LinkedIn ads can be a very effective way to reach your target audience, but like all forms of advertising, there are costs involved. In this article, we’ll look at the key factors that determine how much it costs to run successful LinkedIn ad campaigns.
What are LinkedIn ads?
LinkedIn ads enable businesses to promote their content, products, or services to LinkedIn users based on criteria like job title, industry, interests, location, age, and more. Advertisers can choose from a range of ad formats including Sponsored Content, Sponsored InMail, Text Ads, Dynamic Ads, and more.
Why use LinkedIn ads?
Some key benefits of LinkedIn ads include:
– Access to LinkedIn’s 675+ million members, many of whom are professionals and decision makers. This allows for highly targeted lead generation and sales prospecting.
– Various ad formats that align with different goals, whether brand awareness, engagement, video views, lead generation, etc.
– Powerful targeting options based on LinkedIn profile data.
– Seamless audience expansion to extend reach.
– Ability to integrate with marketing automation and CRM systems.
How does LinkedIn ad pricing work?
LinkedIn ads work on an auction-based pricing model, where advertisers bid on an amount they’re willing to pay for each click or impression. The ads then serve based on factors like bid amount, relevance, and expected engagement.
There are two main pricing options:
– **Cost Per Click (CPC)** – You pay each time someone clicks your ad. The cost per click is determined by the winning bid amount.
– **Cost Per Impression (CPM)** – You pay each time your ad is shown on a LinkedIn page. The cost per 1000 impressions (CPM) is determined by the winning bid.
Bidding higher increases the chance of your ads being shown, but costs more. LinkedIn provides suggested bid guidance based on factors like competition, targeting, and historical performance.
There is also a $10 minimum daily budget requirement.
Key Factors That Determine LinkedIn Ad Costs
Many variables impact how much a LinkedIn ad campaign will cost. Here are some of the key factors:
Targeting
Narrower targeting generally leads to higher CPC/CPM rates, as you’re bidding for a smaller, more premium audience. Broader targeting provides more reach at lower prices.
For example, targeting “HR managers” will be more expensive than targeting “people interested in human resources.” But it may generate better results by reaching the right decision makers.
Competition
More competition for your target keywords, audiences and placements will drive CPC/CPM costs up. LinkedIn bidding guidance adjusts based on competitor activity in the auction.
Checking competition beforehand can give a sense of potential costs. This applies for both search campaigns and audience targeting.
Quality Score
LinkedIn’s Quality Score metric measures ad relevance, expected clickthrough rate (CTR) and landing page experience. Higher Quality Scores improve ad rank and lower CPC/CPM costs.
Optimizing ads for relevance, good CTRs and landing pages all help Quality Score and cost efficiency.
Ad Type
Different ad formats have varying costs:
– Sponsored Content (feed ads) – Tend to have lower CPMs due to abundant inventory. But quality content is essential for engagement.
– Sponsored InMail – Very high deliverability to inboxes means premium CPM pricing, but can drive quality leads.
– Text ads – Tend to have higher CPCs than content ads due to direct response nature.
– Dynamic ads – Can help reduce CPMs with personalized targeting at scale.
Industry/Product
CPM costs vary significantly by industry and product.
For example, advertising high ticket B2B products may warrant larger ad budgets, vs. low-cost retail items. Seasonality also impacts costs.
Historical benchmark CPC/CPM rates by industry are available in this detailed guide.
Campaign Objective
Ads optimized for engagement, video views or link clicks tend to have lower costs than conversion-focused campaigns.
But optimization for conversions can drive greater ROI if willing to invest more per conversion. Define targets upfront.
Historical Ad Performance
Seasoned ads with a track record of high CTRs and conversions often improve in Quality Score and cost over time.
Let top performing ads accrue data before turning new ones on to maximize budget efficiency.
What is the average CPC on LinkedIn?
