The Instagram landscape

Almost, if not all, internet users have at least one social media account. Popular among all genders and ages is Facebook. Twitter and Instagram then follow, which is often used by younger online users.

As our marketplace has expanded into the digital world, these sites have adapted to the transformation as well. They do not only function for communication or networking purposes but also as a marketplace for customers. You can either sell your products or pay ads to promote your services to your target audience.

Instagram has an average of one billion active users daily, and 90% follow a business account. From its inception in 2010, it has become a powerhouse when it comes to digital marketing. Its algorithm studies people’s behaviours and interests, through the posts they engage with so that they can present the most relevant Instagram ads to users.

In Singapore, 62% of the population use Instagram and over two million people can be reached with ads. With the right social media marketing strategy, using this platform is an excellent leverage if you want to expand your market reach. All you need is an Instagram-worthy post and an appropriate ad campaign. This article will help you understand how IG ads work.

How much should you invest on instagram (IG) ads?

Your awareness of the different IG ad campaigns is essential. You can choose between two bidding models – cost-per-click (CPC) or cost-per-impression (CPM), which run on bids (it works similar to an auction bidding).
On average, advertisers who choose the CPC model pay US$0.20 to US$2 for each click while CPM can amount to US$6.70 per 1000 impressions. However, the amount of money to invest in IG ads depends on four factors:

1. Bid amount
2. Ad relevancy score
3. Estimated action rates
4. Competition.

When your ad checks the right boxes on these factors, it has a higher chance of receiving market leads.

#1. Bid amount

The most crucial factors when using Instagram ads are your budget and bidding amount. The number of clicks your ad will get is highly dependent on these variables. As an advertiser, you should estimate how much you are willing to pay for your ad.

Since IG’s advertisement system is like an auction bidding, IG will more likely promote a competitor’s ad if they bid a higher amount per click or impression. If you are uncertain about the amount you should pay, IG has an automatic bidding function that will help you determine your ad’s average cost.

#2. Ad relevancy score

Apart from the bidding amount, IG also studies the relevancy of your advertisement which is dependent upon how your target audience engages with or reacts to your ad. If your ad has a higher number of clicks, likes, and comments for instance, IG will identify it as relevant.

The screen time of your advertisement will be more frequent as a result, even more than an ad with a higher bid, which will help you drive more conversions. However, be mindful of users who hide your advertisement. Such a negative reaction can hurt the relevancy of your product and service, and resultingly the performance of your ad

#3. Estimated action rates

Interaction is also essential for IG. Your ad should be enticing enough to encourage more actions from the users. Good publicity material or Instagram-worthy photos can catch the attention of your potential customers. It is also vital that your ad directs them to the product you are promoting instead of redirecting them to your homepage only.

Knowing your specific target market is essential so that your paid ad will be worth the investment. You can customise your target market, similar to FB ads. It will lead your product to the right audience and results in higher action rates.

#4. Market competition

Since you are not the sole business running in the market, IG also considers all your competitors’ activities in the same field. That is why your bidding amount may be higher when the competition is peak since other key players are willing to pay a higher bidding amount.

Kinds of Instagram ads

Instagram ads blend well with other regular posts and stories. They include:

#1. Stories Ads

#2. Video Ads

#3. Photo Ads

#4. Carousel Ads

#5. Collection Ads

#6. Explore Ads

You can choose whatever form of advertisement you find suitable for your business. You may also set your IG ads directly within the application, on your ads manager, or through IG partners such as a digital marketing agency.

How Instagram ads work

As we have mentioned, IG ads are paid content that appear as regular posts. You will know that it is a paid ad if it has a ‘Sponsored’ label on the post or calls for an action such as ‘Learn more,’ ‘Watch now,’ or ‘Show more’. Video ads can last for 30 seconds compared to the regular IG video length of 15 seconds. Since IG ensures that relevant ads appear to users, its AI analyses the online activities, interests, and other important aspects of potential customers so that it delivers your ad to the most relevant audience.

Wrapping up

With the increasing demand for convenience, social media sites have grown to adapt to users’ needs. It has expanded its network and use by making it an arena for digital marketing. Since most internet users spend their time scrolling through their social feeds, this is an excellent platform for entrepreneurs to extend their market reach. If your target market is 15 to 35 years old, Instagram can be an excellent avenue for you to explore. Planning, budgeting, and consistent analysing of the platform as well as a strong content plan will be important if you want to engage in this strategy. Always set your goals and be specific with your timelines. If you are new to Instagram advertising, we can help work out the best strategy for you.

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