Instagram Advertising 101: Cost, Ads Management and Best Practices

If you’re not taking advantage of Instagram advertising, you’re leaving money on the table.

Each month, more than two billion people use Instagram. Seventy-two percent of Instagram users use the platform to make purchase decisions.

If you haven’t used Instagram to reach your audience, here’s how to advertise to drive ecommerce sales.

Instagram Advertising 101 – What Are Instagram Ads?

Instagram ads is paid marketing with photos or videos that promote a product or service. The ads appear in users’ feeds, Stories, on Instagram IGTV, and more, depending on your preference.

Instagram ads look just like regular platform posts with one exception. They have the word ‘sponsored.’ The benefit of a less conspicuous ad is that it can overcome consumer reluctance to follow your link. 

You can do what Harvard Business Review calls “targeting ads without creeping out your customers.” Given that up to 89% of consumers are at least indifferent (and possibly hostile) to advertising, a little stealth isn’t a bad thing.

You can target these ads to specific audiences. Then you can see how the ads are converting. The Instagram ads management feature allows for some intelligent and sophisticated analytics that let you track ad performance, including:

• Audience engagement
• Follower growth rate
• Website hits
• Most effective times to advertise
• Audience demographics

We should point out that Instagram advertisements aren’t the same as boosted posts. Boosting your Instagram post means you pay to promote it to a larger audience. You can target specific demographics like age, interests, and location just like in a pay-to-play ad. But a boosted post is more spontaneous, like a happy coincidence. If you see an Instagram social post performing well, you can pay to extend its reach. A boosted post lets you take advantage of the popularity of something you’ve shared without committing to a full-fledged advertising campaign. 

Conversely, an Instagram ad is specifically designed for the purpose of paid marketing. It’s usually part of a specific campaign. Instagram ads management allows for more detailed targeting and performance measurement. If you want to achieve a specific marketing goal, you can use the paid Instagram ads management process.

Instagram advertising is helpful for brand awareness, leads, and sales. Conversion could mean the user clicked on the ad visit your website. It could even mean the user made a purchase. Whatever your marketing goals, Instagram is a platform that can deliver.

Instagram Advertising 101 – Types of Instagram Ads

You can choose from several different types of Instagram advertisements depending on your goals. You can experiment with Instagram ads management by running your campaign in several places to see what sticks with your customers.

1. Instagram Photo ads. Instagram is a platform for photos. Photo ads are the go-to traditional feed marketing tools with a single image. You can promote events, products, or services with this tool.

2. Instagram Video ads. Video ads help tell a story about your brand. You can create an Instagram advertisement from a video up to 60 seconds long.

3. Instagram Carousel ads. You can swipe through multiple images or videos on a carousel ad. This marketing feature can showcase various types of products. A carousel ad is suitable for audience engagement or to tell your story in a more interactive way to increase interest.

4. Instagram Stories ads. These ads appear in the Instagram Stories section, separate from your primary feed. Stories ads can be either a photo or video. You can tell a compelling story about a product and even use interactive tools like polls and quizzes. However, you must remember that Instagram Stories only last 24-hours. Stories disappear from a user’s feed and profile the next day. Your ad, however, can continue.

5. Instagram IGTV ads. Instagram TV is a standalone app with longer content. You can advertise on this channel, too. IGTV videos can be 60 to 120 minutes long. You can buy 15-second IGTV ads.

6. Instagram Reels ads. The Reels section of Instagram allows users to create and watch short (60-second) video loops set to music (think TikTok). This section of the platform has its own set of advertisements. Reels ads can be photos or videos, and they’re also shareable in Instagram Stories.

You might wonder whether one ad channel is better than another? The answer varies by your target audience. 

You can reach people based on location or demographics, but the best Instagram advertising platform for your company should depend on your needs and goals. Consider factors such as your budget, target audience, and the type of campaign you want to run. Research and compare different platforms to see what fits. 

Ask yourself:

What is your goal? (Leads? Purchases? Brand awareness? Website traffic?)

What Instagram advertising channels do your competitors use? 

What types of social content perform well on the general Instagram feed? (Video? Carousel? Static post?) 

