The cost of LinkedIn Ads - how expensive is it really?
In this blog post, we’ll dive deep into how advertising on LinkedIn is priced, our findings on what affects costs, and how you can improve your LinkedIn campaigns’ cost-efficiency. Let’s go!
What determines the price of LinkedIn Ads?
Like all modern online advertising platforms, LinkedIn Ad’s pricing is auction-based. A bid is placed for a designated impression to win in an auction, which is won or lost based on your overall competitiveness.
The selected objective, target audience, bidding strategy, and ad relevance score determine the final price of your advertising.
Successful marketing begins with an objective, which is the case with LinkedIn. Each campaign must have an objective which then determines the campaign’s optimization goal and bidding strategies. In other words, what the platform considers the desired result and how its automated bidding algorithms behave.
Second, a campaign must always have a target audience, i.e., who you are attempting to reach. The audience’s composition and desirability determine the cost you’ll end up paying. In other words, if you’re targeting a small but highly valuable group of individuals such as c-level decision makers within a specific industry, several other advertisers are likely competing for the same impressions, driving up the prices.
Third, the selected bidding strategy influences how much you pay per key result. A key thing to remember is that the bidding strategy is closely related to your campaign’s objective, as mentioned previously. The recommended option is to use the automated strategy called maximum delivery. With maximum delivery, LinkedIn’s system aims to deliver the best possible result as efficiently as possible. The second option is to use something called a cost cap. With cost cap, you’ll set an upper limit for your selected metric (f.ex. CPA), and the system uses that value as a benchmark when setting bids. The final and the most involved option is to use manual bidding, where you’re entirely in the driver’s seat and need constantly monitor and adjust bids to remain competitive and deliver results.
The fourth and final factor is your ad relevance score. LinkedIn scores the ads in your campaigns based on CTR, comments, likes, and shares. A high relevance score rewards you with lower prices, so spending time and effort on creatives is crucial for success.
Below you’ll find LinkedIn’s short and sweet explainer video on how auctions work.
Our findings from past LinkedIn campaigns
As you might imagine, we run a lot of LinkedIn Ads at Ambine. We also constantly discuss with our customers to understand how they run campaigns and which factors contribute to their success. In our campaigns, CPMs range from 0.06€ to 65€, and everything in between. We’ve highlighted a few interesting occurrences below.
The first highlight is related to campaign objective selection. Based on our findings, using the website conversion objective often translates to significantly higher CPMs, higher frequency, and often relatively high CPAs, especially if the campaigns run for an extended time. While we do not have an entirely scientific explanation, we hypothesize that conversion volumes play a crucial role in this scenario. In other words, if there is a limited number of tracked conversions daily, LinkedIn’s bidding and optimization algorithm has a limited ability to find the users that are most likely to convert. Low conversion volume often results in the ads being shown to only a small portion of the total audience driving up the unit cost. We’ve also observed similar behavior with website traffic campaigns that generate clicks.
USING CONTACT & COMPANY LISTS
The second observation relates to targeting and audience selection, especially when using contact or company lists. Account-based marketing is a relatively straightforward, widely adopted marketing tactic that allows marketers to target highly relevant companies on LinkedIn. Stricter targeting and more limited audience sizes can result in higher costs, especially if your lists contain highly competed users or industries.
Thirdly, enabling Audience Network-setting in campaigns does reduce prices but might come with a potential caveat: A reduction in the quality of clicks, conversions, or leads. The audience network-setting expands the visibility of your ads outside LinkedIn to other (carefully curated and vetted) third-party sites and apps that might be more reasonably priced than LinkedIn but aren’t as contextually relevant as a professional social media platform. We’re not saying that advertisers should refrain from using audience network. Instead, we recommend everyone to experiment with running campaigns with the setting enabled and disabled and comparing results afterward.
LinkedIn Ads’ Audience Expansion has a similar effect as the audience network-setting. It often has a positive impact in terms of cost, but it also has the potential of diluting quality. To be perfectly honest, the first time we noticed this, we accidentally left the box ticked when creating the campaign. LinkedIn’s system is usually quite intelligent, but audience expansion may start showing your ads to non-relevant audiences. As previously mentioned, we wholeheartedly encourage everyone to experiment and see what works for them, but please don’t set and forget. When running campaigns with the audience expansion setting enabled, we recommend keeping a close eye on the demographics report to see who your campaigns are being served to and whether it translates to actual business results.
Geography has a major effect on LinkedIn Ads’ cost. We’ve experimented with multiple approaches; Including every country in a single campaign, splitting by region (f.ex. DACH), and going country-by-country. What we have seen is that with automated bidding strategies, LinkedIn tends to (heavily) favor countries with higher reach and potentially lower unit cost, but this often means that a significant percentage of impressions is spent in a single country, and we end up underserving some other, high-potential market. We’ve seen the most success with separating campaigns by region to regain control over where the budget is spent but keeping audience sizes large enough to allow the optimization algorithms to work their magic.
How to improve cost-efficiency?
An essential factor in running successful (paid) marketing is not how expensive or cheap buying the actual advertising space is but how cost-efficient it is compared to actual marketing and business outcomes.
If you compare LinkedIn’s advertising costs to other social media channels, like Facebook, Instagram, or Twitter likely, LinkedIn will come out on top as the most expensive. Not all hope is lost, though. There are a few things to experiment with first:
- Try running campaigns on the brand awareness objective instead of the action-based objectives such as website visits or website conversions. LinkedIn will then try to reach as many users within your target audience as possible, and based on our experience, and this will result in lower CPM prices. If you have a good set of creatives and the targeting’s on point, you can cost-effectively generate traffic, conversions, or leads.
- A key thing to remember here is to get your targeting just right. Aim for balance in audience size and relevance. Too broad, you’ll pay for impressions that do not fit your ICP. Too small, and you’ll end up struggling to spend anything. Additionally, keep a close eye on whatever your KPIs are. LinkedIn will only make sure you reach as many users as possible but will not actively optimize towards users most likely to click or convert.
- Test different bidding strategies to determine what works for you. The automated, maximum delivery setting takes a lot of work off your hands. Cost cap gives you more control but still utilizes automation in bidding. And for the ultimate tinkerer with all the time in the world, go manual!
- Spend time planning and setting up a functional campaign structure. There are many options to structure campaign groups and campaigns to support varying approaches. Think about the most critical factor; Market areas, products, audiences, or whatever is aligned with your business and organization.
- Focus on your creatives. Ad Relevance scores can significantly impact your campaigns’ performance and cost-efficiency. Reserve enough time to create multiple variations of ads, try out different formats, and aim for engaging and relevant messaging to catch your prospective customer’s eye in conjunction with your targeting.
- And finally, Ambine’s intelligent budget optimization for LinkedIn Ads campaigns. To make the most out of your campaigns, maintaining an optimal budget allocation can take you even further. If you want to know more, sign up for a trial or book a meeting with us!
This concludes our take on whether LinkedIn Ads are expensive or not. Where LinkedIn shines is its expansive and detailed targeting capability and unique (business) context that is highly relevant to B2B advertising. These features come at a cost, but they shouldn’t discourage anyone from starting.
Like with almost every other advertising platform, there’s no universal truth on how to always succeed or a silver bullet that’ll transform your campaigns from mediocre to extraordinary. Keep experimenting, analyzing, and evolving your tactics!