Instagram Ads in 2020: The Ultimate Guide

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June 18, 2020 BY Elise Darma

One of my students recently asked how to run Instagram ads in 2020 in our paid group: 

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Can you relate to that? 

If you’ve ever struggled with wanting to run Instagram ads for your business, you’re in the right place because in this post I’m going to walk you through how to know if your business is even ready for ads, plus how to run Instagram ads profitably in 2020

At the end of this post I’m also going to share the two key things that most business owners who are running ads forget to do…

…and if you don’t do these things, you’re going to lose a lot of time and money. 

Ready? Let’s get started. 

Prefer video? Watch in full here ⬆️

Is Your Business Ready for Ads?

First things first, the basics.

How do you know if your business is actually ready to spend money on Instagram ads? 

✔️ Validate Your Offer

The very first thing I recommend to my students is to ask themselves, have I validated this offer? 

Have I put it out to my Instagram followers or my email list and already gotten sales or leads for it? 

Instagram ads in 2020

If so, then you’re ready to start putting money into ads. 

I truly believe you should be able to build a warm audience organically first before you start to look at putting money into ads. 

It’s slightly more risky to take a brand new offer and just start running ads to it, especially if you haven’t built up a warm audience first. 

So I highly recommend to build your followers, build your email list, and then promote your new offer to your warm audience before running ads, especially ads to cold traffic.

Now, there is an exception to this rule.

If your business has extra savings in it, and you’re willing to spend money on ads for the sake of testing, then you could look at running ads for your brand new offer to a cold audience. 

But – this is only if you’re willing to spend at least a thousand dollars on running ads, not expecting to see that come back to your business. It’s purely for testing and data

If you’re not in that position, then I highly recommend to first present your offer to your warm audience.

Once your offer has been validated by your warm audience, you can start looking at ads. 

✔️ Determine Your Instagram Advertising Budget

Manage Your Expectations

If you’re new to ads, you have to be willing to accept that you might be putting money into ads and not seeing a Return on Ad Spend (ROAS) as you’re just figuring out what works and what doesn’t for your brand.

A Return On Ad Spend (ROAS) refers to the sales generated from your ads. 

When you run ads, you’re putting in a certain amount of dollars to Facebook or Instagram and you’re (potentially) getting a certain amount back in the form of sales. 

Ideally, you want more revenue coming back to your business from sales than the amount of ad spend you’re putting in to your campaign(s).

However, if you’re brand new to running ads or this is the first time you’re running ads to this particular offer, you have to be willing to accept that you’re simply running ads for data, not for a return on your ad spend. 

If you do make sales from your ads, that is an amazing perk. 

But when you’re just getting started, it’s not the expectation. 

I recommend spending up to a thousand dollars in your ads just for testing and data. 

Determine Your Target Cost Per Acquisition (CPA)

You next need to figure out how much you’re willing to spend on ads to acquire a sale. This is also called the Cost of Acquisition (CPA). 

Here’s an example:

I have a product called Story Vault, and currently it costs $27 to buy.

So, when I’m running ads to the Story Vault sales page, hypothetically, I can spend $20 – maybe even up to $27 – to acquire a purchase.

Now, of course, this is a business decision I make: Am I willing to run ads to make money off this product, or am I running ads just to acquire a new customer? 

Here’s the difference:

If I’m running ads to simply acquire a new customer in my business (rather than to make profit from that offer), then I could spend up to $27 to acquire that customer, which means I would break even on that sale. Breaking even in this case would be acceptable to me because my expectation isn’t to make money from that sale. It’s just to bring in a new customer to my business. 

However, if I’m running ads to actually make profit from that sale, then I probably won’t want to spend $27 per acquisition. I’ll probably want to spend maybe $20 maximum so that there is some leeway for profit. 

So depending on what your offer is – maybe it’s a $27 product, maybe it’s a $600 course – you’re going to have to figure out how much money you are willing to spend in order to acquire that customer from ads. 

