Btw I agree and disagree with you on several points.
First of all, yes. If you turn your account into business acc, instagram limits your natural reach. That`s that.
Also, I see people making the same mistake that start making ads too early. Like they open a new ig account, and they start ads. As a customer myself, when I see ads from ig accounts that sell products with only several hundred followers, I`m like "meh, ill just skip". So i believe even before ads, the account should be more stable and strong.
Besides, I guess the other important thing is what do you sell? I sell physical goods, fashion items and few other things on different niches. But I sell physical goods. When I look at the reach of my posts, I don`t get much likes or interaction but I do sell. So for me, and actually all my friends here, interaction on ig means nothing anymore. When people see my product or my friends products, they don`t waste time on liking or commenting, they straight out come to dm or whatsapp or whatever other median we are using.
As a matter of fact, a friend of mine selling fashion clothing, and they have 1.7m followers on ig. Their posts have around 1k-2k likes, and maybe 20-40 comments. When you consider these with the traditional ig marketing mindset it looks so damn s**itty, but in reality they do sell over 5k pieces of clothing per week. And yes they do ig ads/ fb ads. They spend around 300USD per day on ads.
So its not just ads not working, it really depends on many factors.