LinkedIn sponsored ads have become an increasingly popular way for businesses to reach their target audience and generate leads. But do these ads actually deliver results? In this comprehensive guide, we’ll examine whether LinkedIn ads are effective, who they work for, strategies to optimize them, and more.
The short answer
Yes, LinkedIn sponsored ads can be an extremely effective way to reach your target B2B audience, generate leads, and grow your business on LinkedIn. Studies show LinkedIn ads have 2-3x higher click-through rates compared to other social platforms. With precise targeting options, detailed analytics, and management tools, LinkedIn ads allow businesses to connect with their audience and achieve their marketing goals.
How LinkedIn sponsored ads work
LinkedIn advertisements appear in various places across the platform and come in different formats:
- Sponsored content – Appear in the LinkedIn feed looking like regular posts
- Sponsored InMail – Direct messages sent to your target audience’s inbox
- Text ads – Appear on the right rail of the home and profile pages
- Dynamic ads – Promote specific content to matched audiences
You bid for the price you’re willing to pay per click (CPC) or impression (CPM). LinkedIn then displays your ads to users who match your target audience and optimization settings. You only pay when someone clicks your ad or when it’s displayed to users.
Do LinkedIn ads generate leads?
Many reports show LinkedIn ads are effective at generating quality leads:
- LinkedIn itself reports a 55% higher conversion rate for leads from LinkedIn ads vs. other social platforms.
- 75% of B2B marketers say LinkedIn generates the best quality leads, higher than any other platform.
- Sponsored InMail has open rates of 52% and click-through rates over 4%, much higher than regular email.
- One study saw over 2,100% ROI from LinkedIn ads for a marketing agency.
So while results vary, data indicates LinkedIn ads can be very effective at driving leads when set up correctly.
The benefits of LinkedIn ads
Here are some of the key advantages LinkedIn advertising provides:
- Targeted B2B audience – LinkedIn has over 722 million professionals. You can target by job role, industry, skills, company, and more.
- Precise targeting – Options like job seniority, age, gender, interests, groups, and engagement make targeting precise.
- High relevance – Users are actively looking for products/services on LinkedIn, so ads are more relevant.
- Multiple ad formats – Sponsored content, InMail, dynamic, text ads allow you to use different formats.
- Detailed analytics – LinkedIn Campaign Manager provides metrics on impressions, clicks, conversion, audience insights, and more.
This level of granular targeting and transparency into performance is unmatched on most other advertising platforms.
Who do LinkedIn ads work for?
While results vary, these types of businesses tend to see the most success with LinkedIn ads:
- B2B companies selling to other businesses
- Companies targeting IT, finance, healthcare, HR roles
- Products with long, complex sales cycles
- Businesses focused on the top of the funnel, like leads or brand awareness
- Organizations with sufficient budget to test and optimize ads
LinkedIn ads allow targeting by seniority, industry, job function, and other B2B criteria that makes them a powerful tool for businesses focused on other companies or professionals.
Top strategies to optimize LinkedIn ads
To improve LinkedIn ad performance, here are some top optimization tips:
1. Target by ideal customer profile
Build out an “ideal customer profile” identifying your best-fit audience. Target by seniority, job title, industry, company size, interests, and groups.
2. Test different objectives
Test different campaign objectives like leads or website visits to see what works best.
3. Analyze and adjust targeting
Frequently check your audience insights and adjust targeting to eliminate unwanted audiences.
4. A/B test ad variations
Test different ad copy, images, offers, and layouts to optimize performance.
5. Retarget engaged visitors
Create a retargeting campaign for users who previously engaged with your ads or site.
6. Make ads relevant to audience
Ensure your ads speak directly to your audience’s pain points and interests.
7. Measure ROI accurately
Track conversions on your site to measure true ROI beyond just clicks and leads.
8. Improve landing pages
Make sure landing pages are relevant to your ads and enable visitors to easily convert.
9. Bid strategically
Use automatic or custom bidding strategies to find the ideal bid price.
10. Provide relevant offers
Promote free trials, content offers, events, and other valuable offers in your ads.
What types of ads work best on LinkedIn?
While all ad formats can be effective, here are some types of perform particularly well:
Sponsored Content Ads
These native ads in the LinkedIn feed have excellent visibility and engagement rates. They work well for brand awareness and social selling.
Sponsored InMail
These personalized messages sent directly to inboxes have open rates over 50%. Great for promoting webinars, trials, and personalized content.
Carousel Ads
Carousels with multiple images and messages have high engagement. Allow you to showcase multiple products/messages.
Direct Sponsored Content
Highly targeted ads that appear when users visit specific pages. Helpful for targeted offers after site visits.
Follower Ads
Appear when users look at certain profiles. Useful for promoting your company, content, or thought leaders.