Where does your target audience seem to spend their time on Instagram? 

How much can you spend?

All these considerations should lead you to the right channel for your Instagram advertising campaign.

Instagram Advertising 101 – Instagram Ad Formats

A photo ad may arguably be the easiest marketing tool to produce and manage on Instagram. The format is a single image in a landscape or square format. 

From there, Instagram ads management becomes more complex. It doesn’t help that the platform frequently updates with feature releases. (Case in point: The entire Instagram Shopping tab disappears as of February 2023.)

Generally, it’s a good idea to double-check the platform for the latest specs once you’ve decided on the right Instagram advertising channel to use.

Here are the current ad formats and specifications.

Instagram Photo ads use a single image with a call-to-action button and ad language. Typically, the caption is no more than 125 characters. The optimal image size is 1080 x 1080 pixels within a .jpg or .png format. The full file size for upload cannot currently exceed 30 MB.

Instagram Video ads can run up to a minute long in a GIF or movie format. These are great tools for showing an audience how a product functions. Since the ad moves, it is more likely to grab the eyes of the viewer as they move through their feed. Again, if your video has a caption, don’t exceed 125 characters. 

Other Instagram ads management specs include:

• 600 x 600 pixels (square ad)
• 600 x 315 pixels (landscape ad)
• Aspect ratio of 1:1 (square)
• Aspect ratio of 1.9:1 (landscape)
• Resolution minimum 600 x 600 pixels
• 1080 x 1080 pixels maximum resolution
• Three to 60 seconds in length
• 4 GB file size
• Frame rate maximum of 40
• H.264 video compression preferred
• Stereo AAC audio compression, preferably at 128 kbps

Instagram Carousel ads are called “named cards” in Instagram-speak. You can use up to 10 images or videos in one carousel ad. These ads are great for showing a step-by-step on how to use a product. Within each named card you should follow the specs we’ve outlined for video or static ads. 

Instagram Stories ads can use up to six images. Captioning isn’t currently available, so you must include the text (if you have some) in the actual image file. These ads are vertical full screen (9:16). If you have more than one image, each photo can run five seconds. The current suggested resolution for Stories ads is 1080 x 1920.

You can also make Instagram Stories ads videos (MP4 or MOV) of up to 15 seconds in length. If you use multiple videos, they can only run up to two minutes, and you can use Instagram captions to create text within the video.

Instagram IGTV ads. Instagram TV is a standalone app with longer content. You can advertise on this channel, too. IGTV videos can be 60 to 120 minutes long. You can buy 15-second IGTV ads. They are shown before, in the middle, or post-show. These ads must also be created in a vertical video format. Keep in mind IGTV ads are also mobile-first.

Instagram Reels ads. The Reels section of Instagram allows users to create and watch short (60-second) video loops set to music (think TikTok). This section of the platform has its own advertisements. Reels ads can be photos or videos, and they’re shareable in Instagram Stories.

You’ll notice, when selecting ad delivery channels, that Facebook pops up as an option. Facebook now owns Instagram, and they share a single advertising network.

The other Instagram ads management requirement to consider is the tagging feature as a tool for ecommerce. While tagging isn’t an ad format, this feature can add real value. Tagging lets you add a direct link to a product featured in your ad. Tagging isn’t subtle. 

The goal is to encourage users to share product links, increase click-throughs, and ultimately buy the item. With that said, Instagram just eliminated an entire tab devoted to shopping. Tagging exists as a tool to promote more in-app spending. But don’t get too attached. As we mentioned, features can change.

Instagram Advertising 101 – Instagram Advertising Costs 

When it comes to Instagram advertising, the money is where the rubber meets the road. Most ecommerce companies leverage Facebook heavily to drive sales. 

You may be surprised to find Instagram is considerably less expensive for paid advertising. You can control the spend amount on Instagram in two ways:

1. Total spend threshold.
2. Total number of days to run the campaign.

When you hit either of these caps, the Instagram ads management feature will stop ad distribution (and your costs). 

Here’s a tip for Instagram ads management: You can track spending in real-time on the Ad Payments setting on the app. You can also reset your spending limits. 

