How to Measure the True ROI of Your Instagram Ads
As one of the top digital marketing channels for businesses, social media is a crucial component in your organization’s success. And when the context is about social media marketing and ads, you just can’t look past Instagram. Instagram currently has more than 25 lakh business accounts.
Companies have also spent approximately $7 billion on Instagram advertising last year. Brands leverage Instagram ads because of a wide variety of target audiences. But what is a good ROI for Instagram ads? Instagram has a very high return on investment.
It has an average ROI of $65 per referred sale. Measuring the ROI will let you allow the effectiveness of the Instagram ads. It also demonstrates value to your organization and refines your strategy over time. Instagram ambitions typically vary from one brand to another.
But a common factor among all of them is the ROI. Besides measuring the engagement rate, companies now allocate a dedicated budget to social media marketing and the creation of content. The Instagram metrics vary from tangible to intangible.
Why use Instagram Ads to Promote Your Products and Services?
Do you know that the average Instagram business account grows its followers by 0.98% per month? With such an impressive growth rate, there is no doubt that you should strategize to develop your brand’s engagement rate.
Instagram ads are an excellent way for companies on a budget to gain more exposure and increase sales. Here are some common reasons to use Instagram ads to achieve your digital marketing goals.
Streamlined Campaign Creation
Instagram ads are fully integrated, which ensures the easy maneuvering of campaign creation. With Instagram ads, you can set custom audiences. Moreover, it is relatively easy to calculate ad costs on Instagram. 79% of people who see your Instagram ads click on them to derive more information.
As a brand, you will get the best of Instagram’s audience targeting variations and optimization settings. Instagram can easily integrate with Shopify to make your ad campaigns practical.
Posting an Ad on Instagram is Easy
Small and mid-scale organizations without a dedicated social media marketing team find it easy to promote their brand on Instagram. You can design and post an ad on Instagram within a few minutes. It offers start-ups an opportunity to get positive ROI. As a start-up, you can also target lookalike audiences with ease.
Increases your Brand’s Awareness
Instagram is the 4th most-used social media platform in the world. Undoubtedly, it is one of the leading social media platforms. Instagram allows for a unique opportunity to create, expand, maintain, and expand a high-intent follower base. Always remember that Instagram ads measure success based on awareness rather than comments.
Instagram Ads Offer a Higher ROI
Instagram has an annual advertising reach of 928 million. If you want to get the best return on investment in social media marketing, don’t look beyond Instagram. You can discover numerous potential customers on this platform. Furthermore, your Instagram marketing efforts would have a good return.
What is a Good ROI for Instagram Ads? The Important Aspects to Know
Do you think Instagram is just a platform for Gen Z users? The latest research shows that people spend a minimum of 53 minutes per day on Instagram. In other words, creating a highly targeted advertising campaign is the best way to get your brand noticed on Instagram.
Besides developing organic content, you should create bespoke Instagram ads. But what is a satisfactory Instagram ROI for ads? As a general rule, most companies should aim for an ROI of at least 3:1 for Instagram advertising.
In simple words, for every single dollar you spend on Instagram ads, you should earn 3 dollars in revenue. The ROI of Instagram ads refers to the return on investment. It is the total amount of money you expect to get after the initial investment.
More than 72% of the posts on Instagram are photos. Therefore, you should focus on developing ads in the form of photos for Instagram. Measuring Instagram ROI will assist you in understanding the strengths and weaknesses of your marketing campaigns.
How Much Do Instagram Ads Cost?
To calculate Instagram ROI, you need to know about the cost of Instagram ads. The average cost of Instagram ads typically varies and depends on variables. The cost also relies heavily on the pricing model for your campaign. To understand the ad cost, you should be aware of the two pricing structures in Instagram.
- Cost-per-click or CPC
You will have to pay Instagram every time a user clicks on your ad. - Cost-per-mile or CPM
It is the pricing model where you will be billed every time when the ads get a thousand clicks.
The CPC for ad-based Instagram stories lies in the range of 45-50 cents. On the other hand, the CPM for ad-based Instagram stories lies in the range of $1 to $1.15. You will get a higher ROI for your social media advertising efforts once you know the cost of ads.
Here are a few of the costs associated with Instagram.
- Costs associated with content creation which includes the average price of creating each ad post
- Social advertising budget
- Investment in audience research and social listening tools
- The costs can surge if you are using specialized consultants or agencies
The Best Strategies to Measure the True ROI of Your Instagram Ads
Calculating social media return on investment or ROI can be pretty tricky. Moreover, not everything on major social platforms like Instagram will translate to sales. From calculating link clicks to the ROI of ads, you have to consider several factors.
While ROI is typically a monetary value, there might be cases where the direct effect on revenue can be tough to calculate. In these situations, the ROI for Instagram ads is measured by non-monetary metrics.
Some of the standard non-monetary metrics are social influence, brand awareness, emotional sentiment, etc., among the followers. In 2023, more than 35% of users will make a purchase through ads. Therefore, knowing how to measure the ROI of the ads is essential.
Measuring the ROI of the ads will also let you optimize your company’s social media presence. To measure Instagram ads ROI, you have to consider tangible and intangible metrics.
The Tangible Metrics to Calculate the ROI for Instagram Ads
The Instagram stories generate 1/4 of the ad revenues of the platform. In such a situation, you should know about the tangible metrics to calculate the true ROI of the ads on Instagram. In most cases, marketers think that calculating the click-through rate is the best way to calculate ROI.
They also tend to emphasize advertising costs. Here are some of the top tangible metrics to calculate the ROI of Instagram ads. A majority of these metrics can be found within the built-in Instagram insights platform.
Growth of the Audiences
Are Instagram ads helping you gain more followers each month? With the best Instagram marketing strategies, you can increase your total number of followers. The speed at which your audience grows is the growth rate of the Instagram account.
