Imagine this: It's the online equivalent of Black Friday, your ecommerce store is brimming with incredible deals and the anticipation is high. But, just like a hot new sneaker release that's oversaturated by resellers, your ads are getting lost in the bustling crowd of Instagram.

Instagram, once the artisanal marketplace of social media platforms, with its trendy, high-converting advertising space, has turned into a flea market where everyone's hawking their wares. These days, it's a bit like trying to peddle artisanal coffee in an over-caffeinated world - the unique flavor of your brand isn't standing out.

Buckle up, because we're about to delve into the reasons behind this downward trend. We'll examine the current state of Instagram ad cost, scrutinize the overflowing ad placements, and dive into the gritty world of bidding wars. Is your landing page part of the problem? Or maybe Instagram Stories aren't the golden ticket we all thought they were?

And just when you're about to close shop, we'll introduce you to Subkit, a fresh face in the ecommerce world that could turn things around. Ready to take this journey? Good, because we’re all here to unravel the mystery of decreasing conversion rates and find that sweet spot for our brands.

The Declining Performance of Instagram Ads

Now, let's delve into the cold hard data, served with trustworthy sources and eye-catching infographics. Brace yourself, because these stats are about to make the ecommerce landscape seem a lot more like the wild west.

A. The Unsettling Stats: Lowering Conversion Rates and Rising Ad Costs

  • According to Hootsuite's 2023 report, the industry average Instagram ad conversion rate has slumped from a higher conversion rate of 1.2% in 2019 to a modest 0.9% in 2023.
  • Concurrently, the average cost per click (CPC) on Instagram ads has seen an uphill climb of approximately 55% in the same period, as per Statista's latest data.

B. Comparative Analysis: Instagram vs. Other Platforms

  • However, when we stack this data up against other social networks, the picture becomes even clearer. Data from WordStream shows that Facebook's average conversion rate remains steady at 1.1%, whereas LinkedIn soars to a triumphant 2.74%.
  • As per AdEspresso's 2023 Q1 report, Instagram's average CPC is now $1.15, outdoing both Facebook ($0.97) and LinkedIn ($0.58)

C. The Whys and Hows: Saturated Ad Space and Shifting User Behaviors

  • The reasons for these changes can mainly be traced back to a surge in ad volume, leading to a saturated ad space, as reported in eMarketer's recent study.
  • This has given rise to ad fatigue among Instagram users, diluting the impact of each individual ad.
  • Shifting user behaviors are also a significant factor. With increasing privacy concerns, users are less likely to interact with ads, negatively impacting conversion rates according to a Pew Research report.

These stats and figures provide us with a clear vantage point of the challenges marketers face while using Instagram. It appears the once buzzing marketplace has become a challenging terrain for brands to stand out. But, let's not surrender just yet; there are more layers to uncover in this surprising shift.

The Oversaturated Instagram Landscape

As we navigate this rocky terrain, it's essential to understand the contributing factors to this overcrowding. Let's unmask the usual suspects: carousel ads, Instagram story ads, and video ads.

A. The Ad Overload: Carousel, Story, and Video Ads

  • Carousel ads, the once engaging, interactive tool, have now become omnipresent on Instagram. Sprout Social's latest survey reveals a 60% increase in the use of carousel ads by brands in the past two years.
  • Instagram story ads are not far behind, with a 45% increase, as reported in AdEspresso's recent analysis.
  • Lastly, video ads, which were considered the future of social platform media advertising, have seen an unprecedented surge of 75% according to SmartInsights.

B. The Collateral Damage: User Engagement and Brand Awareness

  • The side effect of this ad inundation is a sharp decline in user engagement. As per Buffer's 2023 report, engagement with brands on Instagram has fallen by 23% over the last two years.
  • Brand awareness, the holy grail of advertising, is also taking a hit. According to a Nielsen study, brands have reported a 17% decrease in awareness levels amongst their target audience on Instagram.

It seems our tried-and-true heroes of the advertising world are falling from grace. The overcrowded landscape of Instagram is turning into an advertising quagmire, with diminishing returns for brands and dwindling patience amongst monthly active users. But is it time to abandon ship or are there still hidden gems in these murky waters? Stay tuned as we continue our quest for answers.

The Hidden Pitfalls of Instagram Ad Placement

Navigating the stormy seas of Instagram advertising, we must recognize the hidden icebergs threatening our ship's course - namely, ad placements, ad sets, and Facebook Ads Manager.

A. The Unexpected Culprits: Ad Placements and Ad Sets

  • Ad placements play a crucial role in the success of an ad. However, a study from AdEspresso shows that cluttered ad placements can lead to 14% lower conversion rates on Instagram.
  • Furthermore, managing ad sets has become a juggling act, with Social Media Examiner reporting that poorly curated ad sets contribute to a 19% decrease in ad performance.

B. The Hurdle: Facebook Ads Manager

  • As the command center for Instagram advertising, Facebook Ads Manager should ideally be a lifeline for marketers. However, according to a survey by Hootsuite, 68% of marketers find its complexity impedes rather than enhances their ad performance on Instagram.

C. The Harsh Reality: Instagram as an Ad Platform

  • A report by Forrester reveals that Instagram's growing emphasis on aesthetic perfection over relatable content might be driving potential customers away, thereby lowering ad conversion rates.

Navigating Instagram's ad landscape is akin to a game of chess. While there are opportunities for strategic victories, overlooked pitfalls can quickly turn the game against us. But fear not, brave marketer, there's a silver lining in every cloud. We're not done yet, and our journey might lead us to promising new shores.

Bidding Wars: A Losing Battle?

