LinkedIn advertising has become an increasingly popular option for businesses looking to reach professionals and drive leads. With over 722 million users worldwide, LinkedIn provides access to a huge potential audience. But are LinkedIn ads actually an efficient way to spend your marketing budget? Let’s take a closer look at the pros and cons.
The benefits of LinkedIn advertising
Here are some of the main advantages of using LinkedIn ads:
- Targeted reach – LinkedIn allows advertisers to target ads based on location, company, job title, industry, interests, skills, age, gender and more. This level of targeting means you can hone in on your ideal customers very precisely.
- Engaged user base – LinkedIn members tend to be active and engaged while browsing the platform, making them more receptive to ads. The click-through rate on LinkedIn ads is significantly higher than other social media platforms.
- Multiple ad formats – Advertisers can choose between text, image, carousel, video and message ads, giving you flexibility for your campaign objectives and creative.
- Lead generation – LinkedIn’s lead gen forms allow advertisers to collect lead information directly within an ad unit. This makes it easy to capture relevant leads from your ads.
- Retargeting capabilities – You can retarget website visitors with LinkedIn ads usingWebsite Demographics targeting. This increases the chances of converting visitors into leads.
- Detailed analytics – LinkedIn Campaign Manager provides in-depth reporting on ad performance including views, clicks, cost-per-click, conversions and more. This makes optimizing your campaign easy.
In summary, LinkedIn ads allow for precise B2B targeting, high engagement, multiple ad formats, lead generation tools, retargeting and strong analytics. This makes them an efficient way to generate leads and connections with your target audience.
The limitations of LinkedIn advertising
However, LinkedIn ads do come with some limitations to be aware of:
- Narrow audience – LinkedIn’s audience is primarily comprised of professionals rather than general consumers. If your business sells mainly to consumers, other platforms may be better.
- Sponsored content looks like regular posts – Some users ignore sponsored content in their feed because it looks very similar to regular posts.
- Limitations for remarketing – You can only retarget website visitors who have LinkedIn’s Insight Tag installed on their site, limiting remarketing reach.
- No support for audio/video ads – Unlike Facebook and YouTube, LinkedIn does not accommodate audio or video ads, only visual creative.
- High cost per click – LinkedIn ads can be expensive, with average CPCs often higher than other platforms. But the leads tend to convert at a higher rate.
- Longer sales cycles – While LinkedIn generates quality leads, converting professionals usually involves a longer sales cycle vs general consumers.
In short, LinkedIn advertising has a more limited audience, lacks some supporting capabilities for creative ads, remarketing and conversions, while also commanding higher prices. This reduces efficiency for some business types.
Use case examples
Here are examples of business use cases where LinkedIn ads can be very efficient or face limitations:
Use cases where LinkedIn ads are efficient
- B2B product targeting IT professionals – With the ability to target by job title and skills, LinkedIn ads are extremely effective for B2B products targeting niche roles like software developers, IT managers, etc.
- HR/recruiting services – The professional audience and lead gen forms make LinkedIn ideal for generating leads among HR managers, recruiters and hiring decision makers.
- Enterprise SaaS – LinkedIn’s lead quality and conversion rates justify the higher CPCs for big ticket B2B SaaS tools focused on the enterprise market.
- Business education programs – Whether it’s MBAs or other business degrees, LinkedIn provides access to engaged prospective students looking to advance their education.
Use cases where LinkedIn has limitations
- Ecommerce brands – LinkedIn isn’t ideal for ecommerce brands targeting general consumers. Platforms like Facebook and Instagram tend to be more efficient.
- Local services – Professionals on LinkedIn are less likely to need local services like house cleaning or contractors. Better to focus locally via Google/Facebook.
- B2C product targeting young demographics – For B2C products targeting younger demographics like gaming apps or fashion, other creative platforms perform better.
- D2C consumer packaged goods (CPG) – D2C brands focused on everyday consumer goods often find better traction and ROI on Facebook, Instagram and Pinterest.
As you can see, LinkedIn advertising is extremely effective for B2B products and services targeting working professionals, but less efficient for consumer-focused businesses.
Optimizing campaign efficiency
Here are some tips to ensure your LinkedIn ads deliver efficiently:
- Leverage precise targeting features – Target by industry, job role, skills, company size and other filters to hone in on your audience.
- Test different targeting options – Try narrowing your focus by seniority, job function, location and company to see what resonates best.
- Analyze conversion paths – Look at the journey your leads took and optimize targeting based on high converting traits and behaviors.
- A/B test ad variations – Test different images, copy, headlines and calls-to-action to see what messaging works best.
- Monitor close rates by source – If conversions from LinkedIn ads are low despite lead volume, expand to other platforms.
- Watch cost per conversion – If your cost per conversion climbs too high, pause low-converting targeting and placements.
- Add retargeting pixels – Use website retargeting and Matched Audiences to reduce wasted ad spend.
- Take advantage of lead gen forms – Collect lead details without sending users to your site to capture more conversions.
Continually optimizing your targeting approach, creative and placements based on performance data will help maximize the efficiency of your LinkedIn ads.
Key performance benchmarks
Here are some average LinkedIn advertising metrics to use as benchmarks for gauging campaign efficiency:
Metric | Average Benchmark |
---|---|
Clickthrough rate | 0.9% |
Conversion rate | 2-3% |
Cost per click | $8-$12 |
Cost per conversion | $250-$500+ |
Your goal should be maximizing conversion rates and minimizing cost per conversion through targeted ad optimization.
Conclusion
In summary, LinkedIn advertising can deliver very efficient cost per lead and conversion results by:
- Targeting the platform’s engaged professional audience
- Leveraging precise B2B targeting options
- Using lead gen forms to capture conversions
- Retargeting your website visitors
- Continually optimizing targeting and creative
However, it does have limitations around audience size, creative options and costs that reduce efficiency for some business types.
Overall, the efficiency of LinkedIn ads depends heavily on matching your product or service to the right target audience on the platform. For B2B targeting professionals, returns can be significant. But for consumer products, other channels often provide better results and ROI.