Determining Your Instagram Ad Cost Per Click & Is It Worth It?

Determining Your Instagram Ad Cost Per Click & Is It Worth It?

71% of U.S. businesses are now on Instagram. 65% of the top performing posts center around a brand. 80% of users follow businesses. As a business today, Instagram is the place to be, especially when you consider the 800 million active users on the platform.

Instagram monthly active users

Yet 70% of posts never get seen.

To be successful on Instagram, you need strategies that get you noticed and help you engage your target customers. But is the cost for an Instagram ad cost per click worth it?

Will you see a decent ROI?

We’ve got the answers. Find out what you should be paying for an Instagram ad cost per click. Then schedule a call with us to discuss how our services can significantly lower that cost per click.

How the Algorithm Decides Your Instagram Ad Cost Per Click

When you choose to use Instagram ads, you’re taking part in one of the fastest auctions ever. But it all happens behind the scenes in a split second.

You don’t have to stand there listening to an auctioneer. You don’t have to raise your paddle, upping your bid each time someone outbids you. Instead, you tell the bidding system how high you’re willing to go.

The bidding system looks at all of the bids for that ad space. It compares the bids to see which one is highest. It then gives the ad space to the highest bidder.

But having the highest bid doesn’t always mean you made the highest monetary bid as we’ll see. Let’s look at the bidding process.

How the Instagram Bidding Process Works

The Instagram bidding system is actually the Facebook Ads Manager. All Instagram ads are set up through Facebook’s easy-to-use ad platform. When you setup your ads, you’ll choose where you want ads to appear.

They may appear on:

  1. Facebook (in several different locations)

  2. Facebook’s Audience Network (Affiliate Websites that have agreed to show Facebook’s ads on their sites)

  3. Instagram

Your bid amount not only determines if you get a spot. It also determines your ad placement. Placement matters. Some placement is clearly superior.

If you’re not trying to reach a competitive audience, you may get a spot regardless of how low you bid. But if you’re in a competitive space, your ad may get no placement at all.

What Determines Your Instagram Ad Cost Per Click?

Here’s a secret you’re really going to like… You don’t have to outbid people financially to win. 3 main factors go into your Instagram ad cost per click. It’s not all about the money.

It’s about:

  1. Relevance

  2. Estimated Action Rates

  3. Your Actual Bid

What Is Relevance?

Relevance is how “relevant” your ad appears to the people who are seeing it. You have great control over who sees your ad in Instagram. Facebook has collected years of extensive data on its users. When you pay for Facebook or Instagram ads, you gain access to this data.

You can target specific users based upon their:

  1. Demographics

  2. Affiliations /Employment

  3. Interests

  4. Location — Over 80% of Instagram users aren’t in the U.S. where you’re most likely doing business. Location targeting is one of the most important ways you target in today’s global economy.

  5. Buying or other user behavior — Target people who buy products like yours.

When your ad is more relevant it enhances the Instagram user experience. That keeps people using Instagram. It earns more quality clicks for you and more paid clicks for Instagram.

Instagram has an invested interest in making sure ads are as a relevant as possible.

So they reward you by “adding” your relevance score to your monetary bid to determine what your top bid actually is. But you still only pay enough to outbid the bidder below you.

What is an Estimated Action Rate?

The estimated action rate is the attention that Instagram estimates that your ad should be getting. It compares your ad to similar ads, your industry, the audience and other factors. Only certain people at Facebook and Instagram know the exact algorithm.

But what you need to know is this. If you under-perform their estimates, it lowers your relevance score. If you outperform it, your relevance goes up.

This is just one more reason doing a competitor analysis is so important. It’s hard to outperform if you don’t know what you’re up against.

Is Instagram Advertising Worth it?

Is each Instagram ad cost per click worth it? Let’s take a look at the data.

On average, you’ll pay between $0.40 and $3 for a click. Instagram has a higher click-through rate (CTR) than Facebook, .08% compared to .06% respectively.

This click-through rate may seem low in general. But remember, you pay for each click.

You don’t want people clicking who aren’t going to help you meet your goals. As people become more familiar with your brand, CTR goes up as well as the quality of those clicks. That means more conversions.

According to info provided by Selftstartr, Instagram ads have 58x the interaction rate of Facebook. People are more likely to see you and want to interact with you.