LinkedIn ads can be a great way to generate leads and increase brand awareness, but like all advertising, you’ll want to calculate the return on investment (ROI) to determine if the spend is worth it. Calculating LinkedIn ad ROI allows you to understand the revenue you are earning per dollar spent on ads. This helps decide if you should adjust your ad budget and strategy or even pause campaigns that are not performing well.
In this comprehensive guide, we will cover everything you need to know to calculate LinkedIn ad ROI, including:
- Why calculate LinkedIn ad ROI
- LinkedIn ad metrics to track
- LinkedIn ad ROI formula
- Calculating revenue generated from LinkedIn ads
- Determining LinkedIn ad costs
- Benchmark LinkedIn ad ROI
- Tips to improve LinkedIn ad ROI
Monitoring and optimizing for ROI is crucial to running successful LinkedIn ad campaigns over time. Let’s get started!
Why Calculate LinkedIn Ad ROI?
Here are some of the key reasons you should be calculating ROI for your LinkedIn ads:
- Understand campaign profitability: The only way to truly know if your LinkedIn ads are generating a return is to compare revenue to costs. ROI tells you your profit margin.
- Optimize campaign performance: By calculating ROI, you can identify well-performing campaigns to invest more in, and poorly performing ads to pause or optimize.
- Compare to other channels: ROI provides an “apples to apples” comparison to evaluate whether LinkedIn ads are more or less profitable than other marketing channels.
- Identify trends: Tracking ROI over time can reveal trends about which campaigns do better seasonally or changes in profitability.
- Project future performance: Historical ROI figures can be used to forecast future returns on ad spend.
Knowing the LinkedIn ad ROI metric empowers you to make smart investment decisions and optimize your advertising strategy.
LinkedIn Ad Metrics to Track
To calculate ROI, there are two main LinkedIn advertising metrics you need to track:
- Revenue Generated from LinkedIn Ads
- LinkedIn Advertising Costs
We’ll dive into specifics on calculating these metrics in a moment. Beyond these two metrics, you should also track the following LinkedIn ad metrics to get a full picture of campaign performance:
Engagement Metrics
- Impressions: Number of times your ads are shown.
- Clicks: Clicks on your ads.
- Click-through-rate (CTR): Clicks divided by impressions.
- Comments: Comments on your ads.
- Shares: Shares of your ads and posts.
- Follows: Follows generated from your ads.
- Reactions: Likes, loves, wows, etc. on your ads.
Conversion Metrics
- Leads: Form fills, sign-ups, emails collected.
- Custom conversions: Other goals you set up such as downloads, purchases, etc.
- Website visits: Traffic driven to your site.
Cost Metrics
- Cost-per-click (CPC): Average cost each time someone clicks your ad.
- Cost-per-thousand impressions (CPM): Costs for every 1,000 impressions.
- Cost-per-lead (CPL): Cost for each lead acquired.
Monitoring all of these metrics provides a 360-degree view into your campaign performance. When calculating ROI, revenue and costs are the two essential pieces, but these other KPIs help provide context.
LinkedIn Ad ROI Formula
Now let’s look at how to calculate LinkedIn ad ROI. The formula is:
Let’s break this down step-by-step:
- Calculate the revenue generated from your LinkedIn ad campaigns within a certain period (ex. past 30 days).
- Calculate the amount spent on LinkedIn ads in that same time period.
- Subtract the LinkedIn ad spend from the revenue amount.
- Divide this number by the ad spend.
This gives you ROI as a percentage. For example, if you spent $1,000 on LinkedIn ads and generated $2,000 in revenue, the ROI would be:
($2,000 revenue – $1,000 ad spend) / $1,000 ad spend = 100% ROI
The higher the ROI percentage, the better, as this means each $1 invested is generating more revenue.
Next, let’s look at tips on how to accurately calculate the revenue and ad spend figures.
Calculating Revenue Generated from LinkedIn Ads
Calculating the revenue driven by LinkedIn ads isn’t always straightforward. Here are some best practices:
Use LinkedIn Conversion Tracking
The most accurate way is to use LinkedIn’s conversion tracking feature. This ties revenue from your website or CRM platform back to the LinkedIn clicks, leads, and campaigns that preceded them.
To implement LinkedIn conversion tracking:
- Install the LinkedIn Insight Tag on your website.
- Set up conversion events like form submissions, purchases, etc.
- In your ads, enable conversion tracking for the events.
LinkedIn will then directly report the revenue per conversion event.
Attribute Conversions to Campaigns
If using LinkedIn conversion tracking, be sure to enable it at the campaign level. This allows you to analyze revenue on a per campaign basis rather than all campaigns lumped together.
