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Let’s Break Down the Cost of Advertising on LinkedIn—Is It Really Worthwhile?

January 5, 2023

The million-dollar question is, are LinkedIn ads worth the cost?



Industrialist Henry Ford said, “Stopping advertising to save money is like stopping your watch to save time.” So, while you might be familiar with the boss or a client bearing down on you to ask about ad spending, you know there’s no choice but to move forward.



Now that LinkedIn is emerging as a viable social media platform for reaching professionals, it’s starting to factor more heavily in B2B marketing strategies and brainstorming sessions.



Content Marketing Institute’s 2021 survey revealed that nearly 58% of marketers opted for LinkedIn over Facebook, Instagram, and Twitter as their social media platform of choice for paid advertising.



Still, the quick answer to the million-dollar question is, it depends.



We’ve hashed out the cost-benefit analysis to help you figure out whether the returns from advertising your business on LinkedIn justifies its cost.



Factors Affecting Your LinkedIn Ad Costs


Staying true to its promise to help you “achieve your marketing goals,” LinkedIn offers flexible ads that meet any budget. Still, LinkedIn offers three basic ad pricing models, where the average cost for each campaign model is rounded up based on how your target audience, bid, and ad relevance.



By understanding how each of these elements works, you can tailor your campaigns around your target and, more importantly, your budget. Here’s a breakdown of the three factors:



1. Target Audience


Remember when you made your own LinkedIn account and provided information like where you’re based, what company you work for, and what topics you’re interested in? These are the identifiers that your company’s advertising campaign searches for to connect with your target audience.



Some market segments are more expensive than others due to more valuable leads and stiff competition. But it goes without saying that LinkedIn’s targeted audience is something you can’t get anywhere else.



2. Ad Relevance


Ad relevance score is the measurement of how engaging your advertisement is to your targeted audience. If your audience finds your content relevant, LinkedIn rewards you with lower advertising costs.



A higher ad relevance score leads to a lower cost of advertising on LinkedIn, based on the fact that the platform believes you are offering relevant and value-adding content to its users.



3. Bidding in Auctions


You’re not the only one trying to turn LinkedIn users into leads, and so you compete in auctions. As a first-time bidder, remember that you don’t pay for 100% of the bid you place, but only a portion of it. You must identify how much you have to pay in bids when trying to run ads on LinkedIn.



We’ll discuss more about bidding below.



LinkedIn Bidding Options (And 2022 Benchmark Costs)


Like other social media platforms, LinkedIn sells your ads by putting them up on an ad auction, where you bid against other marketers in the same market segment for advertising space. 



Here’s how LinkedIn bidding options work: 



1. Cost-Per-Click (CPC)


You’re charged $5.26 per click, or every time a LinkedIn user clicks your ad. This is the preferred model if your target is to drive traffic to your website landing page because you only pay when users click the ad and are redirected to an external website.



2. Cost-Per-Impression (CPM)


You’re charged $6.59 for every 1,000 impressions your ad makes. CPM stands for cost per mille, or one thousand in Latin. One impression is counted for every time your ad appears on a search result page. 



CPM campaigning is the preferred strategy if your target is to raise brand awareness—people seeing your ad but not necessarily doing anything about it.



3. Cost-Per-Send (CPS)


You’re charged $0.8 for every cold email that you send via LinkedIn’s InMail feature. CPS campaigns leverage cold emailing to extend your brand directly to users within the social media platform. With InMail, you can send private messages directly to a LinkedIn member’s account without prior communication.



LinkedIn has a bit more expensive CPC rate and a slightly cheaper CPM compared to Facebook. Facebook ads cost, on average, $0.94 per click and $12.07 per 1,000 impressions.



While the massive CPC gap can appear intimidating, LinkedIn is built on being a network of professionals, entrepreneurs, and thought leaders. If someone within this group clicks on an ad, you definitely have a higher chance of converting them into a fruitful lead. This population set-up within LinkedIn also drives its CPM rate, although the much larger Facebook community ultimately trumps it.



The Pros and Cons of Using LinkedIn Advertising


Like any other advertising campaign, LinkedIn ads work when done right. In this case, this option appears more favorable toward larger companies with more flexible budgets. 



Here’s an overview of the pros and cons of using LinkedIn for B2B marketing:





While LinkedIn advertising comes at a steep price, remember that this is for a platform-wide advertising campaign, where you allocate 70% toward lead generation and conversion-building efforts. The remaining 30% goes to CPM to further build brand awareness toward your enterprise.



After finding a pricing strategy that works for you, it’s worth remembering that your quest doesn’t end there. You’ll need to stay on top of your costs to ensure they don’t spiral out of control. Similarly, developing your leads beyond the paid ads is critical in successfully converting them to sales.



So, Are LinkedIn Ads Worthwhile?


While LinkedIn’s campaign pricing plans mostly cater to larger companies, there are a couple of workarounds to help you find good quality leads to sustain your growing enterprise.



By teaming up with a lead generation expert such as ScaleUpSales, you can choose the right pricing model, efficiently target your market, and drive down your cost without sacrificing reach and relevance.



Contact us today and make the most out of your LinkedIn ads.