How to Figure Out Cost Per Acquisition Using Instagram Ads

Now, I’m not going to go too deep into numbers because the specifics all depend on your offer and your business model. 

(If you do want to go deep into numbers behind the scenes of my business, take a sneak peek here.)

This is where working with an ads professional is really beneficial, but I will share some general guidelines.

Firstly, when you’re looking at conversions, especially to a sales page, average industry conversions are generally between 1-3%. That means if a hundred people land on your sales page, between 1-3 people will become buyers. 

Now, of course, this varies by industry and by market. Some people can get a 5% or even 8% conversion to a sales page. But let’s go with industry average that’s currently between 1-3%. For this example, let’s say 2%. 

So if you have a 2% sales conversion, that means you need a hundred leads so that two of them become buyers. 

Instagram Ads Sales Funnel Conversion

Now if we take a further step backwards, how do we get leads to visit the sales page in the first place? 

Generally, depending on your offer, you get leads by driving them to a freebie or an opt in page. 

Let’s say your opt in page has a 50% opt in conversion.

So 50% of people who land on this page are going to become leads. If you need a hundred leads in your business, then that means you need to send 200 people to your opt in page, because 50% of them are going to become leads, right? 

Instagram Ads 2020 Sales Funnel Stats 1024x149

Personally, I love this kind of math because then it’s black and white. It’s crystal clear. I know how much traffic I need to send to my opt in page or my sales page in order to get the sales that I’m looking for through ads. 

Fun, right? 🤓

What Instagram Ads Are Working in 2020?

Now that we’ve covered whether your business is ready for ads, let’s talk about the types of Instagram ads I see working for businesses in 2020. 

Carousel Post Ad

The first type of ad that’s working is a carousel post. 

Personally, I find this surprising because in my past testings, I’ve never seen this type of ad convert, but in 2020 it’s converting pretty well for me and other business owners. 

Let’s look at this example ad from Dahlia Wealth: 

Ad Example Dahlia Wealth
Example of a carousel post ad from @dahlia_wealth

You can see in this example, they’ve put together three quotes which are kind of motivational and inspirational in the form of a carousel.

I also find that writing a story and breaking up the text in between the carousel posts work really well, or using the carousel posts for testimonials.

Carousel posts tends to be quite engaging if done right, so consider testing them out in your ads!

Animated Graphic Ad

The next type of ad I see doing well on Instagram is what I’m calling an animated graphic: 

GIF General Assembly Animated Ad
Example of an animated graphic ad from @generalassembly

In this example, this is designed to be an Instagram Story ad. Notice the animation and moving text that captures the attention of someone who’s scrolling through their Stories. 

Personally I’m also seeing this kind of ad work well in my business, especially in Instagram Stories. 

If you’re interested in learning about how to create videos for your Instagram, watch this video below ⬇️

My favorite ways to create easy Instagram videos for business 👆🏽

Instagram Story Ad

The third type of ad that I see working well is basically an ad that looks like a regular “talking head” Instagram Story.

This makes sense, right? If you can design an ad to look less like an ad and more like a regular Story, it’s going to fit into someone’s Story scrolling experience a whole lot more seamlessly. 

Let’s look at this ad example from my friend Esther:

GIF Talking Head Ad Example
Example of a “talking head” ad from @esther_inman

She’s got one of the Instagram filters creating that halo effect around her head. She’s got some text over top, plus her Call To Action, and it just looks like something you’d naturally see in your Instagram Stories feed. 

I find this type of ad working really well today in 2020. 

Alright – Now that you know if you’re ready to run ads and the best types of ad to run, let’s talk about the two things that business owners typically don’t do that costs them a lot of time and money: testing, and retargeting.

How to Test Instagram Ads in 2020

There are generally three aspects of an ad that I like to A/B test. 

1. Targeting

The first aspect of an ad I like to test is targeting.

I love to A/B test different types of audiences and see which audience performs the best.

This means running the same ad to two different audiences. Maybe one has a specific interest and one is a different demographic or location.

As those ad sets are running, I can see which audience is performing best with the same ad. 

