Instagram sponsored content cost is one of the most frequently asked questions of people interested in Instagram sponsorships. If you’re reading this article, you’re probably a business operator or digital marketer who wants to advertise on Instagram. Or you might be just wondering, too. If you wish to learn how does Instagram ads work and how much Instagram sponsored posts cost, then continue reading.
Advertising on Instagram
Instagram sponsored posts to work almost the same as advertising on Facebook because Instagram and Facebook are under the roof of a single company, Facebook Inc, and their advertising platforms are connected. So it means that the methodology of paying is almost the same as what it is on Facebook. And how is it on Facebook? Well, of course, there are parameters like your location, the amount of visibility that you want to get, or the age group of your target audience that will change the prices.
Instagram is one of the most popular social media networks, with more than 1 billion monthly active users, and this is continuously increasing. Instagram is also a powerful potential advertising platform for businesses. If you are looking for a suitable way to promote your business and reach more customers, Instagram sponsored posts can be a good start for you.
If you intend to advertise on Instagram, it is quite normal for you to wonder what the sponsored posts’ prices are. You need to know how much the ads will cost, so you can set a budget for your business and evaluate the results. First of all, we can say that Instagram ads are a bit more costly than other social media platforms. The reason for this is that sharper targeting is possible on Instagram, which results in more ROI (Return on Investment).
There is no specific price to advertise on Instagram because the cost of Instagram sponsored posts depends on many factors such as influencer rates. To be more definite, Instagram does not tell you that “You have to pay 100 dollars or 1000 dollars a month to advertise” and do not impose any specific budget. You can set the budget of your ads as daily and total budget. If you want, you can set a daily budget of 10 dollars or 1000 dollars. Or you can set a more significant amount like 5000 dollars in total and divide this budget in, let’s say 20 days. It is totally up to you to set the daily and total amounts, and the duration of the ad.
Auction Model in Instagram Sponsored Posts
The advertising system of Instagram is built on an auction model. When Instagram shows ads to a user, it auctions to determine which ad should show. When we say “auction,” you should not immediately think of those auctions that we see in movies. Instagram does this automatically, and there are many factors that Instagram uses to determine which ad won the auction. Instagram calls this total value.
It means that Instagram will rank ads according to a quality score, and the algorithm will evaluate our promotion as well. High-quality ads are the most valuable ads for users and advertisers. When advertisers create ads, they specify which audience they want to show these ads, but one person can be in more than one target audience. So competition becomes real here. This competition affects Instagram sponsored posts prices. When you try to reach a target audience, you will have a lot of competitors trying to reach the same target audience.
If other companies are bidding to reach the same audience, this may cause Instagram advertising prices to rise. As an example, let’s think of a 24-year-old man who likes to play basketball and go to the movies. One advertiser may target men aged between 18-24 who love to play basketball, while the other advertiser can target men who love to go to the cinema in the 18-24 age group. As such, the same person is in the target audience of both advertisers. In this case, it highlights the advertisement of the advertiser, who gives the best bid by Instagram auctions. Budget is a critical criterion in auctions, but it is not the only criterion. Instagram determines the winners of the auction according to 3 basic aggregate values.
1) Bidding and Budget
The offer is related to your purpose of advertising on Instagram and the result you want to achieve. Notice that this will also affect the price of your promotion. So you should pay attention here. When you create your ad campaign, you determine the type of bid you choose and how much you want to spend for each result.
There are many types of offers you can use on Instagram, but here we will consider the two most common types:
- Cost Per Thousand Impressions (CPM)
- Cost-per-click (CPC)
Cost Per Thousand Impressions (CPM) means the amount you pay for showing your ads to a thousand people. For the CPM bidding type, the average rate is between four dollars and six dollars per one thousand impressions. Let’s give an example to understand this better. For example, your cost per thousand impressions is 5 dollars. And your advertising budget is 1000 dollars per month. Accordingly, you will reach 200 thousand people for 1000 dollars budget.
Cost-per-click, or CPC for short, refers to the price you are willing to pay for each click on your ad. The average rate for a cost-per-click (CPC) bid type is $0.20 to $1. Let’s exemplify this for a better understanding. For example; If you have a budget of 1000 dollars and your bid amount is $1 per click, you can get 1000 clicks on your ad. These costs are the results we find based on the accounts of our customers, with whom we manage advertising accounts. These fees apply to the United States and may not be final prices since these are estimated results. As we mentioned, these costs are average costs, and Instagram advertising prices depend on many factors.
