LinkedIn and Facebook are two of the most popular social media platforms for running ads. However, LinkedIn ads tend to be significantly more expensive than Facebook ads. There are several key reasons for this price discrepancy.
Different Audiences
LinkedIn and Facebook have very different audience demographics. LinkedIn users tend to be higher income professionals in the B2B space. Facebook has a much broader audience, including consumers and people of all ages and income levels.
LinkedIn’s audience is highly valued by advertisers because they have money to spend and influence business decisions. This concentrated professional audience commands higher ad prices on LinkedIn.
Less Inventory
Facebook has a massive user base with over 2 billion monthly active users. LinkedIn is much smaller with only about 675 million members. This smaller audience means LinkedIn has less ad inventory to sell.
With Facebook, advertisers can run large campaigns and buy tons of impressions across the platform. LinkedIn’s limited inventory leads to higher competition for available ad slots, which drives up pricing.
Higher Engagement
LinkedIn members tend to be very active when using the platform, commenting on posts and clicking on content. This leads to higher engagement rates for ads on LinkedIn compared to Facebook.
LinkedIn ads see click-through rates over 2% on average, compared to Facebook’s average of under 1%. Because LinkedIn ads drive more clicks and conversions, advertisers are willing to pay more for them.
Targeting Capabilities
LinkedIn offers very sophisticated targeting capabilities that allow advertisers to zero in on specific professional titles, skills, companies, and more. This level of granular targeting is not available with Facebook.
The ability to micro-target ads on LinkedIn enables advertisers to reach their ideal customers much more efficiently. This increased relevance also boosts engagement, further driving up prices.
More Expensive Ad Units
LinkedIn offers premium ad units and sponsorship opportunities that are unique to the platform. For example, advertisers can sponsor LinkedIn’s email newsletters or runads on the LinkedIn homepage.
These special ad placements have high visibility and engagement, so LinkedIn is able to charge a premium. There are no comparable high-end ad units on Facebook.
Higher Intent Users
People browse Facebook for entertainment and to see updates from friends and family. But LinkedIn users are there for professional networking and education – they have higher intent.
This means LinkedIn ads are more likely to convert users who are actively looking for relevant products and services. The high-intent audience is very valuable to advertisers and LinkedIn capitalizes on this through higher ad costs.
B2B Focus
While Facebook excels at consumer and B2C advertising, LinkedIn is dominant for B2B ads. LinkedIn’s professional audience and targeting capabilities make it ideal for generating leads.
B2B companies frequently rely on LinkedIn advertising for their lead gen efforts. And for many advertisers, these leads justify paying LinkedIn’s higher prices.
No Alternative Platform
For reaching the professional audience, LinkedIn has no direct competitor. The unique value LinkedIn provides in B2B advertising allows them to charge higher prices without losing business to other platforms.
Facebook, on the other hand, competes heavily with other platforms like Instagram, Twitter, and Snapchat. This keeps prices lower on Facebook to remain competitive for advertiser dollars.
Slow Placement Process
Getting ads approved on LinkedIn can take several days, which is much slower than Facebook’s automated approval. LinkedIn has a team that manually reviews each ad before it can run.
This human touch ensures higher ad quality, but limits inventory growth. The slower placement process contributes to limited ad supply and subsequently higher prices.
High Ad Relevance
LinkedIn advertising algorithms are highly optimized to only show ads relevant to each member’s profile and activity. Irrelevant ads are almost non-existent on the platform.
This increased relevance keeps user frustration low and helps drive higher engagement rates. Advertisers pay more to access this highly targeted professional audience.
Performance Tracking
LinkedIn provides robust analytics on ad performance including sophisticated conversion tracking. Marketers can closely monitor ROI and optimize campaigns.
The ability to tightly track performance and returns gives LinkedIn advertisers confidence to invest at higher levels to maximize results.
Local Ad Costs
In addition to platform differences, geographical targeting also impacts LinkedIn and Facebook ad pricing. Advertising costs vary significantly by location.
For example, targeting ads in San Francisco or New York City will be more expensive than targeting a rural area. Both platforms charge higher rates in areas with more demand.
Conclusion
In summary, LinkedIn ads are more expensive than Facebook ads for several reasons:
- Smaller, high-value professional audience
- Limited ad inventory
- Higher engagement rates
- Precise targeting capabilities
- Unique ad units and sponsorship opportunities
- Higher intent users focused on business
- Slow placement process
- Highly relevant ads
- Strong performance tracking
For B2B advertisers interested in generating leads, LinkedIn’s targeting features and professional members justify the higher prices. But for consumer marketers looking for scale, Facebook remains a very cost effective option.
Understanding the key differences between the two platforms enables advertisers to determine which will be a better fit based on their industry, objectives, and budget.
Frequently Asked Questions
What are the average costs for LinkedIn and Facebook ads?
Average costs on LinkedIn tend to range from $5 – $10+ per click and $100 – $200+ per conversion. On Facebook, costs typically average $1 – $3 per click and $20 – $40 per conversion.
What factors impact ad pricing on LinkedIn and Facebook?
Major factors impacting ad costs include targeting, ad placement, time of year, competition, ad creative, and bidding strategy. Both platforms use auctions to sell ad space, so demand also influences price.
How does audience size impact ad costs?
Platforms with larger audiences like Facebook can sell more ad impressions, meaning they can charge less and still generate significant revenue. LinkedIn’s smaller audience limits inventory, leading to higher costs to reach users.
Should I use LinkedIn or Facebook ads for my business?
It depends on your target customer and objectives. For B2B lead generation, LinkedIn is likely the better choice despite higher costs. For consumer ecommerce or app install ads, Facebook may be more suitable and affordable.
How can I reduce my LinkedIn ad spend?
Ways to decrease LinkedIn ad costs include setting lower bids, tightening targeting, designing high-converting ads, testing conversion optimizations, and monitoring performance to eliminate unprofitable areas.
Key LinkedIn Ad Statistics
Here are some key statistics highlighting the performance differences between LinkedIn and Facebook advertising:
| Metric | ||
|---|---|---|
| Click-through rate | 2.14% | 0.90% |
| Conversion rate | 13.54% | 2.80% |
| Engagement rate | 3.92% | 0.22% |
| Average CPC | $8.18 | $1.72 |
| Average CPM | $11.38 | $7.19 |
Sources:
As the stats show, LinkedIn advertising offers significantly higher click and conversion rates compared to Facebook. But marketers pay for that increased performance with a higher cost per click (CPC) and cost per thousand impressions (CPM).
Tips for Optimizing Your LinkedIn Ad Costs
Despite generally higher prices, there are ways for advertisers to keep LinkedIn ad spend under control:
- Set specific goals to track return on ad spend (ROAS)
- Perform regular bid adjustments to find the optimal balance of volume and cost
- Test different targeting options and placements to identify high-value areas
- A/B test multiple ad variations to improve CTR and conversions
- Analyze metrics daily and pause low performing ads
- Use LinkedIn’s conversion tracking to identify profitable actions
- Advertise new content and products to tap into fresh member interest
With the right optimization tactics, companies can scale LinkedIn ads to hit their lead targets while maintaining a healthy ROAS.