15% of the shoppers in the US commence their online shopping searches with Instagram. Measuring the ROI of your Instagram ads is thus pretty essential to target these users. The growth rate of your Instagram account and ads is closely related to organic reach.
It is essential that the growth of the audiences in your account and organic reach are increasing at the same pace. It tells you that the development is authentic. But if the growth rate and organic reach aren’t growing at the same speed, there’s a chance that your audiences are bots.
Besides analyzing the advertising costs, you should carefully assess the type of content of the ads. By running paid ads, you will see your follower growth surge rapidly.
The Rate of Engagement of the Instagram Ads
Engagement parameters like comments, shares, and saves depict how engaging your Instagram ads are. It is always recommended that social media marketers carefully assess the advertising costs on Instagram. By evaluating the costs, there is no chance of overshooting your budget.
You shouldn’t only pay attention to the likes. Engagement metrics like saves and comments showcase that someone actually invested time to go through your Instagram ads. More than 60% of the ad audience on Instagram is aged 18 to 34.
Therefore, you should be proactive in creating the best content for your Instagram ads. You should also be aware of the shares that the ad received. Shares offer your Instagram ads the potential to reach a wide group of target audiences.
And if you notice that the comments on your posts are starting to increase, it is actually a positive sign. It shows that you’re building a community through your ads. However, always keep track of the sentiment of the comments.
Impressions and Reach
Impressions and can tellwhat is a good ROI for Instagram ads. In social media marketing, calculating advertising costs do play a crucial role. But calculating brand awareness is the ultimate aim of every Instagram marketer.
Curating the Instagram feed of your user with targeted ads should be your main objective. Reach in Instagram refers to how many new accounts viewed your ads. On the other hand, impressions refer to how many times it is considered.
Awareness also plays an integral role in pleasing the Instagram algorithm. The Instagram algorithm gives a higher preference to the requirements of its users. It is created to show people more of what they want.
So, if your ads have a higher reach, the Instagram algorithm will ensure that the audiences have access to them. It directly increases your brand’s conversion rate on Instagram. You can also use single-image ads to impress your audiences. The reach and impressions also tell which type of content you should create for this social media channel.
Traffic and Clicks
The traffic to Instagram has increased by more than 9% compared to the last few years. For any marketer, metrics like likes and comments are a good sign. However, as an Instagram marketer, you should never undermine the importance of clicks.
Clicks can assist you in showcasing the best ROI for your Instagram ads. And to protect your brand from negative ROI, you should know when the clicks are dwindling. The way you will assess clicks depends a lot on your objectives.
It is common for social media marketers to have different goals. For instance, if your objective is to increase traffic on your online store, keeping a track of clicks is essential. With the click-through rate or CTR, you can derive the total number of clicks.
Besides measuring clicks, you should know how to measure the traffic for your Instagram ads and your website. Tools like Google Analytics can help you estimate the total traffic to your website due to Instagram ads. The CPM for Instagram ads increased by 17% in the third quarter of 2022. That’s why keeping track of traffic and clicks is essential.
The Intangible Metrics to Analyze the ROI of Your Instagram Ads
Your social strategy for Instagram should always involve intangible metrics. But besides social strategy, the intangible metrics are integral in calculating the ROI of your Instagram ads. Numbers and data are always significant aspects of measuring the ROI of your Instagram ads.
However, you should look beyond them to calculate the return on investment on the stories ads. Here are some of the standard intangible metrics that you should be tracking.
Streamlined Communication with Customers
Do you know the real reason why social marketers love Instagram? Instagram offers a direct line of communication with your customers. So, if any customer is interacting with your ads, you can directly communicate with them.
Due to privacy laws, this type of direct communication is uncommon on other social platforms. 78% of accounts on Instagram will favor your brand if you’re more active. In other words, you should maintain a steady flow of communication with your clients.
But the potential of communicating on Instagram is not only limited to direct messaging. You can speak to your audiences on a subtler level with well-designed ads. You can also develop video ads and post them as reels and stories on Instagram.
Influencer Marketing on Instagram
Your social media marketing strategy for Instagram should also involve influencer marketing. Influencer marketing refers to marketing your company’s services and products through influencers to drive brand messages.
Most influencers on social advertising platforms have more than three billion followers. With influencers, you can easily deduce the overall ROI of your Instagram ads. Some of the expected benefits associated with influencer marketing are:
- Reach and awareness
- Enhances trust and credibility
- Enriches the content strategy of your Instagram ads
Developing the Awareness of Your Brand
To get the best ROI report for your Instagram ads, you can refer to your company’s discovery rate. With 2 billion people reacting to reels on Instagram every day, it is the best place where customers can discover your brand.
And with proper post engagement, you can increase the rate at which your products and service offerings are being discovered. Millions are finding new companies on social platforms like Instagram daily. Therefore, taking actionable steps to optimize your ads is the best way to stay relevant.
The Proven Ways to Boost the ROI of Your Ads on Instagram
Setting campaign goals is typically more straightforward on Instagram compared to other platforms. Being the top social platform, you will always want to increase the ROI of your ads on Instagram. Here are some proven ways to boost the ad’s ROI.
- Invest in influencer marketing campaigns to boost awareness of the ads
- Leverage the power of stories ads to connect with newer audiences
- Always refrain from deriving short-term ROI and consider looking at the bigger picture
For modern-day brands, quantifying the value of social media marketing is essential. By now, you are well aware of what is a good ROI for Instagram ads. Social media marketing ROI is critical to stay relevant in this competitive market. Discover the best time to post and analyze your Instagram video ads with these helpful strategies. As an Instagram marketer, your focus should always be on the bigger picture. Your main objective is to create and design value-driven ads.