LinkedIn Marketing Solutions is LinkedIn’s advertising platform that allows businesses to target LinkedIn users with sponsored content. As one of the largest professional social media platforms with over 722 million members worldwide, LinkedIn represents a massive opportunity for brands looking to connect with professionals and drive leads.
But how exactly does LinkedIn make money from its Marketing Solutions advertising products? There are a few key ways:
Sponsored Content
One of LinkedIn’s primary advertising offerings is Sponsored Content. This allows brands to publish native ads in the LinkedIn feed that look and feel just like regular posted content. When users scroll through their feed, Sponsored Content appears seamlessly mixed in with regular posts.
There are three main types of Sponsored Content:
- Sponsored Content ads – these are single image/video ads with accompanying text.
- Sponsored Messaging – similar to ads but delivers a more conversational ad experience.
- Offer ads – promote special offers, deals, and gated content.
Brands pay for Sponsored Content on a cost per click (CPC) or cost per impression (CPM) basis. This means LinkedIn charges each time a user clicks on the ad or when the ad is displayed 1000 times. Average CPC rates are around $8-12 for Sponsored Content.
In 2021, Sponsored Content ads accounted for around 25% of LinkedIn’s total advertising revenue.
Sponsored InMail
Sponsored InMail allows brands to send targeted direct messages to LinkedIn members matching their ideal audience criteria. These messages get delivered directly to the user’s LinkedIn inbox in the same way a regular InMail message would.
This is one of LinkedIn’s premium advertising options, offering exclusivity and higher engagement rates since the message avoids cluttered news feeds. Brands pay on a cost per send (CPS) basis, with average prices around $8-15 per InMail.
InMail contributes a relatively small but still significant portion of LinkedIn’s ad revenues, around 15% in 2021.
Text Ads
LinkedIn Text Ads are very similar to Google text ads. They appear in the right hand column next to LinkedIn’s feed and are optimized for user targeting and relevance like search ads. Text ads are purchased through an auction on a cost per click (CPC) basis.
Text ads offer a flexible and affordable way for advertisers to get their brand in front of the LinkedIn audience. While engagement rates are not as high as Sponsored Content, text ads are very easy to set up and manage.
Text ads generate around 20% of LinkedIn’s ad revenue.
Dynamic Ads
LinkedIn Dynamic Ads help advertisers retarget website visitors with highly relevant and customizable ads on LinkedIn. Marketers can upload email addresses or account IDs of prospects who have engaged with their brand and LinkedIn will match and target them.
Dynamic Ads make up around 15% of LinkedIn’s ad income. Pricing is on a CPC or CPM basis.
Lead Gen Forms
LinkedIn’s Lead Gen Forms allow brands to collect lead information directly within the LinkedIn feed. Users can fill out a form to download gated content without leaving the platform. The business receives the lead contact details instantly.
Lead Gen Forms are purchased on a cost per lead (CPL) basis, with typical prices around $50-100 per lead. This product contributes around 10% to LinkedIn Marketing Solutions revenues.
Other Paid Advertising Options
In addition to the above core products, LinkedIn offers a few other premium advertising solutions:
- Audience Network – extended targeted ads across third-party apps and sites.
- LinkedIn Events – sponsor and promote virtual events.
- Learning Ads – sponsor LinkedIn Learning courses.
These niche offerings combined make up the remaining 15% of LinkedIn ad revenue.
Self-Serve vs. Managed Accounts
Most LinkedIn advertising spending comes through self-serve accounts where brands directly set up and manage campaigns through LinkedIn’s Marketing Solutions platform. However, LinkedIn also offers white-glove managed accounts and partnerships for larger advertisers who want dedicated strategic support and account management.
Around 75% of LinkedIn’s ad revenue is from self-serve customers, with 25% coming from managed accounts. Managed accounts tend to have much higher spending levels on average.
LinkedIn’s Expanding Ad Business
LinkedIn’s marketing solutions have seen rapid growth in recent years, powered by LinkedIn’s expanding user base and the shift to digital advertising. Some key metrics demonstrate LinkedIn’s momentum:
- Total ad revenue in 2021 reached $3.72 billion, up 57% from 2020.
- Over 270,000 brands actively advertise on LinkedIn as of 2021.
- The number of advertisers has doubled over the past three years.
- LinkedIn now has over 15 million Company Pages used by businesses to connect with professionals.
Moving forward, LinkedIn is prioritizing developing its video ad capabilities, which currently make up around 20% of ad spend on the platform. Video ads are key to engaging LinkedIn’s mobile users in particular. Expanding LinkedIn’s audience network to new sites and apps will also be a growth focus.
Overall, LinkedIn Marketing Solutions appears very well-positioned to keep growing as businesses continue flocking to the platform to reach lucrative professional audiences. LinkedIn’s proven advertising products and targeting capabilities will help drive revenue higher through both self-serve and managed campaigns.
Conclusion
In summary, LinkedIn generates marketing solutions revenue in a few primary ways:
- Sponsored Content ads – CPC/CPM display ads in the LinkedIn feed
- Sponsored InMail – targeted direct messages
- Text ads – CPC ads similar to Google Ads
- Dynamic Ads – retargeting previous site visitors
- Lead Gen Forms – cost per lead model
LinkedIn offers both self-serve and managed advertising options. The platform has seen rapid growth in advertisers and ad revenue, demonstrating the huge monetization potential of its 722 million professional member base. Video, mobile and audience network expansion are key areas driving future growth.
