LinkedIn Advertising Costs & How To Reduce Them

LinkedIn Advertising Costs Cover
Ravi Davda Rockstar Marketing CEO

Written by Ravi

Mar 18, 2022

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It’s widely accepted today that in order for a business to succeed, they need to invest in digital advertising. And as they grow, businesses begin to explore and diversify their channels to ensure a stable growth rate.

Many businesses owners today think of Google Ads and Facebook Ads as the only useable digital advertising mediums. This is because advertising on a platform like LinkedIn is somewhat infamous for being more costly than your average Google or Facebook Ad.

However, the true pioneers of digital advertising recognise the fact that even though LinkedIn is more expensive, it’s in one way or another worth it. This is mainly the case for businesses who are looking to do some B2B marketing. As a matter of fact, around 96% of B2B marketers use LinkedIn as of 2021.

Our focus today is going to be on the advertising costs of LinkedIn. We will also deal with some of the factors that go into these costs, LinkedIn’s different bidding options, and more.

Factors that affect your LinkedIn advertising costs

Factors that Affect Your LinkedIn Advertising Costs

Three main factors influence your LinkedIn advertising costs:

Target audience

When advertising on LinkedIn, you’ll find yourself competing with other advertisers to get your ad displayed. If you happen to have a target audience that’s in high demand, chances are, you’ll end up paying more than usual.

However, if your target audience is niche and has little to no competition, then the opposite occurs (you pay less).

Bidding options

Your bid will also affect your advertising costs on LinkedIn. While you will never exceed your bid amount, you will pay a portion of it.

Ad relevance score

Ad relevance score, also known as your campaign quality score, refers to a score that is designated to your ads depending on how relevant and engaging they are. If your score is high, your ad(s) will cost less.

This is, of course, LinkedIn’s way of actively pushing advertisers to create engaging and relevant ads for the users they are targeting.

LinkedIn bidding options

LinkedIn’s pricing options are similar to those of Facebook. Ads are priced through real-time auctions, with different advertisers bidding on a chosen advertising space that allows them to reach a certain audience.

Unlike your typical auction, these ad auctions happen behind the scenes. In other words, you can only access information regarding your own ad(s). The platform offers three different pricing models, each of which is tailored to your own needs and goals:

  • Cost per click (CPC): As the name suggests, you pay a certain amount of money per click on your ad. This option is great for advertisers who only want to pay for meaningful traffic to their landing pages.
  • Cost per impression (CPM): With this bidding option, advertisers pay a certain amount for every 1,000 impressions of your ad. In case you’re unfamiliar with the word impression, it means view. This pricing model is perfect for advertisers whose aim is brand awareness.
  • Cost per send (CPS): This pricing model is exclusive for LinkedIn message ads (previously known as InMail). You pay per individual ad sent to somebody’s inbox.

LinkedIn advertising costs: Setting up a budget

As an advertiser on the platform, you want to ensure that you don’t end up spending more than you can afford to, even if the campaign is succeeding.

LinkedIn gives you three different methods that you can choose from regarding this issue:

Total budget

A total budget is perhaps the most straightforward way of ensuring that you don’t go over budget. This option is great for advertisers running ads featuring some sort of limited time bonus for new clients.

LinkedIn will go through this budget as quickly as possible by relying on the most effective advertising algorithms and methods it can use.

The lowest amount you can set per campaign is $10, which is about £7.50.

Daily budget

A daily budget is favourable for advertisers who have ad campaigns running for a long period of time. The point of going with this route is to spread your budget over whatever length of time your campaign lasts.

In other words, you won’t run into the risk of using up your entire budget on the first day, as is the case with using a total budget, for example.

LinkedIn allows you to select any amount you wish. However, your minimum spending per day per campaign is, again, $10 or £7.50.

Limited bid

With this mode, LinkedIn gives you the option of setting the maximum amount you are willing to bid for each click or impression per ad. The minimum amount you can bid for every 1,000 impressions or a click is $2 (~ £1.50).

Again, LinkedIn will spend your bid in comparison with other businesses and as effectively as they see fit.