So, how much should you allot to your Instagram advertising campaign? There is no one-size-fits-all answer, unfortunately. There are a few things to think about when setting your Instagram advertising costs thresholds. 

For example:

Who are you trying to reach with your ads?

What are your goals for Instagram advertising?

What is your budget for a trial campaign?

What is your marketing strategy?

Your Instagram advertising costs vary according to several factors:

Audience targeting. The more specific your target audience, the higher the Instagram advertising costs.

Ad format. The format of your selected approach will also affect Instagram advertising costs.

Ad placement. Your ad placement (in Stories, in IGTV) can also affect the cost.

Competition. Remember, this is an auction environment. High demand for ad space in a particular industry will drive up the CPM and CPC (cost per click).

Ad budget. The budget you set for your Instagram advertising campaign will also affect the cost. Instagram’s auction system ensures the highest bidder ends up with the ad placement.

Bid strategy. You can track Instagram advertising costs by CPM, CPC, or CPA. You select the approach based on ad cost, your goals and audience, and budgetary constraints.

We’ve used the metrics CPM, CPC, and CPA for tracking your Instagram advertising costs. What’s the difference?

CPM (Cost per thousand impressions). With CPM, you pay for every 1,000 times your Instagram advertisement is shown to users. This measurement is suitable for brand awareness campaigns where the focus is on getting as many people as possible to see your ad.

CPC (Cost per click). With CPC, you pay each time someone clicks on your Instagram advertising. This is a good measurement for campaigns where the goal is to drive website traffic or generate leads.

CPA (Cost per action) With CPA, you pay every time a user takes a specific action, such as making a purchase or signing up for a newsletter. This is typically used for campaigns where the goal is to drive conversions.

Metrics aside, if you’re looking at establishing a threshold for your Instagram advertising costs, there are four key factors to consider:

1. Bid amount. Basically, how much are you willing to spend for a lead? Consider it this way: If your Instagram advertising budget is $500 for the campaign and your bid amount is $2 per click, you’ll get 250 clicks on your ad. Is that enough for the campaign to pay for itself?

2. Ad relevancy score. How relevant is your ad to your target audience? That’s what Instagram really wants to know. It makes sense that Instagram wants to avoid annoying their users with advertisements that have absolutely no connection to their needs, wants, and priorities. 

So, the ad relevancy score on Instagram measures audience participation with your marketing copy. The relevancy score illustrates why Instagram ads management is so important to the success of your campaign. 

If you see an ad isn’t working, you can fix it to increase engagement. Increasing audience engagement in your Instagram advertising means a higher ad relevancy score. That translates to lower Instagram advertising costs. 

Get the picture? More relevant Instagram advertising means you’ll pay less for more clicks and get more leads. 

3. Estimated action rates. This is another Instagram advertising algorithm that measures the likelihood of people interacting with your campaign. Instagram wants to support the ads that engage audiences. If Instagram feels like you’ve selected the right audience, channel, and ad type, you’ll get a lower bid amount (i.e., a lower Instagram advertising cost).

But how does Instagram determine the estimated action rates? Good question! The platform uses a combination of existing data and predictive analysis to estimate action rates. The platform looks at:

• Data collection based on user behavior, ad engagement, and conversion rates from your past campaigns.
• Targeting data to match your campaign to the right audience.
• Predictive analytics to analyze past data and predict the likelihood of the target audience taking a specific action (like making a purchase).

What’s the lesson here? The more you’re able to maximize Instagram advertising, the better. Big Brother Instagram is watching and judging your success and failure. 

It’s another example of why active Instagram ads management is so important to your success. Actively monitoring and improving your Instagram advertising ultimately affects Instagram advertising costs now and in the future. 

4. Competition. Your competitors actively impact your Instagram advertising costs. Before you freak out, realize this is true for any supply and demand economy. When you’re trying to reach a target audience, you’ll always have competition. 

The frequency of demand for that audience will drive up Instagram advertising costs. (If you’re picturing Russel Crowe against some Roman soldiers in the Coliseum, that’s moderately accurate but less gory.) Companies do have to outbid each other in Instagram advertising. 

