The 2020 guide to LinkedIn advertising costs

Traffic Generation

The 2020 guide to LinkedIn advertising costs

Want to advertise on LinkedIn? In this article, we'll cover LinkedIn advertising costs to help you decide if it's the right move for your business.

February 11 · 4 min read

Want to start a marketing campaign on LinkedIn but worried about your budget? In this article, we’ll cover LinkedIn advertising costs, strategies, and terminology so you can decide if it’s the right move for your business.

Who should use LinkedIn advertising?

Despite how big of a platform LinkedIn is, its marketing niche is quite narrow. Platforms like Facebook, Instagram, and Reddit tend to cater to the majority of social media users, while LinkedIn is strictly for business, and your ads should reflect this.

With this in mind, B2B businesses are the best candidates for LinkedIn advertising, especially those with a more substantial budget. Companies looking to recruit new talent or universities looking to reach potential students are also great contenders for advertising on LinkedIn.

You probably shouldn’t advertise on LinkedIn if you’re anyone else, in all honesty. The price is simply too high and the results too ineffective for B2C companies. It’s not impossible to reach consumers on the platform, but you’ll have significantly better luck elsewhere.

Companies that use LinkedIn advertising effectively

Adobe

Adobe is what you might consider the perfect LinkedIn advertising candidate. Its users largely consist of young professionals who work with creative software. In other words, the exact types of people using LinkedIn.

LinkedIn offers the ability to sort users based on interest, experience, and job experience. Adobe can create ads for students, freelancers, artists, web developers, and animators, and target each of those ads to their specific audience, rather than Instagram, where the targeting is a little more general.

Hubspot

HubSpot, one of the leading producers of marketing software, is a fan of LinkedIn advertising, which should tell you something about the value of advertising on the platform. In a LinkedIn case study, the head of HubSpot’s marketing revealed that they had 60% greater success on LinkedIn than on any other social media platform.

They credited this success to the simple and direct nature of LinkedIn. The purpose of the platform is clear, which makes it much easier to define and target your marketing campaign.

Utah State University

Utah State University’s advertising on LinkedIn is a great example of knowing where and how to find your target audience. Unlike HubSpot and Adobe, which are looking for new customers, Utah State is looking for potential students.

Rather than looking on Instagram or Snapchat, where the user base is largely young and looking to be entertained, the school turned to LinkedIn. LinkedIn helps them find potential students based on age, gender, interests, work history, and education history, making their campaign that much more effective.


The benefits of LinkedIn advertising

LinkedIn may not be for everyone, but that’s actually what makes it so great for advertisers. Because the audience is so specific (businesses and professionals), you have a pretty good idea of who you’re marketing to and how to do so. Compare this to Instagram, where you’re marketing to the entire world, hoping to cut through that vast audience and reach your targets.

Not only do you understand LinkedIn users, but you can also break up that niche into more specific segments, something you can’t really do on platforms like Facebook or Snapchat. You can target people based on the industry they work in, the roles they serve, their experience, etc. The specificity of LinkedIn is its greatest advantage.

How much LinkedIn advertising costs

LinkedIn’s pricing is going to vary per advertiser as well since the platform uses a bidding model. However, LinkedIn does have minimums. These minimums are $2 per CPC and CPM.

On average, you can expect these prices to be significantly higher. According to HubSpot, a company that’s worked with LinkedIn’s advertising often, the prices average at $5.74 CPC with a conversion rate of 6.1%. That means that with a budget of ​$1,000, you are essentially paying for 174 clicks that, with a CVR of 6.1%, lead to 11 conversions.

To put it more simply, you can expect to spend around $90 per conversion on LinkedIn. As mentioned, though, this will vary depending on who’s advertising. Factors like your target audience, ad relevance score, and bid competitors will play a role in determining the cost of LinkedIn advertising.

LinkedIn advertising bids: The basics

Because advertising on LinkedIn is so sought after, they use a bidding model rather than a fixed-price model. This means that prospective advertisers propose what they’re willing/able to pay for LinkedIn advertising, and the highest bidder gets the best advertising treatment.

There are three different bidding options on LinkedIn:

  • Cost per click (CPC): You pay a fee for every click your ad receives.
  • Cost per impression (CPM): You pay a fee for every 1,000 impressions (or “mille,” hence the “M” in “CPM”). Every view an ad receives is an impression.
  • Cost per send (CPS): CPS is used to charge for ads sent to LinkedIn users’ inboxes. You pay a fee for every “send.”

