LinkedIn advertising allows businesses to reach LinkedIn’s audience of over 722 million professionals worldwide. With a variety of ad formats and targeting options, LinkedIn ads can help you generate leads, build brand awareness, and increase sales. But to run an effective LinkedIn ad campaign, you need to understand how LinkedIn advertising is priced.
In this comprehensive guide, we’ll explain the key factors that impact LinkedIn advertising costs, including:
- LinkedIn advertising auction model
- Minimum bid
- Bid strategies
- Audience targeting
- Ad placement
- Engagement
- Account structure
Understanding these pricing components will allow you to set optimal bids and budgets to get the most out of your LinkedIn ad campaigns.
LinkedIn Advertising Auction Model
LinkedIn advertising pricing is based on an auction model, similar to other major advertising platforms like Google Ads and Facebook Ads. Here’s how it works:
- When someone browses LinkedIn, LinkedIn selects ads eligible to show to that member based on targeting, relevance, expected clickthrough rate (CTR), and other factors.
- The eligible ads then enter an automated auction to determine which ad will display in the available ad slot.
- Each advertiser places a bid – the maximum amount they’re willing to pay for a click or impression. The advertiser with the highest bid wins the auction and their ad displays.
- The winner of the auction pays the second highest bid, not their own maximum bid. This is known as the second-price auction model.
So your bid represents the most you’re willing to pay in an auction, but you may end up paying less based on competition from other advertisers. Setting the right bid is crucial – go too low, and you won’t win auctions, but go too high and you’ll overpay.
How Minimum Bid Impacts Cost
LinkedIn sets a minimum bid amount for each auction. Even if you have no competition from other advertisers, you must bid the minimum amount to participate and win auctions.
The minimum bid depends on factors like:
- Audience targeting – More specific targeting has higher minimums
- Ad placement – In-demand placements like the LinkedIn feed have higher minimums
- Industry competition – Highly competitive industries see higher minimum bids
On average, minimum bids on LinkedIn tend to range from $2 – $8 per click. But again, that can vary significantly based on other factors.
You should factor the minimum bid into your budget when launching a LinkedIn ad campaign. Bidding too low will cause your ads to be excluded even if there’s no competition.
Bid Strategies
When setting up your LinkedIn campaign, you choose between two bid strategies:
Cost Per Click (CPC)
With CPC bidding, you pay each time someone clicks your ad. You set a maximum CPC bid, and the actual cost will be the second highest bid. CPC bidding makes it easy to track ROI and control costs per click.
Cost Per Thousand Impressions (CPM)
For brand awareness campaigns, CPM bidding can be useful. You pay for each 1,000 impressions (views) your ad receives. CPM bidding ensures your ads are seen by your target audience. But it can be harder to track ROI compared to CPC.
CPM bids may start around $10, but can be much higher depending on audience targeting. Again, you must bid the minimum CPM to win auctions and serve impressions.
When choosing a bid strategy, consider your campaign goals and desire to control either clicks or impressions. You can run CPC and CPM campaigns simultaneously to balance conversion goals with branding.
Audience Targeting
One of the biggest factors influencing LinkedIn ad pricing is your audience targeting. Targeting a more niche audience tends to increase costs for a few reasons:
- Lower inventory – Narrower targeting means fewer ad slots to bid on
- Increased minimum bid – LinkedIn raises minimums for targeted groups
- Increased competition – More advertisers compete for desirable audiences
Here are some examples of audience factors that tend to raise LinkedIn advertising costs:
Targeting | Impact on Cost |
---|---|
Seniority Level | Targeting Executives increases cost |
Job Function | In-demand roles like Engineering see higher costs |
Company Size | Targeting by Employees or Revenue raises costs |
Location | Going beyond country level gets more expensive |
Interests & Skills | Specific interests have limited inventory |
Member Demographics | Targeting by Age or Gender increases minimum bid |
Audience Expansion | Expanding beyond your core audience is cheaper |
The more filters and combinations used, the more your minimum bid will increase. Being as targeted as possible comes at a premium cost per click or impression.
You’ll need to test different audience targets and find the right balance between volume and cost efficiency. Don’t narrow your focus too far beyond your ideal customers.
Ad Placement
Where your ads appear on LinkedIn also impacts cost. LinkedIn offers different ad placements, including:
- Feed ads – Appear in the LinkedIn feed alongside organic posts
- Right rail ads – Display on the right side of LinkedIn pages
- InMail ads – Sent directly to member’s LinkedIn inboxes
- Text ads – Appear at the top of LinkedIn search results
Feed ads tend to be the most expensive since they garner high visibility and engagement. InMail ads are also on the pricier side due to their exclusive inbox placement.
Right rail and text ads tend to have lower costs since they see less exposure than the feed. But you can still expect minimum bids in the range of a few dollars.
When reviewing potential ad placements, consider both visibility and expected clickthrough rates. Feed ads offer huge exposure but can have lower CTR than highly targeted right rail or text ads. Factor possible tradeoffs between volume and cost efficiency into your ad placement strategy.
Engagement
Higher performing ads that generate more clicks, conversions, or engagement will see increased costs over time on LinkedIn. Here’s why:
- LinkedIn aims to show members the most relevant and useful ads.
- Performance helps determine an ad’s expected clickthrough rate (eCTR) and auction eligibility.
- Higher eCTRs lead to higher minimum bids required.
- More advertisers compete for slots to display high performing ads.
So an ad that consistently gets good results may start to see its minimum bid creep up. But this is a sign you’ve crafted an effective, relevant message and targeting.
To balance costs, try testing alternate creatives and ad copy or expand your targeting. The benefit of reaching highly engaged audiences often outweighs slightly higher costs per click.
Account Structure
How you structure campaigns across ad accounts can also impact costs:
Single Shared Account
Running all campaigns in a single account allows LinkedIn to leverage your overall budget and data to optimize bids and targeting. This can help improve performance and lower average costs.
However, a single account offers less flexibility to customize bid strategies. You also can’t isolate campaign performance data.
Multiple Separate Accounts
Separate accounts for each line of business, brand, region etc. allows you to customize bidding, targeting, and reporting. But this fragments your budget and data, leading to potentially higher average costs.
Balanced Approach
Many advertisers strike a balance using a shared core account for the bulk of spending supplemented by a few separate accounts for specific initiatives. This provides aggregated scale while still offering some flexibility.
Test different structures to see what works for your business depending on your needs for control, segmentation, and optimization. Just know that more accounts usually mean higher costs.
Conclusion
LinkedIn advertising pricing is based on an auction model where your bid competes against others in an automated auction. While the auction sets final prices, several factors impact the minimum bid required to participate.
To keep LinkedIn advertising costs in check, be mindful of:
- Minimum bid requirements for your target audience and placements
- Balancing niche targeting with audience scale
- Testing different ad placements for visibility vs. cost efficiency
- Leveraging well-performing ads to lower your average cost per click
- Structuring accounts to optimize budget utilization
With the right bidding strategy tailored to your targeting and campaign objectives, you can maximize LinkedIn ad results and drive ROI efficiently.