How Instagram Ads Work

Instagram advertising allows business owners and marketing agencies to run tailored ads on the platform, which can directly target specific demographics. 

If set up correctly, Instagram ads can be a great way to:

  • Improve your brand image
  • Increase your traffic and conversions 
  • Generate new leads

In this guide, we explain the types of Instagram ads (and the differences between them), how they are made and managed, and what kind of businesses can benefit the most from using them.


Types of Instagram Ads

There are several types of Instagram ads that you can run, all of which are tailored towards achieving different outcomes for your business and/or client(s). 

Such outcomes include:

  • Increasing brand awareness
  • Increasing overall engagement
  • Generating conversions 
  • Generating traffic

This means that, depending on your desired outcome, you may want to adopt one or all of the Instagram advertising approaches discussed below.

Sponsored Stories

Sponsored stories are a form of Instagram advertising that you see when you are looking at any of your following’s stories. They include a “sponsored” description in the top left corner of the story and can be a maximum of 15 seconds long.

Generally, these allow certain demographics on Instagram to make an action, which can be usually done by “swiping upwards” (e.g., into a specific page on your or on your client’s website). 

Sponsored stories are generally great for catching viewers’ attention — as well as for getting followers — because they appear without the consent of the party viewing them. 

This means that advertisers can always have a chance to create an eye-catching and memorable ad that leaves a lasting impression. If carried out correctly, it can be a great way of catching potential customers' interest and driving them into your (or your clients’) website(s) or app(s).

Collection Ads

Instagram’s collection ads are identical to the collection ads seen on Facebook. They allow advertisers to include several different images of their products in one post. These can be ideal if you need to display several different products or if you need to display one product at several different angles.

Generally, collection ads are used by ecommerce businesses that sell physical products, as the prolific image structure can be a great reassurance of quality for prospective clients.

Photo and Video Ads

Instagram advertising in the form of photos and videos can be great for advertisers. This is because, depending on how they are structured, they can satisfy several different outcomes. For example, you may want to design your ads to increase your conversions (i.e., the number of sales from users checking out your website).

Similarly, you may wish to upload a single photograph or video to increase your total engagement. This can translate into more likes, comments, followers, and — ultimately — field eminence. 

You should note that this is not the same as simply “promoting” your posts. Promoting your posts can be done by clicking the “promote” button at the bottom of any of your posts (assuming you have a business account) and then choosing the budget that you wish to allocate.

This allows you to identify the number of people that you will be able to reach.

Managing Instagram Ads

Even if you are only interested in relying on Instagram advertisements — rather than a combination of social media accounts — you will need to manage them through your Facebook business manager.

This is because Instagram was acquired by Facebook back in 2012, and the parent company has chosen to integrate this section of advertising so that one platform is used for both apps.

Managing your Instagram ads can be done by using:

  • Business Manager: This is the account that you will use to manage all of your clients’ or your businesses’ Instagram advertising needs
  • Ad Manager: Inside your business manager, you will be able to access your ad manager. You can use this to create an ad account for each business or client that you will be working with
  • Ad Account: This is used to directly manage the ads that you will be uploading for each business or client
  • Ad Campaign: This is where you will pick what type of ad(s) you will upload. This could relate to your total engagement, traffic, conversions, or much more.
  • Ad Set: Ad set is where you can decide what demographic you want to target. This is actually one of Instagram's strongest selling points when it comes to advertising because of the seemingly limitless amount of filters that you can introduce (e.g., age, gender, location, interests, etc.)
  • Ad: The final part is your actual ad. You need to decide what it will involve, why it is a good idea, and how it will grasp your viewers’ attention.

When you start out, you will want to run different types of ads and target several different demographics simultaneously. This will allow you to test the most effective approach to advertise your product on Instagram. 

Creating Instagram Ads

In order to create an Instagram ad, you will need to have a business Facebook account. Full details on how this is done can be found on the Facebook Business introductory page.

