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Are LinkedIn ads really worth paying for? Blog Feature

Jason Linde

Google Ads Lead, Paid Media Specialist, 5+ Years Experience Creating PPC Strategies, 20+ Years of Digital Marketing Expertise

April 3rd, 2020 min read

LinkedIn has long been seen as something of a social media also-ran. But in recent years, the platform has expanded its user base and engagement — and put increased focus on ads

So, are ads on LinkedIn worth paying for?

The short answer… it all depends. 

What I have learned over the past five years as a LinkedIn ads specialist is that, while this is one of the most common questions I get asked, it’s never just a yes or no answer. 

If you’re like most clients I work with, this is likely what’s going on:

You’re looking to generate more leads, drive website traffic, and build brand awareness for your company. You’ve heard that advertising on LinkedIn is a great place to start. 

You’ve also probably Googled things like “how much do LinkedIn ads cost” or “how much should I spend on LinkedIn” and have seen an abundance of headlines like Why LinkedIn ads come with a premium CPC or How not to waste money on LinkedIn ads or even Why LinkedIn ads will break your bank

I imagine that your head is spinning and you're asking yourself, again, “are LinkedIn ads really worth paying for?”

Before we address that big question, though, you need to ask yourself exactly what you’re looking to get out of advertising on LinkedIn. 

That way, you can decide what is best for your company. 

Why consider LinkedIn ads to begin with?

According to the latest statistics from LinkedIn, there are 675 million users on the LinkedIn platform actively engaging as professionals in their field. 

What does this mean for your business? This means that you have an opportunity to engage and target prospects by their job titles, skill set, seniority, company name, industry, and more. Some will be decision makers, while others will offer direct paths to decision makers.

With a pool of prospects this size, LinkedIn advertising can quickly become a real lead generator, which could make it the potential revenue stream that you have been looking for.   

However, before you dive in, it is essential to ask yourself this: “Does my target audience spend time engaging in this space?”  

There are typically two reasons professionals are drawn to the LinkedIn platform. 

  • Career advancement - Members are often thinking about their next career move. 
  • Professional and personal development - Members are heavily invested in improving themselves.

If your product or service could fit into what these individuals are looking for, LinkedIn ads could very well be a good fit.

Hopefully you have done ample research on your buyer personas and will have an answer to this question. If you are still struggling to develop personas, check out our free buyer persona template.

Determining if LinkedIn ads are a good fit

First things first, LinkedIn prospects are not necessarily sales-ready. By this I mean that they are not necessarily looking for your product or service, but they may be interested in it once educated via content (articles, videos, infographics, etc.).

With LinkedIn ads, you are targeting users in hopes that they are interested in what you have to offer — or are at least near interested in having a conversation with you. 

LinkedIn ads are what we call disruptive marketing, and unlike Google, where you can spend your advertising dollars on user intent (when a user types a keyword and is served your ad), you are placing yourself into a LinkedIn member's newsfeed without them asking for it.

The analogy I like to use is a cabby looking for a fair vs. a chauffeur looking for their customer. The cabby is trying to get the attention of anyone walking by who might need a ride (the LinkedIn member scrolling through their feed), while the chauffeur is looking for a specific customer (the user who performed a Google Search looking for them).

This leads to the next important question: can your product or service withstand the longer, more nurturing-focused sales cycle that characterizes LinkedIn ads?

Based on LinkedIn’s higher cost-per-click, companies with smaller deal sizes or smaller margins will have trouble seeing a positive return on investment.

You will want a large enough deal size in the end to help offset your upfront cost to ensure a return on your ad spend.

SAAS companies, software solutions, technology companies, and other B2B companies with larger deal sizes often find the most success with LinkedIn ads.

So, how much do LinkedIn ads cost?

According to LinkedIn, they offer “ads for any budget.” However this is simply not the case in my experience.

Just as LinkedIn ads are a better fit for companies with larger deal sizes, they are also a better fit for companies with larger budgets. I am not saying that you can’t advertise on LinkedIn with a smaller budget, you will just need to adjust your expectations around performance and success. 

According to LinkedIn, there are three factors that can influence cost:

  • Target audience: With narrow targeting options, you run into the issue of targeting a high-demand audience. Higher demand equals higher cost, based on the value LinkedIn assigns the audience and the amount of competition. 
  • Bid: Similar to Google, during the auction process you only pay $0.01 more than your competitor’s bid, but what you are willing to pay will be a determining factor in your overall cost (higher competition = higher cost-per-clicks). Meaning that if your competitor is willing to pay $2.50 for a click and you are willing to pay $3.00, you will win the auction and LinkedIn will only charge you $2.51 for the click. 
  • Ad relevance score: If the content is valuable to the audience (which is determined by the number of clicks) and the overall engagement the ad gets, LinkedIn will serve your ad to your audience as desired. If the ad is not generating clicks or engagement, LinkedIn will stop serving the ad. High ad relevance is typically rewarded on the LinkedIn platform with lower cost-per-clicks.

For most companies, I would recommend starting with a monthly ad spend budget between $2,000 - $5,000.

A budget of this size will allow for a daily spend between $66 - $165, which typically yields enough data to determine performance success and allow for faster scaling.

What ad format is best for LinkedIn audiences?

One of the best attributes of LinkedIn ads is the variety of ad types available. Here are some of those available types and the key takeaways you should always consider.

Text ads - These appear on prominent pages within LinkedIn such as LinkedIn member profile pages, home pages, search results, and group pages.

linkedin-text-ads-sample

Sponsored content - These run natively within a LinkedIn member’s news feed.

linkedin-sponsored-content-sample

Sponsored in-mail - These are direct messages you send to your LinkedIn member prospects when they are active on the platform in their messaging inbox. 

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Video ads - These are just like sponsored content except you are engaging your LinkedIn members natively in their news feed on both desktop and mobile with video (rather than static imagery).

linkedin-video-ads-sample

LinkedIn ads terms and metrics you need to know

How can you know if LinkedIn ads are the right platform for you? These are my top three metrics for determining success with LinkedIn ads:

1). Click-through rate (CTR) signals how interesting your ads are. A higher CTR indicates an interested audience, and a low CTR means you are missing the mark on how you are attracting or engaging with your audience. 

2) Conversion rate shows how many of your engaged audience members actually took the desired action.This is a great indicator of your offer. 

3) Cost per acquisition (CPA) shows you how much it cost to get an initial lead.

A few things to note: LinkedIn does require a minimum CPC of $2 to advertise on the platform, but we typically see average CPCs around $7-11.

However, if you are targeting C-suites or Fortune 500 companies, you should expect to see an average around $15-$25. Why the major cost difference? These companies and job titles have the most competition, as everyone wants to talk to the decision makers and the largest companies.

So, are LinkedIn ads really worth paying for?

If you can sustain the recommended budget and have a deal size large enough to create a positive ROI, LinkedIn ads can be a great investment. LinkedIn ads typically yield high-quality leads and offer larger niche targeting options, making them an ideal solution for most B2B companies. 

If the proposed budget and longer sales cycle seem intimidating, you may want to consider other options instead of investing in LinkedIn, such as a Google pay-per-click (PPC) with retargeting or Facebook. 

If you have any questions or want to share your LinkedIn adventures, drop me a line in IMPACT Elite

I am always happy and excited to talk about all things LinkedIn Ads!

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