Other factors affecting your bid include whether you’re fighting for space during a holiday, let’s say, or competing for a specific gender (it costs more to advertise to women, whether that’s sexist or not). Even the day of the week affects the competition for Instagram advertising space.

Now you understand the reality of Instagram advertising costs: It’s complicated. Instagram advertising costs vary widely, along with your audience, goals, and competition. These costs fluctuate by market demand and what you’re trying to accomplish. 

All these factors make setting your Instagram advertising budget a little more challenging. But here are some tips that will help.

Instagram Advertising 101 – Instagram Ad Budget 

You can set a budget for your Instagram advertising campaign in the Facebook Ads Manager or through a third-party vendor. The general overview of establishing Instagram advertising costs via a budgeting process includes:

1. Setting your campaign. First, you’ll need to set up a campaign on Facebook Ads Manager (or that third-party vendor platform). Choose your goal, whether it is “brand awareness” or “conversions.”
2. Creating an ad set. Now you can set the targeting options for your ad. This Instagram ads management process includes demographics, interests, and the behaviors of your target audience.
3. Choosing your bidding strategy. This is the CPM, CPC, or CPA we told you about earlier.
4. Establishing your budget. You can select a daily or a total budget. The differences are simple. A daily budget sets a threshold for the maximum Instagram advertising costs you’re willing to spend on each day of your campaign. 
   A total campaign budget is the maximum you’ll spend for the duration of your campaign. Remember, Instagram stops your ad when it hits the budget threshold. However, you can also go in and adjust the budget at any time.
5. Set the campaign duration. What is the start and end date of your campaign? Should it run indefinitely? You set the duration along with how much you’ll spend.
6. Create your ad. Creating your ad is the fun part. Select the format (photo, video, carousel), upload the creative and add your ad copy (if necessary), links, and headlines.
7. Launch. Once you’ve launched, you can start bidding for ad space. The platform will approve your before it goes live.
8. Monitor. The beauty of Instagram advertising, or marketing on any social media platform, is that these tools allow you to use real-time analytics to make changes mid-campaign. Try doing that in a traditional advertising campaign (in some cases, you can’t). 
   Instagram advertising is not a ‘set it and forget it’ approach. When your campaign launches consider that it is alive, evolving, and changing. So, don’t forget to monitor the performance of your campaign and the Instagram advertising costs to get the most bang for your buck.

Now we know Instagram advertising costs vary greatly depending on several factors. A logical question at this point might be, are there any tricks for lowering my Instagram advertising costs? How can you increase the ROI from the spend you’re able to delegate to Instagram advertising? There are several ways to reduce your Instagram advertising costs:

• Target a specific audience. Narrowing your target audience lets you reach the people most likely to be interested in your product or service. The wider your net, the more expensive your campaign will become. Avoid the blanketed carpet-bombing approach and run with a targeted strike to lower costs.
• Monitor your Instagram ad costs closely. We’ve warned you of the risks of setting up a social advertising campaign and walking away. You’ll lose money every time. Instead, practice active Instagram ads management to analyze the campaigns with the highest click-throughs, then maximize spend in these areas to increase your ROI.
• Figure out where your audience hangs out. This point illustrates why testing is so important to any Instagram ads management process. The more frequently visited Instagram locations for your target audience generally cost more. But the extra cost may be worth it because you’re getting more click-throughs (sales) from this channel. 
• Use customer data to write better ad copy. Your copy should not only match the language patterns of your target audience, but it should also highlight a “pain point” relevant to potential shoppers. 

Does it make sense if you’re an ecommerce site, and you’re selling winter boots to a targeted audience in the Florida panhandle? Does stilted, formal language work with a GenZ audience, or can you use text-friendly acronyms like TTYL? 

Write the ad for the audience. Write a CTA for the audience that makes sense. Target your product sales to solve a problem of a specific audience. All of these approaches to Instagram ads management will improve your ROI.

Now that you have a better sense of the complex world of Instagram advertising and how to manage it, it’s time to understand the steps necessary to create and run your campaigns. Let’s roll.