Analyze Multi-Touch Attributions
Many conversions involve multiple brand touchpoints. Use LinkedIn’s multi-touch attribution reporting to see how LinkedIn ads influence conversions in correlation with other channels like email or organic social.
Referral Traffic Analysis
Use Google Analytics to analyze revenue generated from website referral traffic from LinkedIn compared to other sources.
Correlate Leads to Deals
In your CRM, look at the amount of pipeline generated from LinkedIn form fills and leads vs. other channels. Estimate revenue per lead based on average deal size.
establishments. Companies with a strong customer file are some of the most likely targets since the lists can easily be uploaded to LinkedIn for matching against member profiles.
While there are challenges, taking the time to accurately track LinkedIn ad revenue ensures your ROI figures are as close to true values as possible.
Determining LinkedIn Ad Costs
On the cost side, LinkedIn makes it fairly simple to track the amount you’ve spent on ads:
Campaign Manager Metrics
In your LinkedIn Campaign Manager, go to the “Metrics” tab. The “Total Spent” column shows you exactly how much has been spent on each campaign and ad set. Export and total this up.
Account Level Spend
In Campaign Manager, click into the account name on the top navigation. This will show total amount spent for the account as a whole for custom date ranges.
Campaign Performance Reports
When downloading campaign performance reports as CSV files, a “Spend” column shows the amount for each campaign.
Invoices & Billing Statements
Your LinkedIn invoices will contain grand totals of all advertising charges, which can be compared against what shows in your Campaign Manager.
The LinkedIn ad platform makes it easy to get clear spend figures for calculating cost. Now let’s compare some sample scenarios to benchmark ROI.
Benchmark LinkedIn Ad ROI
As a benchmark, here are typical ranges you can expect for LinkedIn ad ROI by industry according to WordStream research:
Software:
- Low ROI: 32%
- Average ROI: 112%
- High ROI: 143%
Information Technology:
- Low ROI: 45%
- Average ROI: 99%
- High ROI: 217%
Healthcare:
- Low ROI: 16%
- Average ROI: 61%
- High ROI: 168%
Retail & Ecommerce:
- Low ROI: 38%
- Average ROI: 129%
- High ROI: 210%
Consulting & Professional Services:
- Low ROI: 24%
- Average ROI: 105%
- High ROI: 196%
So for example, if you run a consulting business, you’ll generally want your LinkedIn ad ROI to be north of 100%. If it’s under 24%, that’s a red flag that the campaigns need optimizing.
Comparing to your industry benchmarks helps reveal if your ROI is below, at, or above expectations.
Tips to Improve LinkedIn Ad ROI
Here are some tips to help optimize LinkedIn ad ROI:
Target High Intent Keywords
Bidding on keywords like “hire management consultants” and other phrases with strong commercial intent improves quality of traffic.
Leverage LinkedIn’s Unique Targeting
Target by job title, industry, company, skills, groups, and interests to hone in on your best-fit audience.
Test Different Ad Formats
Experiment with single image ads, carousels, and video to see which drives the most clicks and conversions.
A/B Test Ad Variations
Test different ad copy, images, call-to-action, and designs to refine your best ad approach.
Retarget Site Traffic
Remarket to visitors who previously engaged with your website to revive dropped leads.
Review Relevance Scores
Ads with low relevance scores often have targeting and messaging misalignment issues lowering CTR.
Analyze Top Conversion Paths
Look at the pages, keywords, and copy driving the most conversions to double down on what works.
Expand Audience Targeting Slowly
If scaling up spend, add similar target segments one step removed from your core focus to maintain relevance.
Avoid Broad Targeting
Mass targeting of job titles or ages leads to poor CTRs and conversion rates spreading spend too thin.
Set Minimum Conversion Thresholds
Pause ads not meeting minimum CTR or conversion rates until they can be improved.
Review Reports Frequently
Analyze LinkedIn reports regularly to stay on top of performance trends and issues.
Use Competitive Benchmarks
Compare your CTR, CPC, CPAs against industry averages as another layer of optimization.
By constantly monitoring ROI and fine-tuning targeting, creative, and messaging, you can steadily improve the return generated from LinkedIn ads.
Conclusion
Calculating LinkedIn ad ROI provides the visibility you need to know if ad investments are paying off or need to be paused. By tracking revenue and cost metrics, you can plug into the ROI formula to quantify profitability.
Aim for ROI of over 100% in most industries, and leverage optimization tips like conversion tracking, audience targeting, A/B testing, and reports analysis to improve returns. With the right measurement discipline, LinkedIn ads can drive strong revenues at scale.