After you have signed up to the platform, setting up your first Instagram ad is very simple:

  • Select “Create new ad”

  • Choose your marketing objective: This is the reason that you want to upload your Instagram ads. It could be to generate leads, increase your traffic and conversions, or simply increase your total engagement levels.

    Keep in mind that Instagram ads are only effective for certain marketing objectives:
    • Increasing your brand awareness
    • Increasing your total traffic
    • Increasing your total engagement
    • Increasing your total conversions (on your website)
    • Increasing the number of app installations that you get (through Instagram)
  • Choose your budget: This is entirely up to you. You may want to start off relatively small with a few dollars a day, and then — after you have assessed the effectiveness of each ad — incrementally scale upwards.
    • You can also choose to run your ads on specific days and at certain times of the week. This can be very useful if you know that your target demographic is consistently more active in a specific time during the day.
    • Keep in mind that this option is only available to users using a “lifetime budget,” which can be organized through your campaign budget optimization tab.
  • Choose your audience: This step is pivotal, as targeting the wrong demographic can very easily make an ad virtually worthless regardless of how well it is made.

    As already mentioned, the ability to choose your audience is one of the more valuable factors when advertising through Instagram because of the platform’s ability to be extremely specific. For example, you can choose your audience based on their:
    • Location
    • Gender
    • Age
    • Behaviors
    • Connections
    • Custom options
  • Choose your placements: Placements allow you to dictate where and in which platforms your ads will run. This can be managed through the “manual placements” tab, which you can use to tick off any option that you do not wish to use. This includes:
    • Instagram feeds (if you only want a story)
    • Facebook stories
    • Messenger stories
    • Facebook news feeds
    • Facebook marketing place
    • Facebook right column
  • Upload your ad: This can be done through your business manager. Simply select the “add media” option, ad a video or a photograph, and then upload it from the downloaded or saved documents on your device.

Is Instagram Advertising Right for My Business?

So, is Instagram advertising for everyone? Yes and no. While its benefits and targeted marketing approach can yield great results for most businesses, it is better suited towards those that target younger demographics. This is because the platform is predominantly occupied by young adults. 

According to Statista, for example, the most common age groups for Instagram users worldwide are:

  • 25-34: 16.4% of men and 15.7% of women
  • 18-24: 15.7% of men and 14.2% of women 
  • 35-44: 7.3% of men and 9% of women
  • 13-17: 3.8% of men and 3.7% of women
  • 55-64: 1.5% of men and 2.3% of women 
  • 65+: 1% of men and 1.3% of women

This means that unless you are targeting older demographics (e.g., if you are advertising for hearing aids or any other product where the majority of your clients will be elders), Instagram advertising could be an ideal marketing platform for you or your client’s business. 

At the same time, even if your business is tailored towards older demographics, you should keep in mind that — just like with Facebook — older audiences are expected to increasingly migrate towards Instagram in the future, and so getting accustomed to the platform from early on may prove to be a very valuable investment for you. 

Additionally, even though older users are undoubtedly a minority within Instagram, the website still allows you to target them directly, which can mean that you maintain a good ROI regardless.

This is especially the case when considering that Instagram advertising incorporates Facebook’s demographic data into its system. This allows advertisers to target niche demographics much more effectively due to the abundant historical information that is available.

What to Do Before Advertising on Instagram

If you are interested in running your own ads through Instagram, you will likely benefit from considering the following three points beforehand:

Optimize Your Profile

Your profile is the core of your Instagram advertising campaign. Any users who will be interested in your products will seldom not revert back to your Instagram profile, and this means that you need to structure it in an efficient and effective manner.

Make sure that you:

  • Include your business information on your bio
  • Select a profile picture that is representative of your business (e.g., your logo)
  • Include your contact information: This could be your email, telephone number, and/or website

You will also want to ensure that you make posts regularly (at least a few times a week), as this can go a long way in making you seem committed and credible.