Instagram Advertising 101 – How to Create and Run Instagram Ads 

Use the Facebook Ads Manager to create and run Instagram advertisements. You can also use the Instagram Ads management app. 

Here are the 10 essential steps to set up your Instagram advertising:

1. Set up a Facebook account. You’ll also need to link your Instagram account to your Facebook Business Page.
2. Go to the Facebook Ads Manager and click “create.”
3. Select “Instagram” as the placement channel for your ad.
4. Choose the ad format you want to use, such as photo, video, Carousel, or Story.
5. Select your target audience via demographics, interests, behaviors, or other criteria.
6. Create your ad using the ad creation tool or upload your created Instagram advertisement.
7. Set your budget and ad schedule.
8. Submit the ad for Instagram’s review.
9. Once the ad is approved, it will run according to your established budget and schedule.
10. Monitor the campaign through Ads Manager.

As you’re designing Instagram advertising, there are a few rules to follow, whether you’re creating videos or a static ad. These rules include:

• Design your Instagram advertising for mobile. Given that 99% of social media users interact with these platforms on their cell phones, making your Instagram advertising mobile-first is a good best practice. Mobile-first should include keeping your videos short and filming them vertically (it makes them easier to crop). Limit your text and add a little animation if needed—but don’t overdo it.
• Create emotion with your Instagram advertising. Avoid being bland by creating an overall feel in your ad. Engage, amaze, and wow your audience. Be creative and punchy, but above all, don’t be boring.
• Don’t make your post a blatant advertisement. We spoke earlier about how blending in is okay when you’re advertising on Instagram. If you can make your ad engaging, but also make it look organic, like a social post, that’s a plus. Think about how you consume streaming media. Don’t you scroll through ads if you can? You want to avoid this happening to your Instagram ad.
• Don’t forget sound. Sure, 92% of social media users keep their sound off. That leaves 8%, though, that always have their sound up. The answer is to use captions and let your graphic or video tell a story without neglecting to have sound, too. Cover all the bases for a wider audience reach.

We’ve covered a lot of ground related to the essential hows and why’s of Instagram advertising. In this next section, we’ll discuss some best practices to maximize your Instagram advertising ROI.

Instagram Ads Management Best Practices 

“On Instagram, creativity is the cornerstone of success, encompassing elements such as images, videos, ad copy, and targeting.”

– Andy Beohar, Managing Partner at SevenAtoms

Let’s start with some best practices for designing your photo ads. Instagram is a platform founded on the idea of visually appealing posts. That gives us a license to tackle how to create visually appealing content as a first best practice for Instagram ads management. 

Simply put, your photo ads must be visually appealing to stand out on this platform. Use only high-quality images relevant to your product or service. This approach is perfect for ecommerce companies promoting a specific product for sale. If you’re wondering how to make your Instagram photo advertising more appealing, here are 10-tips:

1. Use contrasting colors that draw the eye. Go for a neutral background with a bright, popping product—or vice versa.
2. Minimize text but maximize the graphic. Let the product itself do the talking.
3. Avoid clutter like it’s a traffic cop. Trying to fit too much into an Instagram image will get you a speeding ticket every time.
4. Go for the graphics with one strong, clear image. The Instagram advertising mantra is all about being design-centric. Maximize your campaign by centering the eye of your audience on a picture of the product you’re selling. 
5. Use whitespace to your advantage. Whitespace should be part of your effort to keep your ad decluttered. You can increase the negative space on your ad by tamping down background imagery. Try this trick. Close your eyes. Open them and look at your Instagram ad. Where does the eye naturally hit first? The answer, for most ecommerce companies, should be the product you’re selling. (If that’s your goal, of course.)
6. Use branded colors. If possible, carry your brand into the Instagram advertising for a more cohesive look and feel.
7. Think about color psychology. There is a mood or vibe associated with certain colors. Color psychology 101 may be more art than science, but there are some generally accepted best practices in this area. For example, red is an energy color associated with passion or danger. Green is nature, calming, and tranquil. Blue is warm. And so on.
8. Don’t forget your logo or brand name. Sure, people see your brand next to the ad at the top of the post. Reinforce your image by adding your logo.
9. Divide the ad into sections. One straightforward design trick is to split the Instagram ad into three sections (reserving the biggest section for the image, of course). This simple trick may make the design work a bit less tricky.
10. Try split testing. Split testing is also called A/B testing. The process requires creating multiple versions of the creative copy to see which attracts a larger audience.