The budget is the amount you set the maximum payment you will make in a given period of time. When you publish your ads, Instagram optimizes your advertising budget and distributes it evenly in the advertising process. Also, you will never exceed the budget you set. You can adjust your ads for two types of budget: Daily budget and Total budget. The daily budget is the amount you will spend each day on your ad kit or campaign. The total budget is the amount you will spend in the whole delivery time for your creative set or campaign.
2) Ad Quality
Ad quality affects Instagram ad prices. Instagram wants to show its users the highest quality content possible. How people respond to your ad determines the quality of your ad. If your ads attract attention from your target audience, Instagram will reward this, and the cost of your ad will decrease due to its quality. The more relevant your content is to an audience, the better the user will respond to it. This algorithm causes users to have a pleasant time on Instagram and indirectly spend more time, which is the ultimate goal of Instagram.
If people who see your promoted post interact positively with your ad, it means good quality. Interaction includes operations such as clicking on your ad, commenting, and liking. On the other hand, if those who see your ad interact negatively, such as blocking or reporting it, the quality of your ad will decrease. This action reduces the performance of your commercial and increases your advertising costs.
3) Estimated Action Rates
Estimated action rates are another factor that affects Instagram advertising prices. According to Instagram, this rate determines the probability of whether your audience interacts or not with the product you advertise. Instagram wants to know how relevant the target audience will be with this metric and the likelihood that the advertiser will achieve its advertising goal. If Instagram believes that too many people are likely to interact positively with your ad, they will promote your ad. This means more interaction, conversion, and low cost.
The total value of these three main elements determines the ad relevance score. Relevance describes the relationship between your ad and the people who see it. With its significance, Instagram scores how relevant your ad and those who see your ad is. It is the most crucial factor of Instagram advertisement prices, and the cost of your ads depends on these factors. In addition, high-relevance ads have precedence over low-relevance ads. In other words, a low relevance score causes your advertisement to reach fewer people.
Other Factors Affecting Instagram Advertising Prices
Instagram advertising prices are dependant on many factors such as holidays and events, genders, age groups, advertising fields, days of the week, times of the day, periods of the year, and sectors of business. We will give examples for each.
Holidays and events: Competition is high in activities such as holiday periods, valentine’s day, and mother’s day. For example, many jewelry companies will advertise on men who are in a relationship or married on Valentine’s Day. The fact that many jewelry companies try to show ads to the same audience increases the advertising prices.
Gender: Showing ads to women in Instagram ads is more costly than advertising to men. Women are more likely to spend time and interact on the platform. Therefore, if your target audience is women, it will cost you more to show them ads.
Day of the week and time of the day: Advertising on the days and hours when users spend the most time on Instagram is more expensive than choosing the other days and hours.
Age groups: In Instagram sponsored posts, some age groups may be more costly than other age groups because of various reasons (providing more interaction and conversion). Ages between 18-24, 25-34, and 35-44 are the most expensive age groups for advertising.
Spaces of advertisement: Instagram’s spaces for advertising are its homepage and stories. At times, one advertising space may be more expensive than the other one. Generally, the ads appearing on the Instagram homepage are relatively more costly than story ads, but story ads are less likely to be watched and clicked, as recent statistics show.
Sectors of Business: The industry you aim to reach affects your Instagram advertising price. B2B (business-to-business) ads are more expensive because there are fewer businesses on Instagram than user profiles. Some sectors, such as clothing, are more costly due to high competition.
Conclusion on Instagram Sponsored Posts Costs
In this article, we mentioned what Instagram sponsored posts are, how Instagram ads work and what are the metrics that change their costs. If you have read everything up to here, then you know that it is very dependant on a lot of parameters. That is why we suggest you to start trying to see what works best for you with small amounts first. Then, you can make your big move and rise on the platform suddenly.
We hope that learning about these factors can help you. Feel free to leave a comment in the comments section down below to let us know what you think. If you want to read more about other social media-related topics, check the InstaFollowers blog. You can also get more information by checking this video out recorded by Social Media College: