Determining the right budget for LinkedIn marketing can be challenging. LinkedIn offers a variety of advertising options and strategies, and costs can add up quickly. However, investing in LinkedIn ads can also generate a strong return on investment if done correctly. In this article, we’ll explore what goes into setting an effective LinkedIn budget and share tips to get the most from your spend.
Understand LinkedIn Advertising Options
LinkedIn offers the following main advertising formats:
Sponsored Content
Sponsored Content places native ads in the LinkedIn feed similar to regular posts. You can target Sponsored Content based on location, job title, industry, interests, and more. Pricing is based on cost-per-click (CPC) or cost-per-thousand impressions (CPM). Sponsored Content is best for increasing brand awareness and generating clicks to your website or pages.
Sponsored InMail
Sponsored InMail allows you to send targeted direct messages to LinkedIn members matching your ideal customer profile. InMail pricing is based on cost-per-send, so you pay whether the message is opened and read or not. Use Sponsored InMail when you want to deliver personalized, promotional messages driving conversions.
Text Ads
Text ads on LinkedIn are similar to Google text ads—short headlines, descriptions, and URLs. Text ads are displayed on the side rail next to search results and feed posts. You are charged on a cost-per-click basis. Text ads work well for driving traffic from LinkedIn search.
Dynamic Ads
Dynamic Ads automatically promote your latest content to relevant viewers. You specify the target audience, and LinkedIn dynamically generates ads using posts from your Company Page or Showcase Pages. Pricing is cost-per-click. Dynamic Ads help ensure you don’t miss opportunities to promote newly published content.
Know Your Goals
Before determining budget, you need to establish clear goals for your LinkedIn advertising. Some common LinkedIn marketing objectives include:
– Generate leads or sales inquiries
– Increase website traffic
– Grow followers and engagement with your Company Page
– Recruit new employees or find B2B partners
– Promote events and webinars
– Raise brand awareness
The goals you want to achieve should directly inform how much budget you need. If you simply want to increase followers, a smaller budget may suffice. But if you expect to generate leads and sales, a larger budget is likely required.
Research Competitors and Industry Benchmarks
Conduct research to see what other businesses and competitors are spending on LinkedIn. Some benchmarks to consider:
– Average CPC for Sponsored Content: $5-$8
– Average CPM for Sponsored Content: $15-$30
– Average cost-per-send for Sponsored InMail: $50-$100
– Average CPC for text ads: $3-$7
Keep in mind these averages can vary significantly depending on your target audience, industry, and other factors. Use them as a general guideline.
You can also research industry reports to find LinkedIn advertising spend benchmarks. For example, B2B companies allocate around 25-30% of their total marketing budget to LinkedIn on average.
Calculate Potential ROI
Before deciding on budget, estimate the potential return from LinkedIn advertising investment. Here’s a simple formula to calculate possible ROI:
Projected Revenue – LinkedIn Ad Spend = Potential ROI
For example, if you estimate LinkedIn ads will generate $50,000 in revenue, and you plan to spend $10,000, then your estimated ROI would be $40,000.
When projecting revenue, look at conversion rates from your website or past campaigns. If 2% of LinkedIn clicks convert to sales, and you expect 10,000 visits from LinkedIn ads, that’s 200 potential conversions. Multiply by your average revenue per conversion to get projected revenue.
Test Different Budgets
The best way to determine the right long-term budget is to first test with smaller budgets. Start with a modest budget, track results closely, then increase budget in increments as needed to achieve KPIs.
For example, you may allot $500-$1000 per month for initial testing. If you meet goals and see positive ROI with that spend level, incrementally increase budget by 15-20% each month to scale.
Testing smaller budgets first minimizes risk and gives you data to justify larger investments.
Invest 15-25% into Prospecting
For businesses focused on lead generation or customer acquisition, devote 15-25% of LinkedIn budget specifically to prospecting and outreach.
This typically involves using Sponsored InMail to contact new, relevant prospects. Set aside a portion each month for sending targeted InMails tailored to different personas and buyer stages.
While open and response rates for InMail are often low, consistent prospecting ensures you stay top of mind and convert interest over time.
Allocate 60-75% to Audience Retargeting
The bulk of your LinkedIn budget—around 60-75%—should go toward retargeting.
This involves targeting website visitors, leads, event attendees, and proven prospects with Sponsored Content and text ads. Retargeting warm, engaged audiences has significantly higher conversion rates.
For example, you may spend 15% prospecting new leads, and 60% retargeting leads who have already visited your website. Remaining budget goes to Company Page followers and branding.
Include 10-15% for Branding
While lead generation and retargeting initiatives should make up the majority of budget, devote 10-15% to general brand awareness activities.
This includes promoting your Company Page and content to broad audiences to increase followers and engagement. Brand budget ensures you continue reaching net new audiences.
A long-term brand building mindset is important on LinkedIn. Allocating a portion of budget to brand keeps your business top of mind.
