LinkedIn advertising allows businesses to reach their target audience and generate leads through the professional social media platform. As one of the most popular business-oriented social networks, LinkedIn provides a unique opportunity for companies to connect with professionals in their industry.
When setting up a LinkedIn ad campaign, understanding how you will be billed is an important consideration. LinkedIn offers advertisers multiple options for how their ads can be billed so businesses can choose the method that works best for their budget and goals.
LinkedIn Advertising Billing Methods
There are three main ways LinkedIn bills advertisers for their ad campaigns:
- Cost Per Click (CPC)
- Cost Per Impression (CPM)
- Cost Per Lead (CPL)
Let’s take a closer look at each of these common billing options for LinkedIn ads.
Cost Per Click (CPC)
The Cost Per Click (CPC) billing method charges advertisers based on the number of clicks their ads receive. This is one of the most popular billing options on LinkedIn because it allows businesses to pay only when potential customers engage with their ads.
With CPC billing, you are charged each time someone clicks your ad. The amount you pay per click depends on factors like the demand for clicks within your target audience and how competitive other advertisers are in bidding for your keywords. CPC rates can range from a few cents to over $50 per click depending on these variables.
CPC billing is ideal for companies focused on generating traffic to their website or generating a high number of leads. You can maximize the value from CPC campaigns by optimizing ads to increase click-through rates.
Cost Per Impression (CPM)
The Cost Per Impression (CPM) model charges advertisers based on the number of times their ads are displayed on LinkedIn. It does not take into account whether the ad was clicked or not.
CPM rates are based on the demand within your target audience and how many advertisers are competing for their attention. Rates are often quoted in cost per thousand impressions. Average CPM rates on LinkedIn tend to range between $2-10 per thousand impressions delivered.
CPM advertising can help raise brand awareness and reach a wide audience on LinkedIn. This billing method is best suited for advertisers focused on increasing brand visibility rather than direct response.
Cost Per Lead (CPL)
The Cost Per Lead (CPL) billing model charges advertisers based on the number of leads generated from their ads. A “lead” might consist of a site visit, whitepaper download, email sign-up, or another conversion defined by the advertiser.
With CPL billing, you only pay when your LinkedIn ad directly results in a lead being captured. The cost per lead varies based on the value of each lead to your business but typical CPL rates range from $50-$200.
This billing method is ideal for companies focused on generating qualified leads from LinkedIn. It aligns costs directly with the results you care most about.
How does LinkedIn Charge for Their Different Ad Types?
In addition to the overall billing methods above, it is helpful to understand how LinkedIn specifically charges for their different ad formats and placements.
Sponsored Content
Sponsored Content refers to native ads that match the look and feel of regular LinkedIn posts in the feed. Advertisers can target Sponsored Content to appear in the main feed or the correct side rail.
Sponsored Content is billed according to either CPC or CPM depending on which model the advertiser selects when setting up the campaign.
Sponsored InMail
Sponsored InMail allows advertisers to directly engage LinkedIn members via personalized messages that are delivered like regular InMail messages.
Advertisers are charged on a CPM basis for Sponsored InMail ads. You are billed for each time your message is delivered to a member’s inbox. Expect CPM rates around $10-20 for generic InMail campaigns.
Dynamic Ads
Dynamic Ads automatically show personalized content to LinkedIn members based on their profile data and activity. For example, a Dynamic Ad could promote certain webinars or whitepapers based on the member’s interests and role.
LinkedIn bills advertisers on a CPM basis for Dynamic Ads. Expect CPM rates comparable to Sponsored Content and Sponsored InMail.
Text Ads
Text Ads function similarly to PPC ads on other platforms. Advertisers bid on keywords and placements. When someone searches on LinkedIn, relevant text ads may appear alongside the results.
Text Ads are billed on a CPC pricing model. You are only charged when someone clicks your ad. CPC rates vary based on competition, industry, keywords, and other factors.
Minimum Advertising Commitments
In addition to the billing methods above, take note that LinkedIn requires a minimum advertising spend to launch most self-service campaigns:
- Sponsored Content: $50 minimum campaign budget
- Sponsored InMail: $10,000 minimum annual commitment
- Dynamic Ads: $5,000 minimum annual commitment
- Text Ads: No minimum spend
Managed campaigns through LinkedIn’s sales team typically require higher minimum spends, often $5,000 per month or more.
When and How You are Billed
Understanding the cadence of billing is also an important consideration when planning your LinkedIn advertising budget.
Billing cycles for self-service accounts are as follows:
- Accounts under $10,000 spend: Bill monthly
- Accounts over $10,000 spend: Bill every 14 days
Keep in mind LinkedIn bills in arrears, meaning you are billed for the previous period’s activity. For example, if you are on a monthly cycle, on the 1st of each month you would be billed for the previous month.
LinkedIn offers several payment options including credit card, PayPal, wire transfer, and for qualified brands, net 30 terms. Your monthly invoices provide detailed reporting on impressions, clicks, CPC, CPM, and other statistics from your campaigns.
Tips for Controlling LinkedIn Advertising Costs
While LinkedIn advertising can drive significant results, the costs can add up quickly if campaigns are not optimized effectively. Use these tips to help control ad spend on LinkedIn:
Set Daily Campaign Budgets
Establishing daily maximum budgets for each campaign prevents your costs from exceeding expectations in any given period.
A/B Test Ad Variations
Test different ad copy, headlines, images, target audiences, etc. to determine the most effective combinations that yield lower CPCs or CPMs.
Optimize Landing Pages
Ensure your landing pages are highly relevant to the ads and campaign. This will result in higher quality scores for lower CPCs and CPMs.
Review Reports Frequently
Check your campaign analytics at least weekly and pause or adjust underperforming parts of your campaigns to maintain cost efficiency.
Use Click & Spend Thresholds for Targeting
Leverage LinkedIn’s advanced targeting options such as click frequency and average spend to focus your ads on high-intent members.
Consider Lower Cost Ad Formats
Text ads tend to have the lowest CPCs. Sponsored Content also offers more flexible minimums and potentially lower effective CPMs than InMail campaigns.
Conclusion
Understanding the billing methods and minimum spend requirements is key to planning and budgeting your LinkedIn ad campaigns effectively. Focus on the billing model and ad formats that best align with your goals and use optimization best practices to control costs.
With the right approach, LinkedIn advertising can deliver high value leads and brand awareness for your business at scale. The platform offers multiple options to find a billing method that fits your budget and objectives.