LinkedIn advertising can be very expensive compared to other social media platforms. There are a few key reasons why promoting content and products on LinkedIn costs more:
- Highly targeted audience: LinkedIn has over 722 million users, but they are not all created equal when it comes to advertising. LinkedIn offers tools to target ads by job title, industry, seniority, company size, geography, interests, skills, age, and more. This level of granular targeting comes at a premium.
- Affluent user base: The average LinkedIn user has a higher household income than other social networks. Around 40% of users make over $75,000 per year. Advertisers pay more to reach an audience with more disposable income.
- Pay per click pricing: Most LinkedIn ad formats are priced on a cost per click (CPC) model, meaning advertisers pay each time someone clicks their ad. The more niche the target audience, the more advertisers compete to reach them, driving up prices.
- Low organic reach: Unlike Facebook or Instagram, brands cannot rely on unpaid organic reach alone to connect with their audience on LinkedIn. Paid advertising is needed to supplement content marketing.
The Value of LinkedIn’s Audience
LinkedIn users are highly educated, employed professionals. Around 65% have a bachelor’s degree or higher. They work for some of the largest, most successful companies around the world.
This makes them an attractive audience for B2B companies to reach with advertising. Here are some key stats on LinkedIn’s audience value:
- 29% of LinkedIn’s users make over $100,000 annually
- 40% work in upper management or executive roles
- 61 million are senior-level influencers
- 10 million are in decision-making positions
Industry Breakdown
The most common industries found on LinkedIn include:
Industry | Share of Users |
---|---|
Higher education | 9.8% |
Computer software | 8.7% |
Financial services | 7.5% |
Hospitals & healthcare | 5.2% |
Nonprofit organization management | 4.6% |
As this breakdown shows, major industries like software, finance, healthcare, and education dominate the LinkedIn landscape. For B2B brands in these sectors, LinkedIn ads present a major opportunity to connect with their target customers.
Job Function Data
The most common job functions and titles held by LinkedIn members include:
Job Title | Share of Users |
---|---|
Student | 11.2% |
Owner | 9.6% |
Senior Manager | 8.3% |
Manager | 7.5% |
Director | 6.2% |
LinkedIn is popular among students and young professionals, but the largest share of users holds influential management roles. They control budgets and make major business decisions.
LinkedIn Ad Targeting Options
One reason LinkedIn ads cost more is the expansive targeting options available. Advertisers can zero in on exactly who they want to reach based on professional and personal demographics.
Job Role Targeting
You can target LinkedIn ads by job title, function, seniority, and more:
- Job title (manager, director, etc)
- Job function (engineering, HR, finance)
- Seniority (entry-level, manager, VP, CXO)
- Company size
- Company name
- Years of experience
Interest and Skill Targeting
Beyond job criteria, LinkedIn ads can also be targeted based on members’ personal interests and professional skills:
- Group membership
- LinkedIn post engagement
- Page followers
- Skills and expertise
- Degrees and educational background
- Hobbies & interests
Location and Demographic Targeting
Like other social platforms, advertisers can target LinkedIn ads by location and demographics like age and gender. But they can drill down further to focus on language, company location, school, and income level.
LinkedIn Ad Platform Options
LinkedIn offers a range of paid ad formats and products. The more advanced options provide greater targeting and relevance, at a higher cost.
Sponsored Content
Also known as LinkedIn Company or Showcase Pages, these ads showcase content directly within the LinkedIn feed like organic posts. They become part of the member’s feed after meeting targeting criteria. Costs around $10 CPM on average.
Sponsored InMail
These are direct messages sent to a member’s LinkedIn inbox. Open rates are up to 90% higher than email. But minimum monthly sends start at $1,000. Individual InMails cost around $10 each.
Text Ads
Appear on the right rail next to the LinkedIn feed. Similar to Google text ads. Cheapest LinkedIn ad format at $3 – $5 CPM on average. Limited customization and targeting.
Dynamic Ads
Automated ads that pull content from a company’s website or blog to create scrollable image carousels or custom display ads. Provides relevant scale. Costs around $20 CPM.
Why LinkedIn Ads Cost More
Now that we’ve looked at LinkedIn’s audience, targeting, and ad options in-depth, several factors clearly drive higher costs:
- Professional, affluent audience
- Specific job role, interest, and skill targeting
- Slow organic reach growth on LinkedIn
- Highly customizable and relevant ad formats
- Pay per click pricing model
- Competition to reach niche B2B audiences
Sophisticated targeting and relevance comes at a price. While LinkedIn ads cost more, they provide precision targeting that can be well worth the investment when formatted and targeted correctly.
Tips for Lowering LinkedIn Ad Costs
Despite typically high costs, there are ways to lower CPC prices for LinkedIn ads:
- A/B test different targeting options
- Increase ad relevance with dynamic creative
- Offer an incentive for clicks (ebook, whitepaper, coupon)
- Improve quality score through testing
- Analyze competition and avoid high bidding rates
- Use text ads initially to lower entry cost
- Create retargeting campaigns for lower funnel offers
- Set a smart max CPC bid threshold
With the right optimization and testing, it’s possible to find affordable ways to achieve your LinkedIn advertising goals. The platform rewards relevant, engaging messaging targeted at the right professional niches.
Conclusion
LinkedIn advertising costs more due to the professional audience, precise ad targeting, and desire to reach niche B2B buyers. But it’s a necessity for companies marketing products or services to other businesses and affluent consumers.
To maximize value, take the time to analyze LinkedIn’s sophisticated targeting options and advanced ad formats. With testing and discipline around bids and budgets, results can be achieved at acceptable CPC rates.