2. Creative

The second thing I like to test is the creative.

By “creative” I mean the visual aspect and format of the ad, such as the image, the video, the carousel post, etc.

Sometimes I think I know what kind of ad my audience is going to resonate with, and sometimes I am completely wrong and completely surprised.

That’s why I like to create approximately five different types of ads to run to the same audience.

I let Facebook test and optimize to see which ad really resonates the best with my audience. 

3. Copy

The last thing I like to test is the copy in the ad.

“Copy” refers to wherever there is writing in the ad. This means the headline, the body text of the ad, whether or not we include emojis, etc.

When testing copy, what I like to do is run two variations of the ad with different copy, but keep everything else (the audience targeting and creative) the same.

During testing I also make sure to only test one tweak at a time so I can be really sure as to what specifically worked and what did not. For example, maybe both ad variations have the same body text, but I’ve changed the headline on each ad to test which headline works best. 

Then when everything’s running, I can look at campaign data as a whole and turn off what’s not working or what’s costing me too much money.

Testing is a key money saver. 💰

Retargeting Ads on Instagram

The second thing that most business owners don’t do in advertising is retargeting

Retargeting is generally the easiest way to recoup your costs of advertising or actually make money from your ads. 

What is a retargeting ad?

A retargeting ad is an ad that is shown to people who have already visited your website, or are already a contact in your business, such as being part of your email list. 

Before you start running ads, you are going to place your Facebook Pixel ID on your website and any landing pages associated with your offer. 

For example, let’s say you have an opt-in page and a thank you page.

When you set up a retargeting ad campaign, what you’re doing is targeting everyone who landed on your opt-in page, but who didn’t make it to your thank you page. 

This tells you that someone was interested enough in your ad to click through to your opt-in page, but did not end up signing up (and therefore did not land on your thank you page).

Generally when you set up a retargeting campaign, it’s very cost effective to run a specific ad with specific messaging to recapture those people who left your landing page and never opted in. 

Retargeting campaigns are key in my business. 

Whenever I run a campaign for either sales or lead generation, I always have a second campaign that will have a specific ad to recapture that lost traffic of mine. 

Hey, you’ve probably seen one of my retargeting ads before. 

In fact, some people meet me and they say, “Oh yeah, I recognize you. I’ve seen your ads!

When this happens, it actually makes me happy. 

It tells me that my ads are doing their job and I’m showing up in multiple ways so that people know about my business and my brand. 

If you’re interested in running an Instagram Story ad specifically, I invite you to check out the video below where I cover the back end of setting up an Instagram Story ad in Facebook Ads Manager. ⤵️

I walk you through how to set up an Instagram Story ad ⬆️

Ready to Create Instagram Ads That Convert?

If you’re thinking, “Yes! I’m ready to run Instagram ads, but what the heck do I say?“, I’ve got you covered.

Story Vault is my answer to your question, What should I post today?

Story Vault Course Card 1024x410

It’s time to stop wondering how others are locking in clients, leads and sales from social media. 💰

Story Vault is a curated collection of 800 strategic Instagram Story prompts covering the four seasons of business growth:

  • Get visible in your market… so you go from being invisible and unknown to “OMG I love watching your Stories!”
  • Boost your engagement… so you never get a “crickets only” response to your Stories again
  • ​Get qualified, ready-to-buy leads so you can build up your email list or book out your call calendar
  • ​Lock in chart-topping sales to your programs, products and offers (so you can STOP aimlessly posting on social media and actually see a return from it!)

And I guarantee once you’ve unlocked Story Vault and you see those 800 ideas, you’re going to get ideas for your ads as well. 😉

June 18, 2020 BY Elise Darma
Hi, I’m Elise Darma!

I traded my 9-5 office cardigan for
that 7-figure entrepreneur life. But
I’m no overnight success. I’ve
experienced burnout, overwhelm
and ghosting Instagram for the
entire month of February 2019. I’m
probably the laziest Instagram
marketer you know, but if you want
to know how to sell more by doing
less – you’re in the right place.

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