LinkedIn advertising offers two main bidding options: manual bidding and cost cap bidding. Both bidding types allow advertisers to target their ads to a specific audience on LinkedIn. However, there are some key differences between manual bidding and cost cap that advertisers should understand before setting up a LinkedIn ad campaign.
In manual bidding, the advertiser sets the maximum bid amount they are willing to pay for each click or impression on their ad. With cost cap bidding, the advertiser instead sets a total daily maximum budget that they want to spend on their ad campaign. LinkedIn’s algorithm will then automatically adjust bids to try and get as many clicks/impressions as possible while staying under the daily budget cap.
Understanding these differences allows advertisers to choose the right bidding strategy for their campaign goals and budget. Manual bidding gives maximum control for targeting specific CPCs/CPMs, while cost cap bidding simplifies budget management.
How Does Manual Bidding Work on LinkedIn?
With manual bidding on LinkedIn campaigns, advertisers get to set the maximum bid amount for their ads on a granular level. There are two types of manual bids that can be placed:
– Cost-Per-Click (CPC) bidding – Set a maximum bid for each click on the ad
– Cost-Per-Thousand Impressions (CPM) bidding – Set a bid for every 1000 impressions of the ad
When using manual CPC bidding, the advertiser inputs the highest amount they are willing to pay for a single click on their ad. LinkedIn will then serve the ad until the click-through rate (CTR) drives the effective CPC up to the advertiser’s max bid.
Similarly with manual CPM bidding, the advertiser inputs the maximum they want to pay for 1000 impressions. As CTR and competition impact impression volume, the effective CPM will reach but not exceed the max bid amount.
Benefits of Manual Bidding
– Precise control over max CPC/CPM bids
– Can target specific costs per click/impression
– Can adjust bids frequently to optimize for KPIs
– Can set higher bids to aggressively gain rank vs competitors
– Know exact CPC/CPM you will pay
Downsides of Manual Bidding
– Time consuming to manage bids daily
– Unpredictable spend as rankings fluctuate
– Lower budget flexibility as fixed bids may overspend
– Unable to fully maximize entire budget each day
Overall, manual bidding is ideal for advertisers who want maximum control over the exact CPC/CPM they pay for their LinkedIn ads. The tradeoff is the time required to actively monitor and manage bids daily.
How Does Cost Cap Bidding Work?
Cost cap bidding takes the opposite approach from granular manual bidding. Instead of focusing on CPCs/CPMs, it allows advertisers to input a total daily maximum budget for their campaign. The LinkedIn algorithm then automatically adjusts individual bids to try and gain as many clicks/impressions as possible under the budget limit.
When setting a daily budget cap, the advertiser inputs the maximum total amount they want to spend per day for their campaign. LinkedIn’s bid algorithm will then optimize bids across auctions to gain the most reach and engagement possible while averaging the daily spend to the budget cap set.
Benefits of Cost Cap Bidding
– Requires less frequent bid monitoring/updating
– Guarantees campaign budget will not be overspent
– Maximizes reach and engagement within fixed budget
– Ad frequency adjusted dynamically by algorithm
– Flexible budgeting, easy to adjust cap as needed
Downsides of Cost Cap Bidding
– No control over actual CPC/CPM paid
– Rankings fluctuate more vs fixed manual bids
– Impressions can vary significantly day-by-day
– Lower priority vs competitors who manual bid higher
The key advantage of cost cap bidding is simplified budget management. Just set your daily maximum, and LinkedIn’s algorithm handles pacing spend to that level. The tradeoff is lower prioritization than competitors using aggressive manual bids.
Key Differences
Now that we’ve covered both bidding methods in detail, here are some key differences to keep in mind when deciding on a LinkedIn bidding strategy:
Level of Control
– Manual bidding offers maximum control over specific CPC/CPM
– Cost cap control focuses on total budget spending
Bid Flexibility
– Frequent bid changes easily made with manual bidding
– Cost cap bids remain static day-to-day once budget is set
Budget Management
– Manual bidding risks overspending daily budget
– Cost cap guarantees budget will not be exceeded
Ad Rank Impact
– Manual bids directly impact ad rank vs competitors
– Cost cap bidding manages rankings dynamically within budget
Optimization Effort
– Manual bidding requires close monitoring to optimize
– Cost cap automation simplifies optimization over time
| Factor | Manual Bidding | Cost Cap Bidding |
|---|---|---|
| Level of Control | Highly granular | Total budget focused |
| Bid Flexibility | Very flexible | Static day-to-day |
| Budget Management | Higher overspend risk | Guaranteed cap |
| Ad Rank Impact | Directly controllable | Managed dynamically |
| Optimization Effort | High effort required | Automated simplicity |
Use Cases for Manual Bidding
Now that we’ve compared the two bidding approaches, here are some of the best use cases for manual bidding on LinkedIn:
Keywords With High Conversion Rates
For keywords that deliver conversions very profitably, manual bidding lets you precisely target the CPCs and impression volume that deliver the best ROI. Maximize profit from high performing keywords with aggressive manual bids.
Outranking Specific Competitors
If there are 1-2 top competitors you want to outrank for valuable keywords, manual bidding allows you to set specific CPC/CPMs to target ranking above them in auction.
Low Competition Ad Spots
Manual bidding also works well for highly targeted, low competition keywords where you can dominate rankings at very low CPCs using precision manual bids.
