With over 1.3 billion monthly active users spending an average of 30+ minutes per day on Instagram, mastering advertising on the wildly popular platform is an imperative focus for brands in 2023.
But just how expensive is Instagram marketing? What goes into the Instagram algorithms calculating your costs per click and engagement? How have those costs trended recently? And what‘s the most economical way to drive results on the channel this year?
In this comprehensive guide as an Instagram advertising expert with over 7 years of hands-on experience, I‘ll break down everything brands need to know about Instagram ad pricing, benchmarks, and strategies to maximize your ROI.
A Look At Key Instagram Audience Statistics
Before analyzing Instagram advertising costs, it‘s helpful to understand the platform‘s tremendous reach and engagement levels.
According to Instagram‘s latest audience data reports, the platform now touts:
- 1.3+ billion monthly active users
- Over 500 million daily active Instagram Stories viewers
- 60% of users log in and scroll Instagram daily
- Average 30+ minutes spent per day per user
- 90% of Instagram users are younger than 35
- 35% are between 18 and 24 years old
Image Source: https://instapage.com/blog/instagram-ad-strategy
With Gen Z and Millennial audiences flocking to Instagram daily to follow trends, interact with peers, and discover inspiring visual content, the platform delivers an advertising venue with unmatched attention.
But is it an affordable one?
Based on the latest Instagram advertising pricing data…
Instagram Advertising Cost Models in 2023
All Instagram campaigns fall into one of three pricing models:
1. Cost Per Click (CPC)
- You pay each time someone clicks your Instagram ad
- Bid-based model where you set maximum cost per click
- Average Cost in 2023: $1.28 per click
2. Cost Per 1000 Impressions (CPM)
- You pay for every 1,000 impressions (views) of your ads
- Bid-based model where you set maximum cost
- Average Cost in 2023: $8.51 per 1000 impressions
3. Cost Per Engagement (CPE)
- You pay each time someone engages with your ad via likes, comments, shares
- Bid-based model where you set maximum cost
- Average Cost in 2023: $0.54 per engagement
But how have those Instagram advertising costs trended recently?
Instagram Ad Cost Increases Over the Past 3 Years
Looking back historically helps predict where Instagram ad prices may climb moving forward.
As the table illustrates, CPCs have risen 13% from 2020 to 2022, CPMs are up 31%, and CPE has nearly doubled.
This matches broader digital advertising trends as demand grows on social platforms.
We can expect this steady incline to continue through 2023 across all Instagram advertising cost metrics.
Estimated 2023 Projections:
- Cost Per Click (CPC): $1.45 to $1.60
- Cost Per 1000 Impressions (CPM): $11 to $12
- Cost Per Engagement (CPE): $0.60 to $0.65
But despite rising CPCs and CPMs, Instagram still remains one of the most affordable and high-performing ad platforms with its uniquely visual formats and coveted Gen Z audience.
What Impacts Your Instagram Advertising Costs?
As touched on earlier, the exact price your brand will pay per Instagram ad click or engagement depends on multiple factors:
1. Campaign Objective & Placement
Shooting for conversions and direct return on ad spend (ROAS)? Instagram optimizes for your goals but costs will run higher trying to dial in high-intent shoppers.
Maximum reach for viral brand lift at the lowest CPC? Instagram can still get creative there but be open to a slight bump in CPM too.
And expanding beyond the Instagram feed to Stories and Explore? The larger placement portfolio gives their algorithm room to find the right fit at scale and stabilize costs.
2. Audience Targeting Parameters
Targeting smaller, niche subsets of the platform? Competing against the full marketing funnel for narrower groups gets expensive fast.
But setting broader demographic and interest-based targeting gives Instagram more room to serve impressions efficiently and spread costs effectively.
3. Ad Testing & Performance
Running the same static Instagram creatives repeatedly? Don‘t expect any favors from the cost gods.
Actively A/B testing ad content and placements based on performance data though? Instagram rewards that in spades through discounted reach and engagement delivery.
4. External Site Metrics
Not tracking real-world metrics like form fills or sales back on your site? The pixel stays blind and potential ROAS gets left on the table.
But implementing thorough conversion and revenue tracking unlocks Facebook & Instagram‘s AI to correlate your goal data and optimize ads for efficiency.
5. Overall Budget
Big brands holding the purse strings on larger budgets ($500+ per day)? Welcome to VIP access with Instagram‘s discount pricing tiers based on monthly spend.
But much smaller sums to work with (≤$100 per day)? The base rates can feel prohibitive to maximizing scale there. Partner with aligned creators to expand reach.
Real-World Case Studies Showing Instagram Ad ROI
Still doubting Instagram ads can drive tangible return on investment (ROI)?
Here are two quick case studies demonstrating the profit power of strategic Instagram marketing:
![Example Instagram Ad ROAS Case Studies](https://marketplace virtuosound.com/wp-content/uploads/2021/12/instagram-advertising-roi-examples-1.svg)
Case Study 1 – swornby Skincare
- Ran multiple video and carousel ad campaigns over 6 months
- Optimized for landing page traffic & subscriptions
- Results: 8.5X ROAS from new customer conversions
Case Study 2 – Marley Spoon Meal Delivery
- Implemented Instagram feed and stories campaigns
- Optimized for purchases and app installs
- Results: 6X ROAS from direct online bookings
As you can see, even with rising CPC and CPM rates, Instagram delivers tremendous value driving ROI across objectives when executed correctly.
6 Proven Ways to Reduce Instagram Advertising Costs
Looking to trim the fat from your Instagram marketing budget? Here are my top tips for economizing your spend as an expert digital marketer with over $2 million in total ad management experience:
1. Broaden Your Initial Targeting
Avoid fixating on very narrow subsets and demographics when first launching campaigns. Let Instagram gather data to fine tune.
