Plan An Instagram Ad Budget Like A Boss

If you are new to Instagram, it can be a challenge to decide on a budget that can give you the best results. Should you go high immediately? Should you start at the lowest amount? Stay tuned, and I'll show you how to plan an Instagram ad budget like a pro.

First, let's talk about how much it costs to advertise on Instagram.

The Cost Of Instagram Advertising

Instagram advertising costs fluctuate. It depends on the demographics, date, time, and targeted mobile devices. But it all boils down to your target audience. I always tell our clients who want to advertise on Instagram, "You must know who you want to target."

There are three primary Instagram cost per click (CPC) factors you should know.

First, there are more women than men on Instagram, making the CPC (cost per click) higher if you target women.

Second, most users are younger than 50, with the largest age category of 18 to 24, but the cost per click doesn’t vary as much as it does with gender. 

Lastly, the cost per click depends on specific campaigns. 

Remember that Instagram cost per click projections depend on those primary factors, but that’s not all. Instagram cost per click also heavily depends on your campaign. 

For example, a clothing store's Instagram ads will likely have a higher cost per click when they are geared towards women. Also, the cost per click tends to increase during Thanksgiving, Christmas, and other special occasions. 

You should base your ad budget on cost per click, and several other factors like ad objective, targeting, and ad format. 

But how much does it cost to advertise on Instagram? To give you a better idea, here are elements that determine the cost of Instagram ads:

• The average Instagram ads cost per click (CPC) is around $0.50 to $1.00 but can also reach up to $3.00 per click if you choose to advertise in highly competitive industries like apparel.
• The highest CPC age groups are 18 to 24, 25 to 34, and 35 to 44-year-olds. These are the most profitable age groups on Instagram.

Instagram ads are a little more expensive compared to Facebook advertising. If you are serious about advertising on Instagram, consider how much a conversion is worth to you and make sure that your campaigns have a positive ROI.

With that said, let's talk about how to plan your Instagram ad budget.

How To Plan An Instagram Ad Budget Like A Boss

You can set up your Instagram ad budget in the Facebook Ads Manager tool.

You can choose between a daily or lifetime amount for your Instagram ad budget. 

• Daily Budget is the average Instagram ad budget you will spend every day. 
• Lifetime Budget is the maximum Instagram ad budget that you will spend during the lifetime of your ad.

Now, this is my perspective on how to plan an Instagram ad budget.

1. Calculate Your Overall Budget

Choosing an ad budget that is too small means that your ad will not reach all your target audiences. However, one that is too large might hurt your overall marketing budget. 

When calculating your ad budget, always consider the campaign goal and the return calculation. 

For example, if you want to drive revenue on Instagram, then the metric to consider is new revenue. At a minimum, your ad budget should allow you to turn a profit. 

A quick way to estimate if your Instagram ad budget can generate a return on investment (ROI) is by keeping your entire marketing funnel in mind. Here are some calculations to determine if your Instagram ad budget is reasonable:

• Pay per Click (PPC) * Number of Clicks = Ad Spend 
• Number of Clicks * Website Conversion Rate (CR) = Number of Customers
• Number of Customers * Average Customer Value (ACV) = Revenue 
• Revenue / Ad Spend = ROI 

A slow and gradual Instagram ad campaign is often cheaper but will take more time. If you want immediate results, then go for a larger budget.

2. Take Advantage Of Facebook's Demographics

Use Facebook demographic information to help you with your Instagram ads. It will help you with better targeting like any effective affiliate program out there.

For example, you can target people in a specific location. Your Instagram ad will get you there because of the demographic info that Facebook has.

Use your ad budget towards Instagram to target local users with its Facebook demographics tools, especially if you have a location-based marketing budget.

3. Use Your Ad Budget To Target Instagram's Adult Demographic

Instagram tends to have more adult users than Facebook. It's not what Facebook is promoting, but your analytics will show far more engagement from users above 20s when advertising on Instagram.

Test your penetration with Instagram if you target a 20 to 40 year old demographic. If you get excellent results, then start scaling up and budgeting more.