Testing different ad formats is recommended, as performance can vary significantly by industry and audience.
How much do LinkedIn ads cost?
LinkedIn ad costs vary based on several factors:
- Bid strategy – Manual bidding starts at $2/day but can go much higher. Automatic bidding aims for more conversions within a target budget.
- Audience targeting – Narrow audience targeting is more expensive.
- Ad engagement – High performing ads drive up costs.
- Industry competition – Some industries have much higher costs per click.
Average costs tend to fall in the following ranges:
Ad Format | Average Cost |
---|---|
Sponsored Content (CPM) | $5 – $15 |
Text Ads (CPC) | $3 – $7 |
InMail (Per Message) | $80 – $250 |
With manual bidding, daily budgets can be as low as $10/day to start. But most experts recommend at least $50 – $100/day for adequate reach and conversion volumes.
Tips for lowering LinkedIn ad costs
To help reduce LinkedIn advertising costs, some tips include:
Use automatic bidding strategies
Automatic bidding like “target CPA” bidding works to get conversions at the lowest cost.
Tightly define your target audience
The more precise your audience, the lower competition and prices will be.
Ad scheduling
Run ads only during weekdays or high-engagement hours to reduce waste.
Optimize for engagement
Higher quality score ads tend to have lower costs long-term.
Analyze and eliminate low-value targets
Remove underperforming segments from your audience definition.
Improve landing page experience
Better landing pages equal higher conversion rates and lower costs.
Test different bidding strategies
Try out different manual bids and automatic bidding options.
Measuring the results of LinkedIn ads
To determine the true return from LinkedIn ads, you need to thoroughly track and measure performance:
In-depth analytics
LinkedIn Campaign Manager provides powerful analytics on impressions, clicks, costs, conversion tracking, audience insights and more.
UTM campaign tracking
Using UTM tags to track clicks, on-site engagement, and goal conversions provides clearer ROI.
Analyze goal/macro conversions
Look beyond just clicks and visits to see your true goal conversions like signups.
Optimize based on insights
Use insights on audience, messaging, and offers to optimize performance.
Calculate true ROAS
Factor in goal values and conversions accurately to understand true return on ad spend.
A/B test different elements
Test different combinations of targeting, creatives, landing pages, and calls-to-action.
Thorough tracking and ongoing optimization is key to making the most of your LinkedIn advertising investment.
LinkedIn advertising best practices
To maximize the impact of your LinkedIn ads, some top best practices include:
- Target a specific audience based on strong buyer personas
- Use high quality, relevant imagery and copy in ads
- Ensure your landing page provides a seamless user experience
- Continuously A/B test elements like copy and creative
- Monitor analytics regularly and optimize
- Retarget engaged visitors and website traffic
- Promote content and offers that bring value to your audience
- Measure true goal conversions beyond just clicks and views
- Schedule ads during peak engagement times for your audience
Ongoing refinement and improvement is critical to running truly effective ads. Testing and learning from experience will build expertise.
Should you use LinkedIn ads?
LinkedIn advertising makes sense for most B2B companies targeting professionals, but is especially effective if:
- Your audience is on LinkedIn
- You want to generate quality leads at the top of the funnel
- You have a sufficient budget for continuous testing and improvement
- Your business can benefit from brand awareness and content distribution
- You sell complex or high-value products/services
- You want to target decision-makers and leaders
While costs can be higher than some platforms, the ability to precisely target key decision-makers makes LinkedIn ads very advantageous for B2B brands.
Risks to consider
Some risks to keep in mind:
- Trial and error is required to master LinkedIn ads
- Competition is increasing, making costs potentially higher
- Sophisticated targeting means smaller audience sizes
- Measuring ROI accurately can be challenging
- Changes to the LinkedIn algorithm can affect performance
Thorough testing, tracking, and flexibility are key to adapting to changes and driving ROI.
The future of LinkedIn advertising
LinkedIn advertising shows no signs of slowing down. Projections and trends indicate:
- Ad revenue growing rapidly, expected to top $5 billion by 2023
- Sponsored content and video ads will grow significantly
- More interactive ad formats like polls and lead gen forms
- Expanded options for businesses of all sizes to advertise
- Enhanced targeting with AI and machine learning
- CPC rates steadily rising as competition increases
Businesses who want to reach professionals and decision-makers will still find LinkedIn’s targeting capabilities and qualified audience unmatched. But costs and mastery required will likely rise.
Conclusion
LinkedIn advertising can deliver tremendous value in terms of reach, engagement, and ROI. But precise targeting, effective creative, and comprehensive tracking are required to maximize results.
A strategic, analytical approach optimized by continual testing and improvement will enable you to tap into LinkedIn’s unparalleled B2B audience. While costs are not insignificant, the potential to connect with your best-fit prospects makes LinkedIn ads one of the top B2B marketing channels today.