Size Monthly Budget to Campaign Objectives
The specific budget you set each month should tie directly to campaign objectives. If you have a major campaign or initiative planned, increase budget accordingly.
For example, you may set aside larger budget leading up to a major conference, product launch or website redesign. Bigger campaigns demand more investment to achieve results.
Don’t fall into the trap of arbitrary monthly budgets that have no tie to your marketing calendar. Review what’s planned, then right-size each month.
Leverage LinkedIn’s Budget Recommendations
LinkedIn’s advertising platform provides suggested budgets to consider based on your target audience and objectives.
When setting up a campaign, enter your goals—whether it’s leads, traffic, or brand awareness. LinkedIn will recommend a daily or monthly budget range to achieve those goals.
For example, for a lead generation campaign targeting 10,000 finance executives, LinkedIn may recommend a daily budget of $500-$700.
While you shouldn’t rely on these recommendations alone, they provide helpful guidance grounded in real data and benchmarks.
Start Small for New Campaigns
When launching a new LinkedIn ad campaign, always start small and increase spend over time. Begin with a test budget of a few hundred dollars for 2-3 weeks.
Evaluate results during the initial test phase. If you achieve your cost-per-click, click-through rate, or conversion rate goals, progressively increase budget in increments of 15-25% at a time.
Ramping up spend allows you to validate performance at small scale first. Jumping into large budgets prematurely often leads to wasted ad spend.
Review Performance Frequently & Optimize
The biggest budgeting mistake is setting arbitrary monthly amounts then leaving campaigns running with little oversight. Instead, plan to review performance at least every 2 weeks.
Analyze metrics like click-through rate, cost-per-click, conversions, and ROI. If a campaign exceeds goals and hits maximum budget quickly, increase budget. For underperformers, pause campaigns and reallocate dollars to what’s working.
Don’t take a set-it-and-forget it approach. Ongoing optimization and agility are key to budgeting success.
Target Multiple Ad Sets for Scale
For best results, divide budget across multiple complementary ad variations and audiences. Start with 2-3 ad sets per campaign as a best practice.
For example, you may have different Sponsored Content ads focused on product benefits, thought leadership, and offers respectively. Testing multiple creative approaches allows you to optimize and double down on what resonates.
Similarly, split target audiences into different segments and budget for them separately—such as job title, location, company size. More tailored targeting translates to higher engagement and conversions.
Align Budget to Buyer Funnel Stage
Your LinkedIn budget should reflect the customer buying journey. Budget more per lead for bottom-of-funnel offers and calls-to-action vs. top-funnel brand awareness.
For example, you may allocate $50 cost-per-lead for a whitepaper download, but $100 cost-per-lead for a product demo request. Demo signups indicate later-stage buyers with higher conversion value.
Develop average cost-per-lead benchmarks for different funnel stages. Tailor copy and budget based on the offer match to buyer readiness.
Review Both Short-Term and Long-Term Metrics
Understand the difference between short-term and long-term success metrics when evaluating budget impact.
In the short run, focus on cost-per-click, click-through rates, and conversions. But also consider long-term brand and engagement growth.
For example, a brand awareness campaign may have a high cost-per-click, but over time contributes enormously to overall followers, impressions, and share-of-voice.
Don’t over-optimize for immediate ROI at the expense of brand equity. Strike the right balance.
Adapt Budget to Seasonal Changes
Review budget monthly, but also think about larger seasonal trends across the year. You may need to increase or shift budget to align with buyer behavior changes.
For example, B2B buyers are often harder to reach over summer holidays. You may pause lead gen campaigns and shift budget to brand building instead during that period.
Plan ahead for major budget adjustments you’ll need to make for initiatives concentrated in certain months. Adapt to the natural ebb and flow.
Define Clear Attribution Windows
An attribution window defines how long after an ad impression you can attribute a conversion back to that ad. For LinkedIn, 30 days is typically best.
This means you count leads, sales, or other goals generated up to 30 days after someone clicks your ad. Longer attribution better accounts for the upper funnel value of LinkedIn.
Work backwards from your attribution window to forecast monthly budgets. If you want to generate 500 leads attributed over two months, you may need $50,000 in monthly budget.
Maintain Minimum Thresholds
When decreasing budgets, be careful not to drop below minimum needed thresholds for campaigns to run effectively.
As a rule of thumb, spend at least $500-$1000 per campaign on a monthly basis. Don’t spread tiny budgets across too many small campaigns.
Maintain at least $3-5 daily budget per ad set as well. This ensures your ads are shown frequently enough to get results.
review performance regularly and consolidate budget into the highest performing campaigns.
Conclusion
Determining the ideal monthly budget for LinkedIn takes research, planning, testing, and ongoing optimization. Start by aligning spend to your specific marketing objectives. Leverage benchmarks and ROI projections to right-size budget. Test smaller budgets first, then scale up what’s working.
Remember to divide budget across prospecting, retargeting, and branding efforts for maximum impact. Review performance frequently and adapt to drive results. With the right budgeting approach, your LinkedIn investment can deliver significant returns.