How Much Does Instagram Advertising Cost in 2025? [Complete Price Guide]

instagram ads cost 2025

Instagram boasts over 1 billion active users, and its posts get 10x more engagement than Facebook. These numbers are impressive!

The platform’s advertising costs are a significant factor for businesses to think over. Small startups and brands need to understand what they’re getting into. Advertisers typically pay between $0.50 to $1.00 (AUD 0.76 to 1.52) per click, but costs can reach $3.00 (AUD 4.56) in competitive markets.

Most businesses invest anywhere from $0 to $500 (AUD 0 to 760) monthly on Instagram ads. Large corporations often spend $5000 (AUD 7600) or more. Your target audience and ad placement choices directly affect the final cost.

Our 2024 guide will help you make smart decisions about your marketing budget. Let’s delve into the details!

Understanding Instagram Ad Costs in 2024

Instagram’s advertising costs depend on three key metrics that drive campaign expenses. Let’s get into the current rates for 2024.

Average cost per click (CPC)

Several factors affect Instagram’s cost per click. Businesses currently pay $0.84 ($1.28 AUD) per link click on average. The costs for destination URL clicks range from $0.50 to $0.95 ($0.76 to $1.45 AUD). On top of that, it can jump up to $3.00 ($4.59 AUD) per click during peak shopping seasons like Black Friday.

Cost per thousand impressions (CPM)

Instagram’s cost per thousand impressions shows different pricing patterns. The average CPM is $8.60 ($13.12 AUD). Instagram Stories ads have a CPM of $7.27 ($11.09 AUD), while Reels ads provide a budget-friendly option at $4.30 ($6.56 AUD). CPM rates changed substantially throughout 2023, starting at $6.23 ($9.50 AUD) in January and reaching $8.83 ($13.46 AUD) during the November holiday season.

Cost per engagement

Instagram’s engagement costs are lower compared to other metrics. You’ll pay between $0.01 to $0.05 ($0.02 to $0.09 AUD) per engagement. This makes engagement-focused campaigns a great way to boost interaction with your content.

The platform’s costs vary throughout the week. Friday costs advertisers the most, with an average CPM of $7.45 ($11.36 AUD). The highest CPM in 2024 came during Thanksgiving and Black Friday week at $13.45 ($20.52 AUD), with Cyber Monday week close behind at $12.56 ($19.16 AUD).

Factors That Impact Your Ad Costs

Your Instagram advertising costs depend on several factors that make each campaign different.

Target audience selection

The way you select your target audience plays a big role in determining costs. Broader audiences usually mean lower costs because there’s less competition. The costs typically go up when you narrow down your targeting with specific demographics, interests, or locations.

The gender you target affects your costs too. Ads targeting women cost more because they’re more active on the platform. The same goes for age groups – advertising to people between 18-44 years old comes with the highest cost per click.

The competition in your chosen audience segment drives the final costs. When many advertisers target similar groups, it can start a bidding war that drives prices up. This happens most often during holiday seasons when everyone wants to advertise.

Ad placement options

Instagram gives you many ways to place your ads. Here’s where you can show them:

  • Feed advertisements
  • Story advertisements (reaching 500 million daily users)
  • Reels advertisements
  • Carousel advertisements
  • Shopping advertisements
  • Collection advertisements
  • Explore tab advertisements

Feed ads usually cost more than Stories or Explore page placements. Your choice of format matters too – video ads cost more than simple image posts.

The time of year changes how much placements cost. Advertising during lunch hours on Mondays and Thursdays (11 am to 12 pm) gets you the best engagement. Tuesday mid-mornings (9 am to 10 am) are another great time to run your ads.

Instagram’s automatic placement settings can help you save money. This feature lets the platform’s algorithm find affordable ways to show your ads, which can lower your campaign costs by spreading them across different parts of the platform.

Industry-Specific Cost Analysis

Instagram advertising costs vary among different industries based on their market dynamics and how audiences engage with content.

Retail and ecommerce costs

Retail and ecommerce businesses deal with specific advertising expenses on Instagram. The average cost per click ranges from $0.38 to $2.00 (AUD 0.58 to 3.06). The Home and Garden sector shows strong engagement metrics with click-through rates between 1.24% and 1.47%, and moderate costs per click from $0.62 to $0.91 (AUD 0.95 to 1.39).

The apparel industry’s competitive nature drives costs higher, with clicks reaching up to $3.00 (AUD 4.59). Notwithstanding that, Instagram’s built-in shopping features justify these costs by enabling direct product purchases through the platform.

B2B advertising expenses

B2B companies face higher advertising costs on Instagram typically. The main reasons include:

  • B2C sectors’ larger audience pool
  • More specific targeting requirements
  • Professional audience competition

The science and technology sector shows this trend clearly. Its costs per click range between $0.22 and $3.16 (AUD 0.34 to 4.83), while click-through rates vary from 0.14% to 3.07%.

Service industry rates

Service industry’s advertising costs show unique patterns in different sectors. The travel industry enjoys favourable costs per thousand impressions from $1.28 to $3.02 (AUD 1.96 to 4.62). High user intent and visually appealing content drive this advantage naturally.

Sports-related services compete in a tougher market, especially during live events. Their cost per thousand impressions ranges from $3.59 to $4.63 (AUD 5.49 to 7.08), with engagement rates between 0.09% and 0.11%.

