Instagram CPCs, CPMs drop as click-throughs continue to climb

On Dec 27, 2018

Instagram advertisers experienced a drop in cost-per-clicks (CPC) and cost-per-impressions (CPM) in the third quarter compared to the second quarter of 2018, with CPCs down 21 percent quarter-over-quarter and CPMs down 19 percent, according to AdStage’s Paid Media Benchmark report for the third quarter of 2018. While CPCs and CPMs dropped, Instagram’s click-through rate (CTR) was up 8.9 percent. At $1.09, AdStage reports Instagram’s CPC rate during the third quarter was the lowest it has been all year.

Good news for Instagram advertisers. Instagram’s lower CPCs matched with higher CTRs translated to strong results for advertisers on the platform during the third quarter. Instagram CPCs dropped 20.7 percent in the third quarter over the second and CPMs were down 19 percent at $6.90. As CPCs and CPMs fell, CTRs on the platform were up nearly 10 percent quarter-over-quarter — even more impressive, Instagram CTRs saw a 150.1 percent year-over-year increase during the third quarter of 2018.

AdStage co-founder and CEO Sahil Jain said there are likely a variety of reasons why Instagram is experiencing a drop in CPC and CPM rates.

“Seasonality can play a role during the summer months. In addition, however, we have seen continued excitement and investment in Instagram as a network and placement. With the diversified placement options and mediums (for example, video, carousel, etc.), the competition can be distributed allowing for more favorable auction dynamics,” said Jain.

In July, Merkle reported Instagram ad spend was up 177 percent year-over-year — far outperforming Facebook News Feed ads which had increased only 40 percent year-over-year.

Facebook falls short. Facebook’s third-quarter data was not nearly as appealing to advertisers as Instagram’s CPC and CTR results. While Instagram saw its lowest CPCs of the year, Facebook News Feed ad CPCs were at their highest during the third quarter. In fact, AdStage says Facebook’s third quarter CPCs were the highest they’ve been in 2018 — up 27.9 percent over second quarter results. Meanwhile Facebook’s CTRs fell 35.7 percent between the second and third quarter of the year — meaning advertisers were paying more for less engagement. (Facebook News Feed ad CPMs were down 15.6 percent quarter-over-quarter.)

Unlike Instagram, Facebook did not deliver nearly as strong results for advertisers. With CPCs at a record-high for the year and CTRs continuing to drop, more Facebook advertisers may be turning to Instagram, which Facebook owns.

Facebook’s Audience Network and Messenger ads appeared to perform slightly better than the News Feed ads, with CPCs down for both and CTRs up in the third quarter. Facebook Audience Network ads did see a rise in CPMs during the quarter.

Twitter and LinkedIn results. Advertisers on Twitter and LinkedIn experienced slight changes in the right direction. Both platforms saw CPCs and CPMs drop in the third quarter compared to the second quarter, while CTRs were up 26.9 percent for LinkedIn and 23 percent for Twitter. AdStage reported LinkedIn CPCs were the lowest the digital ad platform has seen at $3.77 — falling more than a dollar since the second quarter and down $2.38 year-over-year. LinkedIn’s CTR was up 73 percent year-over-year.

In addition to Instagram, Facebook, Twitter and LinkedIn ad metrics, AdStage’s report also covered benchmarks for Google and Bing search ads and YouTube ads. The full report can be downloaded at: AdStage’s Paid Media Benchmark Report – Q3 2018.

Why you should care. Overall, knowing benchmarks for social media ad campaigns can help give marketers perspective on ad performance, along with a measuring stick to rate their own efforts. The report may also offer an added layer of insight for any advertisers on the fence about shifting ad dollars from Facebook to Instagram in the coming year.

AdStage’s Instagram CPC, CPM and CTR data provides evidence into why many Instagram advertisers are remaining loyal to the platform — a trend the company’s VP of product, Paul Wicker, predicted would happen through the end of the year when he spoke to Marketing Land in August. The VP said advertisers’ growing interest in Instagram was the outcome of Instagram’s commitment to investing in its ad platform combined with the one-billion daily active users it has attracted.

“The pace of innovation by the Instagram team has been fierce. Over the past year, we’ve seen Instagram roll out numerous improvements to the core Instagram experience as well as Instagram Stories. Facebook recently announced that there are more than one billion Instagram users, and advertisers are drooling over all that inventory,” said Wicker earlier this year.