Average CPC rates on LinkedIn fluctuate frequently with market conditions. Here are some benchmarks for key ad objectives:
| Campaign Objective | Average CPC |
|---|---|
| Brand awareness | $2 – $5 |
| Lead generation | $8 – $12 |
| Website conversions | $12 – $18 |
| Mobile app installs | $10 – $15 |
CPMs also vary significantly based on factors like industry, target audience, and geographic region.
Averages can mask huge variances. Some ads and products can sustain much higher CPCs and CPMs profitably. Conduct A/B testing.
How can I estimate my LinkedIn advertising costs?
Here are some tips to estimate potential LinkedIn ad costs for initial budgeting:
– **Use LinkedIn’s suggested bid guidance** – The platform suggests conservative bid ranges based on your targets.
– **Review auction insights** – See current bid levels advertisers are paying for any target.
– **Analyze competitors** – Study competitors’ current LinkedIn ad activity for clues on audience costs.
– **Review historic benchmarks** – Use average CPCs and CPMs by industry and region to project costs.
– **Model CPA goals** – Determine acceptable CPA thresholds, then divide budget by projected conversions.
– **Consider a pilot first** – Test demand and pricing with a limited pilot campaign before scaling up budget.
– **Use LinkedIn’s estimator tool** – The estimator provides projected performance and budget guidance based on inputs.
– **Consult LinkedIn reps** – Reps can provide information on audience size, competitiveness, and historic costs.
With these approaches, you can ballpark LinkedIn CPCs and build an initial budget. Adjust as you go based on actual performance data.
What budget do I need for LinkedIn ads?
The budget required depends heavily on factors like:
– Goals – Are you focused on awareness or direct response?
– Targeting – A narrow audience costs more to reach.
– Industry – B2B ads often have higher budgets than B2C or retail.
– Ad formats – Video and Sponsored InMail have premium CPMs.
– Geographic targeting – Countries and regions vary significantly.
That said, here are some general LinkedIn advertising budget benchmarks to consider by objective:
| Objective | Suggested Budget |
|---|---|
| Brand awareness | $5,000 – $10,000+ per month |
| Lead generation | $5,000 – $15,000+ per month |
| Ecommerce sales | $15,000 – $30,000+ per month |
| Mobile app installs | $10,000 – $25,000+ per month |
| SaaS conversions | $15,000 – $50,000+ per month |
B2B and high-value products often justify larger budgets. Test conservatively then scale up.
Target cost per conversion (CPA goals) also help inform minimum viable budgets.
How can I maximize ROI from LinkedIn ads?
The key to maximizing return on ad spend is to systematically optimize based on data. Follow these best practices:
– **Track conversions** – Install tracking pixels to measure leads and sales from ads. This enables optimization.
– **A/B test ad variations** – Test different text, images, targeting, etc. to boost CTR and conversions.
– **Analyze performance reports** – Look for high performing segments to shift budget to. Stop low performers.
– **Refine targeting** – Try tighter audience focusing using Matched Audiences from your CRM or web visitors.
– **Improve landing pages** – Ensure they align closely to ad content and user intent.
– **Monitor Quality Score** – Work to improve QS through relevance, landing pages and ad CTR.
– **Maintain top-of-funnel and retargeting** – Nurture leads through the purchase process.
– **Use LinkedIn Analytics** – Uncover insights on best-performing content, products, segments and channels.
With disciplined testing and data-driven optimization, ROI on LinkedIn ads can improve dramatically over time. Measure everything.
Conclusion
With over 675 million quality members, LinkedIn advertising provides a phenomenal opportunity to reach lucrative B2B and professional audiences. But costs can add up quickly if not managed carefully.
The most successful advertisers use smart targeting strategies, measure ROI diligently, run rigorous tests and optimize campaigns based on performance data. This enables maximizing results over time to capture the full value of LinkedIn’s audience reach and capabilities.
With the right expectations, thoughtful planning, savvy budget management and data-driven optimization, LinkedIn ads can deliver tremendous ROI across a variety of B2B and B2C marketing objectives.
