How much should a small business spend on LinkedIn ads?

LinkedIn advertising can be a powerful tool for small businesses looking to reach new customers and grow their brands. However, determining the right budget for LinkedIn ads can be challenging, especially for small businesses with limited marketing resources.

What are the benefits of LinkedIn advertising?

There are several key benefits that make LinkedIn ads worth considering for small businesses:

• Targeted reach – LinkedIn allows advertisers to target ads based on location, industry, job title, interests, and more. This enables smaller businesses to reach their ideal customers efficiently.
• Professional audience – LinkedIn’s user base of over 740 million consists largely of working professionals, decision makers, and business owners – making it a prime platform for B2B companies.
• Multiple ad formats – Sponsored content, Sponsored InMail, Text Ads and more allow brands to utilize different tactics to achieve goals ranging from engagement to lead generation.
• Trust and authority – LinkedIn members are more likely to engage with content and messaging on the platform given its professional nature.
• Retargeting capabilities – LinkedIn’s retargeting options like Matched Audiences help advertisers reconnect with prospects who’ve previously visited their sites.

Factors that determine ideal LinkedIn ad spend

When setting a LinkedIn advertising budget, small businesses should take these key factors into account:

• Overall marketing budget – LinkedIn ads will be one component of broader marketing activities, so allocate budget appropriately based on resources.
• Business goals – Are you focused on brand awareness, lead generation, or sales? Ad spend should align with these specific goals.
• Target audience size – How big is your ideal audience? The more niche, the lower budget needed in many cases.
• Competition – Research competitors’ spend levels to ascertain benchmarks for your industry.
• Cost per click (CPC) – LinkedIn’s auction-based pricing model means monitoring average CPC in your industry.
• Stage of company – Early-stage startups may start smaller as they test LinkedIn’s capabilities.

LinkedIn advertising cost benchmarks

Average costs on LinkedIn can fluctuate significantly based on factors like industry, geographic targeting, and campaign objectives. However, these benchmarks can provide initial guidance on CPCs to expect:

Sponsored InMail tends to range from $50-$100+ per message depending on target seniority. Sponsored Content can range from $100-$500+ per piece based on factors like audience size and targeting.

Setting an initial LinkedIn ad budget

When first testing LinkedIn ads, it’s advisable to start small with a conservative budget and iterate from there. Here are some recommended initial monthly budgets to consider based on business size and goals:

• Early-stage startup focused on testing – $300-$500 per month
• Established small business seeking leads – $500-$1,000 per month
• Growing brand aiming to scale – $1,000-$2,000 per month
• Larger SMB with sales goals – $2,000-$5,000 per month

These budgets can be adjusted over time based on performance data and ROAS benchmarks for your industry. Many small businesses find success starting with just $100-$200 per campaign to test effectiveness.

Tips for setting and managing a LinkedIn budget

Here are some best practices small businesses should keep in mind when budgeting for LinkedIn advertising:

• Leverage LinkedIn’s bidding options like CPM bidding to maintain control over daily/monthly spend.
• Use conversion tracking to focus budget on campaigns, ads, and targets delivering results.
• Set specific ROI goals you want campaigns to achieve to guide budget decisions.
• Allocate budget across both upper and mid-funnel campaigns for a complete approach.
• Adjust budgets regularly based on performance – optimize or pause poorer performing elements.
• Take advantage of LinkedIn support and free resources to improve campaigns.
• Test different budget levels to find the right balance between spend and returns.

Potential impact of limited LinkedIn budgets

While starting with small budgets is prudent, there are some risks small businesses should be aware of on LinkedIn when resources are highly constrained:

• Limited reach and awareness due to narrow targeting and low ad frequency.
• Difficulty generating sufficient conversions for campaigns to optimize effectively.
• Not fully capitalizing on audience insights provided by LinkedIn’s data.
• Being outbid frequently for key terms/placements by competitors.
• Not funding enough variation in creative, offers and audiences.

The most successful advertisers find ways to fund comprehensive, properly-resourced campaigns over time. But even modest budgets can be effective on LinkedIn with the right targeting.

The role of organic LinkedIn activity

In addition to ads, small businesses should maintain an active organic presence on LinkedIn to complement paid efforts:

• Maintain an optimized LinkedIn Company Page to build followers and engagement.
• Encourage employees to be active sharing content and engaging with prospects.
• Publish targeted articles and content that resonates with your audience.
• Partake in relevant LinkedIn Groups to connect with your industry.
• Consider an influencer marketing program working with LinkedIn thought leaders.

This organic activity boosts visibility and allows small businesses to reach prospects without paid media in some cases. Organic and paid efforts work hand-in-hand to attract and engage LinkedIn’s professional audience.

The takeaway on LinkedIn ad spend

Determining the right LinkedIn ad budget requires balancing factors like goals, audience, and resources. While there are no fixed rules, a measured approach starting with small budgets and scaling strategically based on data tends to work best. With the right organic presence and smart bidding tactics, even modest budgets can deliver results in the right circumstances. But more importantly, small businesses must view LinkedIn ads as an ongoing, optimized commitment, not a one-off experiment. Their professional targeting makes it a highly valuable platform – when invested in properly over the long-term.