4. Start With Automatic Bidding

To keep your Instagram ad costs low, I suggest starting with automatic bidding, especially if you are new.

If you are new to Instagram advertising, you won't have any previous data telling you the average cost-per-result, making it very tempting to test different manual bidding options.

Using manual bidding options can result in either overbid or under-bid. Both will give your lousy campaign results in the end.

5. Aim For Higher Conversions

Optimizing your Instagram ad campaigns for higher conversions is an excellent way to push Facebook to auto-optimize your campaigns to get better results at a minimum cost.

6. Set A Frequency Cap

Frequency Cap keeps Instagram or Facebook users from seeing your ad too often. Enter the minimum number of days that should pass before someone sees your ad again.

Set your Instagram ad's Frequency Cap to 3 to 5 days to guarantee that users won't get bored seeing your ad too frequently.

7. You Ad Content Should Look Like A Regular Instagram Post

Why does your ad have to look like a regular Instagram post? Because users will browse your ads like they are looking at other people's Instagram posts.

Doing so may seem odd, but as an advertising platform, Instagram publishes tons of ads. It is an excellent way for Instagram not to annoy its users.

I recommend you invest in IG ad content that can pass for regular Instagram posts. Never pay digital marketing agencies or freelance designers to use shock tactics because that's just ad money down the drain.

8. Be Careful With Click Or Bid Prices

Why is the average Instagram ad spend between $0.70 and $0.80? Because it is the mid-market price. Fluctuations don't occur throughout the year. 

For example, the summer season isn't cheaper than winter. Fluctuations are always temporary, and prices always normalize to between $0.70 and $0.80. Why? Because, again, that is the mid-market price. 

Do not deviate far from between $0.70 and $0.80 when you set your click or bid prices. You need to change your strategy entirely if you are frequently paying more, and you continuously are getting zero conversions.

9. Monitor Performance & Adjust Campaigns As Needed

Be careful when analyzing your stats, because they don't always tell you the whole story.

Why are click prices for 13 to 17-year-olds low, and click prices for users above 65 are high? Click prices for young users, between 13 and 17, are low because users in that demographic are overly excited to click but are less likely to buy. The number of users who click is high, but the number of users who buy is low.

Click prices for users 65 and above are very expensive because there are very few Instagram users in this demographic, especially when compared to all other age groups. This demographic is also less likely to click on ads impulsively. When they do click on an ad they tend to be more motivated to buy.

Your Instagram ads should not be "set it and forget it." You should always be testing to identify what is working and what's not. The incremental improvements you make along the way will make all the difference for you!

How To Increase Instagram Ads ROI

Use Facebook's automatic placements option or a few selected placements to get the maximum campaign ROI.

To see if it's the right place for showing your ads, use your Instagram campaign reports.

Instagram ad costs are lower for B2C (Business to Consumer) or brands that sell consumer products. For B2B (Business to Business), Instagram ad costs can be higher as they don’t spend a lot of time on the platform to buy some business tools.

And that's how to plan an Instagram ad budget like a boss!

If you want to learn more about Instagram Ads, check out the recommended resources section below. You can also TALK TO US if you need a one-on-one session on planning your Instagram ad budget.

Recommended Instagram Ads Resources

• The Complete Guide to Instagram Ads: A Step-by-Step Guide to Advertising on Instagram
• Instagram advertising: 6 steps to successful ad campaigns
• How to Use Instagram Ads (and How Much Do They Cost)

So what do you think about this article? Are you ready to plan an Instagram ad budget like a boss?

Leave a comment below and let's discuss.

Also, if you think this article is worth the SHARE, it will be a great honor!

Header image courtesy of Jumpstory.

About the Author Tim Fitzpatrick

Tim Fitzpatrick is the President of Rialto Marketing. At Rialto Marketing, we help small businesses & entrepreneurs eliminate the confusion of marketing by focusing on the fundamentals. As a marketing partner, we help clients put in place and manage a simple marketing plan so they can grow. Marketing your business shouldn't be a challenge. All you need is a plan.