdEspresso puts it, the cost of Instagram ads is affected by many factors — everything from your audience to the feedback your ad receives.

AdEspresso looked at 100 million US dollars worth of Instagram ad spend in 2017 and found that the average cost per click for Instagram ads in Q3 was between 0.70 and 0.80 US dollars. While that is a useful benchmark, the result still depends on the auction, the audience, competition, time of day, day of the week and similar variables. In 2022, Instagram revenue reached the level of 23 billion dollars.

Some advertisers find that Instagram ads tend to attract higher engagement, but that engagement can cost more. According to Keith Baumwald, founder of Leverage Consulting, the cost of Instagram ads is somewhat higher than the cost of Facebook ads. Baumwald argues that because the ads are so tightly targeted, you can work at CPM-level costs for a given period.

How do you control ad spend?

On the bright side, advertisers have control over how their budget is allocated. For example, you can choose a daily budget to cap how much you spend each day, or a lifetime budget that keeps your ads running over an extended period until the budget is exhausted.

Other ways to control your Instagram ad spend include:

• Ad scheduling: you can specify the particular hours of the day when you want your ads to run.
• Delivery method: there are three options — link clicks, impressions and daily unique reach.
• Bid amount: you can choose between manual and automatic bidding.

What are the benefits of Instagram ads?

There are over 2.49 billion users on Instagram and the community is still growing.

Instagram and Facebook are connected, which makes it easier to target your audience based on Facebook data. All budgeting and scheduling tasks, along with the setup and creation of ads, are done through Facebook. If you have used the sister platform for marketing and advertising before, you do not have to start from scratch. Instagram ads are non-intrusive and less likely to bother your target audience.

Instagram measures the success of your campaign based on awareness, reach and recall rather than follower counts, likes or comments.

Most people use their smartphones to read the news, socialise, post their own stories and update their social media timelines. Most smartphones come with cameras good enough to take a photo and publish it on Instagram straight away. Instagram is the best channel for this type of media, and that is why most mobile users have an Instagram account.

Treating Instagram ads as one part of your wider digital advertising plan makes it easier to see how the channel performs alongside the others rather than on its own.