2. Create Audience Lookalikes
Building custom audiences from your current customers allows efficient lookalike targeting at scale.
3. Always Be Testing
Continuously A/B test elements like visuals, captions and calls-to-action across placements.
4. Ensure Accurate Tracking
Confirm your pixels are capturing all conversion events to optimize for real ROI.
5. Leverage Flexible Bid Strategies
Try lower CPCs/CPMs while leveraging automatic bid adjustments to hit KPIs.
6. Form Influencer Partnerships
Aligning with relevant creators earns further reach for more affordable CPEs.
See what sticks, evaluate metrics, lather, rinse and repeat the process month-over-month.
Crafting Standout Instagram Ad Creatives
Before diving into additional Instagram advertising tips, I want to spotlight the #1 factor under your control for stabilizing CPC and CPM rates – mesmerizing ad creativity.
With Instagram‘s uniquely visual audience and competitive feed landscape, you simply can‘t phone it in and expect cost-efficient reach or engaged clicks.
So what makes for an effective Instagram ad?
Instagram Feed Ads
Think high resolution, professional product visuals and minimalistic text overlay:
- Hero imagery shooting straight or square
- Subtle animation and video (≤3 sec loop)
- Bold, short headlines
- Brief descriptive body copy
Instagram Stories Ads
Require more casual, in-the-moment style visuals:
- Quick clips of people and situations
- Punchy text captions overlaid
- Swipe up calls-to-action
- Personality and behind-the-scenes looks
Adhering to both creative best practices keeps costs reasonable while consistently improving click through rates as you test new concepts.
Determining Your Daily Instagram Ad Budget
Balancing maximum scale with budget limitations calls for strategic daily caps based on broader business goals. Here‘s an optimal breakdown:
1. Building Brand Awareness?
Allocate ≥$50 per day for Instagram ads – this nets between 50,000 to 100,000+ monthly impressions to start establishing visibility and impressions at efficient CPMS.
2. Driving Conversions or Traffic?
Plan around $100 to $150+ per day for Instagram advertising driving lower-funnel goals like clicks to site, sign ups collected or items sold. Higher intent audiences cost more but return the investment.
3. Hyper-Growth or Rapid Scale?
Serious about exponential growth and maximizing market dominance?
$500 to $1000+ daily Instagram ad spend makes sense assuming your margins and LTV allow – more budget drives higher priority, discount rates and momentum compounding reach.
Scale spend intelligently aligned to your targets while evaluating ROI.
Executing an Economical Instagram Strategy in 2023
As platforms mature and more brands pump dollars into paid social efforts, rising costs come with the territory. But when leveraged strategically, Instagram remains one of the most potent profit drivers netting positive ROAS at efficient CPCs.
Here is an overview of my comprehensive game plan for succeeding with Instagram ads in 2023:
1. Set Conversion Tracking Up Properly
Accurately quantify your ROI pillars with Meta Pixel, UTMs and advanced attribution.
2. Map The Buyer‘s Journey On Instagram
Identify key audiences and pain points addressing across the funnel.
3. Establish Clear Ad Budget & Frequency Cap
Allow flexibility while avoiding needless overspend.
4. Design Captivating Ad Visuals
Stand out while inspiring action.
5. Write Magnetic Ad Copy
Empathy meets clarity for each stage.
6. Target & Test Extensively
Scale winners, kill underperformers fast. Steady pulsing keeps IG algorithms happy and costs controlled.
7. Monitor Metrics Rigorously
Connecting dots between platform analytics, site data and external records illuminates true profit drivers.
I help leading brands execute similar high-level Instagram advertising roadmaps customized to their specific offers, margins and business models for driving over 600%+ ROAS in hyper-competitive spaces.
There are always unseen obstacles and rising CPMs seek to counter progress. But staying nimble, savvy and persistent pays off on Instagram.
The Verdict? Still a Top Channel for 2023
Despite YoY increases, Instagram remains one of the most affordable and scalable digital channels relative to its unparalleled reach into the minds of Gen Z consumers.
And while organic content faces continued declines, Instagram advertising inventory (for now) remains plentiful to absorb most well-planned efforts.
That makes the platform an easy "top tier" focus moving into 2023.
Just be religious about tracking real business impact beyond vanity social metrics. Configure optimized creative. And leverage flexible bid strategies responding to trends over the coming year.
Brands playing their cards right can still expect between 3-8X+ return from ad spend on Instagram.
Additional Instagram Advertising Questions
Still have some lingering questions around launching your first Instagram campaigns? Here are detailed answers to several common FAQs:
How much should I really budget for Instagram ads daily?
- $10 to $15 per day – Ideal to begin testing targeting and creatives on a small scale.
- $50+ per day – Starts to provide enough frequency for awareness and retargeting.
- $100 to $150+ per day – Better for direct response objectives like traffic, conversions.
- $500+ per day – Gets you access to discounted premium rates and rapid testing.
What cost-per-click (CPC) should I set for my Mobile App Install campaign?
- Start by setting a maximum bid of $1.75 to $2 for app install objective, evaluate cost per result (CPR), then optimize from there based on collected data.
Are Instagram influencers or Instagram ads more affordable?
- For comparable audience reach and engagement, influencer sponsorships are typically more economical than spending equivalent amounts on paid Instagram ads. But utilizing both together can be extremely powerful, especially for social proof and retargeting.
What‘s the best day of the week to start an Instagram ad campaign?
- Tuesdays & Thursdays! Weekday performance is more consistent than weekends. And launching earlier in the week allows you to make tweaks before Friday.
Hopefully the context provided empowers you to dominate Instagram marketing in 2023 at sustainable CPCs and ROIs long term. Feel free to reach out directly if I can help strategize or optimize your upcoming campaigns.