Next, let’s talk about cross-promoting your Instagram advertising. There’s nothing wrong (and everything right) about promoting your paid Instagram advertising with an organic social post. In fact, organic and paid Instagram posts go together like PB&J. You can even set the organic posts in advance with a scheduling tool such as Hootsuite. 

Another common cross-promotion technique is to partner with influencers to help you sell. Influencers are Instagram posters with huge followings. Influencers often have a niche, such as beauty or fashion, travel or music, and a ready-made audience interested in that topic. 

Influencers are thought of as “micro” when they have between 1,000 and 100,000 followers. Macro-influencers bring an audience of 100,000 and up. Influencers use their channel to post sponsored content (such as your Instagram advertising), collaborate with brands, or promote affiliate marketing links. 

Many companies work with Instagram influencers because they can help to increase brand awareness and drive sales to target audiences. Influencers bring you a built-in audience that trusts what they have to say. 

Another best practice is to reduce your Instagram advertising costs. There are several ways you can lower the costs of Instagram advertising. All of these require some time devoted to Instagram ads management both upfront and during the campaign. This process includes:

• Maximizing your use of automation for bidding. Automatic campaign bidding in Instagram advertising lets the algorithms work on your behalf. If you don’t have any prior or preliminary data on what your Instagram advertising costs should be, this platform feature will allow you to use and maximize automation to set a suggested bid amount.
• Using precision audience targeting. You know how important it is to find the right audience for higher sales and lower Instagram advertising costs. Instagram ads management features allow you to select a target audience by:

1. Location which can be as broad as a country or as specific as a zip code.
2. Demographics, including age, gender, and race.
3. Interests, such as technology, fashion, or crafting.
4. Behaviors on social media, such as hitting your social account before making a purchase or buying mostly from a cell phone.
5. Connections that could include targeting consumers who have already engaged with your brand or that have shopped on a competitor’s site.
6. Custom audiences allow you to import an audience (such as email addresses) into your targeted campaign. 
7. Lookalike audiences are new potential consumers with similar characteristics to your proven target markets.

• Set goals. You can lose a lot of money quickly on Instagram advertising if you don’t understand what you want to achieve. Do you want to:

1. Increase awareness of your ecommerce business in preparation for a later sale?
2. Educate your audience to warm them for a major purchase.
3. Convert the target market by making a sale, downloading your app, signing up for a coupon—or something else.

• Create better landing pages. Don’t just send the user to your website after clicking on the Instagram advertisement. A general website doesn’t encourage engagement with a specific product. Instead, create a cohesive, effective campaign that drives your goal. 

Say you’re selling boots. You create the ad for a target audience and define your Instagram advertising cost. Your call to action (CTA) is “Shop Now!” Where would you send that audience after they click on your ad? (The answer is not to your general website.) 

Instead, the user should hit a landing page tailored for—you guessed it—buying boots. That landing page should basically continue the conversation that engaged the user enough to click on your ad. Don’t turn them away with a landing page that doesn’t close the deal.

• Test your Instagram advertisement. Please test your Instagram ads! Testing ensures you’re putting out the best possible copy for a maximum rate of return. There is no better way to lower your Instagram advertising costs.
• Use conversion tracking. Analytics lets you track the actions of your target audience from the Instagram advertisement to your webpage. Is the CTA doing what you intended?

These steps require time devoted to Instagram ads management. But by using these tools, you can optimize your ads to increase conversions, which in turn, will help you lower your Instagram advertising costs. 

Get Started with Instagram Advertising

Want to maximize revenue and avoid empty clicks? Increase your exposure on the Instagram and Facebook platforms with laser-like targeting. SevenAtoms is a social media advertising agency that creates winning campaigns and is trusted by numerous companies for its social media advertising. Contact us today for a free consultation.

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