Managing your LinkedIn advertising costs

Although LinkedIn is competitive when compared to the other major social media sites, its pricing is still high for many businesses’ marketing budgets. Luckily, LinkedIn offers three ways to manage your LinkedIn advertising spending.

The first is with a total budget. Total budget is an amount you set at the beginning of your campaign that outlines exactly how much you want to spend. LinkedIn then goes through this budget as quickly as possible using the most effective advertising methods possible. It’s quick and punchy advertising.

You can also choose to set a daily budget. A daily budget is an amount you plan to spend each day for a certain period. This is better for slow and steady advertising. Finally, there’s bidding. In bidding, you bid the max amount you’re willing to pay and depending on the other bids, LinkedIn will spend your bid as effectively as it sees fit.


The different types of LinkedIn ads

Text Ads

Text ads are simple advertising banners that appear in people’s sidebars on LinkedIn. These can be CPC or CPM based depending on whether you want to build awareness or earn conversions.

Sponsorship content

Sponsored content pushes content that you publish on LinkedIn into people’s newsfeeds. It’s one of the most common types of advertising on the platform and is great for increasing engagement.

Video Ads

Video ads are less common on the platform, though still important. These are functionally the same as sponsored content (they show up in users’ newsfeeds) but are, of course, video-based. This affects the pricing (fee for every three-second view). LinkedIn plays these ads on silent by default, so be sure to edit subtitles into your ad.

Sponsored Inmail

InMail is LinkedIn’s direct messaging system. Sponsored InMail is a way to send advertisements directly to users’ inboxes. To keep from overwhelming users with ads, only one advertiser can send ads to a user for 45 days. So you won’t have to compete with other ads when using sponsored InMail.


How to advertise on LinkedIn

Step 1. Choose which ads you want to use

This is something you should begin doing before advertising on LinkedIn. Do you have a video you can use as an advertisement or an article that would make great sponsored content? Or do you have graphic design pieces that you can show as banners on the site?

Once you have an idea of the types of ads you want to show on LinkedIn (text ads, video ads, sponsored content, or sponsored InMail) you’ll need to decide how you want to pay for those ads: CPC or CPM?

CPC is going to cost more (you’re paying more to reach fewer users), however, it’s also going to earn much higher engagement than CPM. If you’re not sure which to choose between the two, CPC is usually the better option, unless you know that your brand is only trying to build awareness at the moment.

Step 2. Choose a target audience

Next, you’ll need to choose a target audience. This is one of the areas where LinkedIn shines, as we already mentioned earlier. The niche nature of the site — business professionals — makes it easy to break up the users into particular categories.

Specifically, LinkedIn is great for breaking down your target audience by their job, skills, and work history. Using these factors, which all users fill out when creating their profile, allows you to target very specific individuals with your ads.

To plan out your target demographic for LinkedIn advertising, break down your envisioned customers by the following categories:

  • Industry and company
  • Age and gender
  • Education and experience
  • Interests

Step 3. Create a budget

With your audience in mind, it’s time to set your LinkedIn budget. We already explained the three different types of LinkedIn budgets you can set: a total budget, daily budget, and bidding. Now we want to discuss how to choose your budget amount.

LinkedIn generally recommends setting a budget of $5,000 per month, which you can spend in a few different ways. Setting it as a total budget for the month is the fastest way to spend it for heavy-hitting advertising, while splitting it to about ​$150 per day is better for a steadier approach.

From there, LinkedIn recommends using a 70/30 split on your budget. That’s 70% toward conversion marketing (building conversions and lead generation) and the remaining 30% on CPM (building brand awareness on the platform). This isn’t the only way to structure your budget, but it’s a good place to start.

Step 4. Track your LinkedIn ads

After you’ve set your budget and have ads playing across LinkedIn, it’s time to start keeping track of those ads. Like Facebook pixel, LinkedIn has a built-in tracking feature known as Conversion Tracking. This tool allows you to pick a metric, like email registration, signups, or purchases, and measure your leads accordingly.

You can then use the data gathered from Conversion Tracking to make more informed decisions about your LinkedIn advertising. Growth tracking is one of the best ways to make sure the money you’re investing in LinkedIn isn’t going to waste.

Another way to track your LinkedIn ads is to combine them with Google Analytics on your website. By seeing how long users stay on your website and the actions they take, you can better understand your advertising’s effect and how your audience perceives it.

Are LinkedIn advertising costs worth the price?

Yes! if your business is well-suited to the platform, that is. For companies that read this article and feel that they’re a good match for LinkedIn, you’ll find that the platform offers much better results for the price. For more resources on building your brand awareness, check out the rest of B12’s Resource Center.

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