Seasonal timing affects costs in any industry. The fourth quarter (October-December) shows higher advertising expenses as businesses compete for holiday season attention. The industry’s average cost per engagement stands at $0.06 (AUD 0.09), though this figure varies substantially based on each sector’s engagement patterns.

Setting Your Ad Budget

The right budget structure is the foundation of successful Instagram advertising campaigns. Let’s look at everything in budget planning and minimum requirements.

Daily vs lifetime budgets

Instagram gives advertisers two main budget structures that serve different advertising needs. A daily budget lets advertisers set a specific amount for each day. Meta might spend up to 25% more on high-performing days while the weekly average stays the same. This gives better control over daily spending and makes it easier to extend successful campaigns.

Lifetime budgets distribute the total allocation throughout the campaign duration. Time-sensitive campaigns like product launches or seasonal promotions benefit from this approach. You can schedule ads for specific days or times with day parting, which you’ll only find with lifetime budgets.

A practical hybrid approach combines daily budgets with campaign spending limits for ongoing campaigns. This strategy gives you both daily control and overall spend management. Many experienced advertisers now prefer this choice.

Minimum budget requirements

Several factors determine the minimum investment for Instagram advertising. Photo ads start at $1 (AUD 1.53) per day. Video ads need a minimum of $3 (AUD 4.59) daily. Carousel ads have the same minimum threshold as photo ads at $1 (AUD 1.53) per day.

Here’s what to think about when testing new campaigns:

  • Set budgets at the ad set level instead of using Advantage campaign budget
  • Put in enough funds to generate at least 50 optimisation events
  • Begin with smaller amounts and scale gradually by up to 20% at a time
  • Watch performance metrics to adjust spending effectively

The best results come when you set a testing budget that’s 10-20 times your product cost. This will give you enough data to make informed decisions. Most businesses invest between $20-$50 (AUD 30.58-76.45) daily or $1,000-$5,000 (AUD 1,528.99-7,644.95) monthly.

The platform lets advertisers change budgets based on performance metrics. Daily spending control works better for long-term advertising strategies unless you run time-sensitive campaigns. This approach helps optimise your budget and keeps ad delivery consistent throughout your campaign.

Ways to Lower Your Ad Costs

Budget-friendly Instagram advertising needs smart approaches to audience targeting and creative optimisation. Let’s learn about proven ways to make the most of your advertising budget.

Audience targeting tips

Precise targeting is the life-blood of budget-friendly Instagram advertising. Focused targeting of users who are most likely to interact with your brand can improve engagement rates by a lot and lower costs.

Custom audiences are a great way to cut costs. We targeted people who had already connected with the brand through website visits, app usage, or content engagement. You can build audiences based on specific landing page visits or app interactions.

Lookalike audiences give you another chance to save money. These audiences share traits with your existing customers, which makes them more likely to convert. Start with a smaller percentage of lookalike audiences to keep targeting precise while managing costs before expanding your reach.

Your targeting costs will drop if you:

  • Keep past converters out of campaigns to avoid wasting ad spend
  • Use interest-based segmentation to match audiences better
  • Target specific locations down to postal codes
  • Add demographic philtres based on education, employment, and lifestyle details

Ad creative optimisation

The quality of creative content affects your ad costs and results directly. Ads that score high on relevance and get positive user feedback often cost less while performing better.

Video content plays a big role in cutting expenses. Brief, effective videos with quick-cut scenes work really well. Your video content should have:

  • Music that keeps viewers watching
  • Several 1-2 second high-quality scenes
  • Simple, clear stories
  • Closed captions for silent viewing

Carousel ads help reduce costs through storytelling. These ads let you show 2-10 slides that tell your story chapter by chapter. This format works best when you need to show multiple product features or tell complete brand stories.

Testing is essential to optimise costs. A/B testing different elements helps you find the most budget-friendly combinations. Watch metrics like click-through rates and cost per conversion right after launching campaigns to make smart adjustments.

User-generated content (UGC) builds trust while keeping costs down. Customer content has shown higher engagement rates without raising expenses. You can reuse UGC in multiple campaigns, which makes your advertising investment go further.

Smart bid strategies are vital for managing costs. You might want to try automated bidding features that change bids based on up-to-the-minute performance data. This method helps optimise spending without constant manual changes and improves campaign efficiency.

Conclusion

Businesses want to maximise their social media marketing budget on Instagram in 2024, and knowing the advertising costs is crucial. The platform has flexible spending options that start from $0.50 (AUD 0.76) per click, making it available to businesses of any size.

Smart budget allocation and strategic planning determine your success with Instagram advertising. Companies get better results at lower costs when they combine precise audience targeting with optimised creative content. On top of that, it helps to test regularly and monitor performance to keep campaigns economical while boosting engagement rates.

Note that Instagram advertising costs change based on industry competition, seasonal trends, and placement choices. You’ll get better returns on ad spend by keeping up with current pricing trends and using strategies to reduce costs.

The best approach is to start small and test what works. Scale your successful campaigns step by step. Your Instagram advertising experience starts when you understand these costs and use analytical insights to connect with your target audience.

Author

  • Benjamin Paine Headshot

    Managing Director of one of Australia's leading Digital Marketing Agencies... With over 5+ years of hands on experience in SEO, managing both national & international organisations SEO strategy and campaign distribution. Having won several international awards (Search Awards, Clutch, TechBehemoth etc.) for both paid media and search campaign success... He is a front runner in leading search and defining the playbook for the Australian market.

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