As we wade deeper into Instagram's tempestuous waters, we find ourselves in the midst of bidding wars. These unseen battles have a profound impact on your advertising costs and could be silently draining your marketing daily budget.

A. The Hidden Battlefield: Bid Amounts and Bidding Strategies

  • Bid amounts are a significant component of advertising costs. According to AdEspresso's 2023 research, average bid amounts on Instagram have risen by 37% over the last two years.
  • Both automatic and manual bidding are used by advertisers, but neither seems to be reigning in costs. A report from WordStream suggests that both strategies have contributed to inflating advertising costs by up to 22%.

B. The Ripple Effects: Relevance Score and Average CPC

  • The relevance score, Instagram's measure of an ad's quality, has a direct impact on ad costs. Unfortunately, as per a report from Social Media Today, achieving a higher relevance score has become more challenging, indirectly inflating the Instagram ads cost.
  • With the increased bid amounts and the struggle for relevance, the average CPC on Instagram has taken a hike. According to Statista, there has been a 55% rise in average CPC since 2019.

C. The Elusive Prize: Achieving Desired Results

  • With soaring costs and diminishing returns, achieving desired results from an Instagram ad campaign seems like a daunting task. According to a report from eMarketer, 61% of marketers believe that their current Instagram strategies are not delivering optimal results.

As we make sense of these murky waters, it's clear that winning these bidding wars might require a revised battle plan. But as we sail into the eye of the storm, we also stumble upon potential lifelines. Read on as we uncover these life-saving strategies in the final section.

The Instagram Stories Conundrum

Our journey leads us to a curious plot twist – the case of Instagram Stories. Once hailed as a trailblazing marketing tool, this format may not be as beneficial as it seems for your brand's conversion rates.

A. The Paradox: Instagram Stories and Users

  • Instagram Stories are inherently engaging, with their short-lived nature triggering FOMO (fear of missing out) amongst the right people. However, a recent study by Hootsuite suggests this might be contributing to a lower conversion rate. With users rapidly tapping through Stories, the chances of converting impressions into clicks dwindle.
  • Interestingly, Instagram users themselves seem to be contributing to this trend. A report by Sprout Social reveals 63% of users admit to frequently skipping branded Stories.

B. The Myth: Instagram Stories as The Best Engagement Tool

  • Though Instagram Stories have been widely touted as the best way to engage potential customers, recent data tells a different story. According to Buffer's 2023 report, feed posts consistently outperform Stories in terms of user engagement.

C. The Big Question: Effectiveness of Social Platforms for User Engagement

  • This discovery prompts us to reconsider the effectiveness of our current social platforms for user engagement. As per a report from Forrester, 41% of marketers question the overall efficacy of Instagram as a conversion tool, compared to other platforms like Facebook and YouTube.

As we unravel the Instagram Stories conundrum, it seems that this once foolproof method of engaging users may not be as reliable as we thought. But don't be disheartened. The winds of change are blowing, and they're carrying with them new strategies for boosting your conversion rates. Buckle up as we explore these in our final section.

Is Your Landing Page to Blame?

Now, we find ourselves faced with another suspect potentially impacting your conversion rates - your landing page. Could your Instagram-centric landing pages be misdirecting potential customers instead of guiding them towards specific actions?

A. The Misdirection: Instagram-Centric Landing Pages

  • Landing pages are essential in guiding potential customers towards desired actions. However, a study by Unbounce indicates that Instagram-centric landing pages might be failing at this task. In fact, the report states that these pages convert 22% less effectively than platform-agnostic ones.

B. The Instagram Dilemma: Leading Potential Customers

  • While Instagram is a powerful platform for brand awareness, it may not be the best tool for driving potential customers towards conversion. According to a report by HubSpot, Instagram falls behind Google Ads and email marketing when it comes to converting potential customers.

C. The Domino Effect: Bad Landing Pages and Conversion Rates

  • A poorly designed landing page doesn't just mislead your customers; it also negatively impacts your average conversion rate. Research by Neil Patel shows that bad landing pages can reduce conversion rates by up to 47%.

As we begin to realize, it's not just about the destination, but also about the journey. The path that leads potential customers from your Instagram ad to the final conversion point is as important as the ad itself. But before you sail into a sea of despair, let's chart the course towards better conversion rates in our final section.

Conclusion: Charting a New Course

Our deep dive into Instagram's lowering ad conversion rates and rising costs paints a somewhat somber picture. From oversaturated ad spaces to bidding wars and landing page misdirections, we've unmasked the reasons behind this downward trend. As we conclude, you might feel like a sailor adrift on choppy waters. But fear not, for there is a lighthouse on the horizon, guiding us towards safer shores.

A. A Sea of Challenges: The State of Instagram Ads

  • As we've seen, the Instagram ad landscape is increasingly challenging. With lowering average conversion rates, rising ad costs, and shifting user behaviours, the social media giant seems less like a utopian marketplace and more like a battleground for marketers.

B. The Lighthouse: Subkit, Your High-Conversion Lifeline

  • Enter Subkit, your beacon in this storm. This ultimate partnership and membership platform allows brands to easily co-market and revenue-share bundles, providing a more cost-effective way to engage your target audience. Subkit's solution is not only more affordable, but its focus on engagement and customer loyalty also ensures higher conversion rates.

C. Set Sail with Subkit: Your Call-to-Action

Now that we've navigated through the Instagram ad waters, it's time to embark on a new journey towards better conversion rates and lower advertising costs. We have invite only access to this innovative tool. Request an invite with our Subkit team today, and let us show you how to chart the course to sustainable eCommerce success. After all, it's not about weathering the storm, but learning to sail in any weather.