Flexibility in Budget Fluctuations
If there are large variances in daily budget allocation needed (e.g. high some days, low other days), manual bids allow you to quickly adjust spending.
Micro-Conversion Campaigns
For campaigns focused on micro-conversions like email signups, manual bidding allows granular bid tuning to optimize lead volume and cost per lead.
Use Cases for Cost Cap Bidding
Cost cap bidding on LinkedIn tends to work best for these use cases:
Guaranteed Lead Volume Campaigns
When you need to deliver a high volume of leads consistently day-to-day, cost caps provide automated bid management to pace spend to budget and achieve lead goals.
New Campaigns Still in Testing Phase
As you scale up new campaigns and iterate on messaging, cost caps simplify management without close manual bid monitoring needed.
Broad National Brand Campaigns
For top of funnel brand awareness campaigns targeting wide national audiences, cost caps offer set it and forget it budgeting at scale.
Flexible Daily Budget Needs
If daily budgets fluctuate significantly across the week or month, cost caps allow easy adjusting without manual bid changes needed each time.
beginner Advertisers New to Paid Marketing
For those new to paid marketing, cost caps eliminate the need for manual bid management to gain experience before taking full control.
Key Considerations for Choosing a Bidding Strategy
As a recap, here are some key considerations when deciding between manual bidding and cost cap bidding for LinkedIn ad campaigns:
– Do you need to precisely control specific CPCs/CPMs? Go manual bidding.
– Are you focused purely on budget management? Use cost caps.
– Do you want to outrank competitors for keykeywords? Leverage manual bidding.
– Is consistent daily lead volume crucial? Cost caps help maintain delivery.
– Do you have high daily budget variability? Manual bidding adds flexibility.
– Is achieving maximum reach essential daily? Cost caps automate optimal reach.
– Do you have minimal resources for bid management? Cost caps require less oversight.
– Are you launching a new campaign in an exploratory phase? Start with cost caps.
– Do you need granular insight into auction dynamics? Only manual bidding provides this.
– Is quickly scaling budget a key priority? Cost caps make growth easier.
Best Practices for Manual Bidding
If you do choose to implement manual bidding for LinkedIn ads, here are some top practices to maximize the impact:
Set Specific Bid Targets
Determine specific max CPC/CPM goals for each ad group to provide clear direction for bid management. Track progress to targets.
Analyze Auction Dynamics
Regularly check impression volume, ad rank, competition, and other auction factors to optimize bids.
Enable Bid Simulations
Use LinkedIn’s bid simulator to test potential bid changes before deploying live.
Scale Cautiously
When increasing budgets, ramp up bids gradually to avoid dramatic overspending.
Pause Poorly Performing Ads
Pause low performing ads frequently so budget allocates to better ads.
Monitor Daily Spend
Check daily spend reports to maintain budgets and optimize passing as needed.
Adjust Bids Every 1-3 Days
Actively modify bids for key campaigns frequently to maintain targets.
Best Practices for Cost Cap Bidding
For succeeding with cost cap bidding, keep these tips in mind:
Set Realistic Budget Minimums
Budget caps should meet minimum levels needed to gain sufficient daily impressions.
Analyze Spend Trends
Look at historical daily spend to set budget caps aligning to trends.
Modify Caps Weekly
Plan to adjust caps at least weekly to account for targeting and performance changes.
Review Delivery Daily
Monitor daily delivery vs caps to identify big performance variances needing action.
Leverage Bid Recommendations
Use LinkedIn’s suggested bid guidance to pick optimal starting caps.
Expand Targeting Gradually
When expanding targeting, increase caps slowly to control spend impact.
Set Alerts for Cap Changes
Get notified when LinkedIn suggests raising caps so you can review frequently.
Key Takeaways
To wrap up, here are the key points to remember when choosing an optimal bidding strategy for LinkedIn ad campaigns:
– Manual bidding enables maximum control over specific CPCs/CPMs but requires granular bid management.
– Cost cap bidding simplifies budgeting but provides less control over ad ranking factors.
– Choose manual bidding when outranking competitors or hitting precise CPC/CPM targets is crucial.
– Cost cap bidding works best for flexible budgeting and automated bid optimization.
– Regularly adjust manual bids based on auction insights to maintain targets.
– With cost caps, review spend trends frequently and adjust caps accordingly.
– Blend both models across campaigns if needed to balance control and automation.
Successful LinkedIn advertising requires optimizing bids over time as campaign data rolls in. Both manual bidding and cost cap bidding provide paths to achieving key marketing objectives according to your unique requirements. By understanding the nuances of both approaches, you can develop an effective paid strategy tailored to your LinkedIn goals.
Conclusion
Manual bidding and cost cap bidding take different approaches to optimizing LinkedIn ad auctions. Manual bidding offers maximum control over granular CPCs and CPMs to precisely manage ad ranking. Cost cap bidding instead simplifies budget management by automating bid adjustments to average daily spend to your set cap.
When launching new LinkedIn campaigns, assess factors like budget flexibility needs, targeting breadth, and competitiveness of keywords to decide which model fits best. Over time as performance data comes in, you can refine your bidding strategy across campaigns to strike the right balance of automation and control for your goals. By mastering both bidding approaches and aligning them to specific campaign objectives, you can make the most of LinkedIn’s advertising platform.