Know Your Objective

Just like any other form of advertising, knowing what you are trying to achieve needs to be thought out proactively. This is important because it allows you to target the correct demographics, tailor your ads in a specific way, and choose the most effective marketing objective. 

Your marketing goals should always be SMART:

  • Specific: This should be interpreted as “broadly” as possible. You should set unambiguous goals so that you have a way of accurately measuring your progress.
  • Measurable: Your marketing goals need to be designed in a way where you can produce measurable results. This can allow you to accurately assess:
    • How you need to improve
    • What you should change
    • What you did correctly 
  • Attainable: This can be hard to quantify, but it is very important nonetheless. Setting marketing goals that are unattainable can very easily demoralize you and your entire team.
    • You should find the balance between goals that are too attainable (i.e., to the extent that they are not even worth setting) and the goals that are too unattainable (i.e., virtually impossible to complete)
  • Relevant: This will need you to identify what you aim to achieve. You will need to know this in order to choose your marketing objective when creating your Instagram ads down the line. 
    • Make sure that your marketing goals are structured in a way that supplements your business’s general brand strategy. 
  • Timely: You should set reasonable but strict deadlines for your goals. 
    • This can allow you (and everyone in your team) to stay motivated on the task at hand and not focus on other seemingly more urgent matters.

Identify Your Key Audience

Before you start running ads on Instagram, make sure that you have allocated a sufficient amount of time toward identifying who your ideal customers are.

Know their specificities (e.g., age, location, gender, activity levels, etc.) and craft your ad so that it can resonate perfectly with them. 

This can ensure that you do not waste any capital on ineffective ad campaigns which were reasonably foreseeable. 

If you are already popular on Instagram, an easy way of going on about this is to look at your current followers and customers and attempt to categorize them into quantifiable categories.

Frequently Asked Questions

Which country has the largest Instagram audience?

As of July 2021, the country with the largest Instagram audience is India (180 million). The US is a close second place with roughly 170 million active users.

Other notable country audiences include:

  • Brazil (110 million)
  • Indonesia (98 million)
  • Turkey (50 million)
  • Japan (46 million)
  • United Kingdom (29 million)

How much money do Instagram influencers make?

Instagram influencers can make anywhere from a few dollars per post to seven-figure annual salaries and — in extreme cases — over $1 million per post. 

Ultimately, this depends on influencers’:

  • Engagement levels
  • Following
  • Market

For more information on how you can make money on Instagram, check out our recent How Instagram Influencers Make Money guide.

Should I become an Instagram influencer?

One of the most convenient parts of becoming an Instagram influencer is that it requires almost no startup capital. 

All you really need is a computer or laptop that you can use to edit and upload your posts, a stable internet connection, and a camera. You may also want to purchase dedicated editing software, but this is usually very affordable. 

This means that if you want to try becoming an Instagram influencer, you have little to lose and potentially a lot to gain — especially when accounting for all of the marketing opportunities that a popular Instagram account can provide. 

Of course, you will need to establish your presence on the platform and identity:

  • What market you will operate in
  • What products or services you will provide
  • How you will stand out from other competitors

What other social media platforms can I advertise on?

Other social media platforms that you may want to consider for your advertising campaigns include:

  • Facebook 
  • Twitter
  • LinkedIn
  • Snapchat
  • TikTok

As different social media platforms attract different types of users, you will want to consider where you will be able to attract your targeted demographic. 

For example, a recruitment agency would likely find that LinkedIn would be the most applicable platform because it would provide them with a high number of individuals who are actively looking for work.

What is the most effective type of Instagram ad?

It is very difficult to categorize one type of Instagram ad as the “most effective,” as this will depend on each business’s marketing objective. 

If you are looking to increase your engagement levels, you may want to run a single post and structure it in a way that invites increased interaction (e.g., likes, comments, etc.). On the other hand, if you want users to complete a certain call to action, an Instagram story (with its “swipe up” feature) could be your best approach. 

Ultimately, users are encouraged to experiment with several different types of Instagram ads and demographics in order to extrapolate what works best for their specific business.