LinkedIn advertising can be an effective way for businesses to reach their target audience. However, as with any paid advertising, it’s important to understand the costs involved. One of the key metrics to consider is the cost per thousand (CPM) impressions.
What is CPM for LinkedIn ads?
CPM stands for “cost per thousand” and refers to the cost an advertiser pays for every 1,000 impressions of their ad. An “impression” occurs every time an ad is displayed, regardless of whether it’s clicked or not. So a CPM of $10 means the advertiser is charged $10 for every 1,000 times their ad is shown to users on LinkedIn.
CPM represents the cost effectiveness of an ad and allows easy comparison across platforms, ad types and target audiences. The lower the CPM, the more affordable it is to reach 1,000 viewers. LinkedIn’s CPMs are on the higher end compared to other social platforms, which reflects LinkedIn’s highly valuable professional audience.
What influences LinkedIn CPM costs?
There are several factors that determine an ad’s CPM on LinkedIn:
- Targeting: Narrowly targeted ads have higher CPMs because you’re only reaching a smaller, more specialized segment of users. Broad targeting leads to lower CPMs but less relevant reach.
- Placement: Where the ad appears affects CPM. In-feed ads tend to have lower CPMs than Right Rail ads.
- Ad quality: Well-designed, compelling ads earn higher engagement, which signals relevance and drives up CPM.
- Competition: Higher demand for ad inventory in certain industries and targeting categories leads to higher CPMs.
- Timing: CPMs fluctuate depending on day of week and time of year when audiences are most active.
Understanding these factors allow advertisers to optimize their campaigns for their unique objectives, whether that’s to drive down costs or boost visibility among a very specific audience.
Average LinkedIn CPM Rates
According to LinkedIn, the average CPM on their platform is $8. But in reality, CPMs can vary greatly based on the above factors. Here are some benchmarks for CPM costs on LinkedIn:
- Text ads: $2 – $7
- Sponsored content: $10 – $15
- Dynamic ads: $8 – $12
- Message ads: $10 – $14
CPMs also range significantly across industries. According to LinkedIn, here are average CPM rates for some major industries:
| Industry | Average CPM |
|---|---|
| Technology & Software | $9 |
| Business Services | $6 |
| Financial Services | $12 |
| Healthcare | $10 |
| Education | $7 |
| Retail | $5 |
Location also impacts LinkedIn CPM rates. Advertisers targeting countries like Australia, Canada and western European nations will incur higher costs than those focused on developing nations where LinkedIn has lower penetration.
How can I estimate my LinkedIn ad CPM?
LinkedIn provides a CPM bid estimator tool to help advertisers calculate potential CPMs based on targeting criteria. You can access it through LinkedIn Ads Manager.
The tool will ask you to enter:
- Locations
- Company sizes
- Industries
- Job functions
- Job seniorities
- Age ranges
It then generates an estimated CPM range. The more precise your inputs, the more accurate the estimate will be. This allows you to experiment with different targeting scenarios to balance reach and relevance with cost efficiency.
Monitoring actual campaign performance is also crucial. Make sure to regularly review your ad CPMs in LinkedIn’s reporting. If they exceed your goals, try adjusting targeting, bids and ad creative to bring down costs. Testing is key to finding the optimal approach.
Tips for lowering LinkedIn CPM
Here are some proven strategies for reducing LinkedIn advertising CPM:
- Use broader targeting – going after larger audience pools may decrease relevance slightly but can substantially cut CPMs.
- Bid strategically – bid higher on the most sought-after audience segments, lower on less competitive ones.
- Test ad variations – change up copy, creatives, calls-to-action to see what resonates best at lowest CPM.
- Advertise consistently – LinkedIn rewards consistent ad spend with lower CPMs.
- Watch timing – adjust daily budgets to when your audiences are most active on the platform.
It also pays to work closely with your LinkedIn account rep, who can provide guidance on lowering CPM based on campaign objectives and KPIs.
Conclusion
CPM rates on LinkedIn can vary significantly based on many factors. While the average is around $8, real-world CPMs could be as low as $2 or as high as $15+ depending on targeting, format, industry and other variables. By leveraging LinkedIn’s estimation tools, regularly reviewing performance, testing different approaches and optimizing based on results, marketers can develop an effective strategy for controlling LinkedIn ad costs.