Adjusting your bidding strategies & caps

Once you are done setting up your campaign’s objective, audience, ad format, and placement, LinkedIn will ask you to select your budgets and strategies. The platform allows you to choose from three different strategies, which are:

  • Automated maximum delivery: This option allows LinkedIn to set and adjust your bid automatically. It will leverage your whole budget while ensuring that your campaign stays as competitive as possible.
  • Target cost: This strategy allows LinkedIn to set and adjust your bid while working near your budget. You can choose a target cost, and LinkedIn won’t raise your bid above 30% of said amount.
  • Manual bidding: As the name suggests, this option is entirely manual. As a result, more user control is given to the advertisers than the automated bidding route.

So, how much does LinkedIn advertising cost in general?

According to WebFX, here are the average costs of LinkedIn ads per bid type:

  • Cost per click (CPC): The average cost per click on LinkedIn is $5.26 or £3.89
  • Next, Cost per 1,000 impressions (CPM): The average cost per 1,000 impressions is $6.59 or £4.87
  • Cost per send (CPS): As for LinkedIn message ads, the average cost per message ad sent is $0.80 or £0.59

Reducing LinkedIn advertising costs

Reducing LinkedIn Advertising Costs

So now that we have taken a look at the average LinkedIn advertising costs and the factors that influence them let’s go through some strategies that you can use to reduce these costs. That’s probably why you’re here, right?

Reducing LinkedIn advertising costs: Be specific

As we mentioned above, fierce competition over a target audience can drastically drive up advertising costs. So, many people might fall under the impression that they’re getting specific costs more. However, in most cases, the opposite is true.

In other words, going for small-sized, niche audience groups might end up costing you less than expected. Still, don’t get us wrong; we’re not saying that highly specific audiences are always the way to go. It all depends on what industry you function within, what products and services you offer, and more.

Rely on lead gen forms

Lead gen forms are an option offered by LinkedIn for users to capture leads on the platform. These lead forms will appear for users once they click on your ad.

Here are some reasons why lead gen forms are extremely effective:

  • They automatically extract the data of users from their profiles. In other words, users won’t technically have to fill in these forms manually
  • In most cases, users will be annoyed by having to leave the platform to fill out a form. However, with lead gen forms, that’s not the case since users can just keep surfing after encountering one
  • Lastly, many users on the Internet won’t trust being led to a third-party website to fill out a form with their personal data. However, since lead gen forms are built-in with the platform, users tend to worry less about their data

To put things into perspective, Linkedin lead generation forms have a conversion rate of 13%, whereas landing pages have a 2.35% conversion rate.

Perform A/B testing

A/B testing is perhaps one of the most efficient ways of reducing advertising costs on any digital platform, including LinkedIn.

The process refers to the act of testing out two different variations of an ad and closely observing and evaluating their performance to determine which to keep and which to get rid of.

When A/B testing, make sure to only change one element at a time, such as your target audience, your ad’s creatives, the copy, headlines, landing page, and more.

Work on your Quality Score

The Quality Score of an ad is an estimate of how relevant and engaging that ad is to your target audience. And as we have mentioned above, the better of a Quality Score you have, the more efficient your ad(s) will be in the auction.

LinkedIn doesn’t go into detail about how they calculate this score, but we do know for a fact that there are two main factors at play which are:

  • The maximum amount an advertiser is willing to pay
  • An ad’s relevance score is the product of all user interactions with said ad

Reducing LinkedIn advertising costs: Use the data

Understanding your target audience and their different behaviours is one of the most effective ways of significantly reducing LinkedIn advertising costs. Why? You might ask. Well, as we have just seen, relevance is key in determining how much you end up paying for an ad.

The more relevant an ad is to your target audience, the more they will interact with it, and the less you will have to pay for it.

In order to access the pieces of data that can give you a clear idea about all of this, simply use LinkedIn’s Analytics which is divided into two menus: Performance Chart and Demographics.

Closely follow the results of each campaign and get an idea of which ads have potential and which do not. The data you collect from this process can then be used to determine what audience works best for you.

Once you make all the necessary changes to your campaign with the data you have just collected, your ads will become more relevant, better performing, and less costly.

Want to run ads cost-effectively?

Book a discovery call with us today, and we’ll show you how we can optimise your LinkedIn ads for optimal results without breaking the bank.

LinkedIn advertising costs – FAQs

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