Advertising on LinkedIn: setup and cost for B2B
LinkedIn ads are managed through Campaign Manager. Setup needs a company page, an ad account and the LinkedIn Insight Tag on your site. Cost per click on LinkedIn is markedly higher than on other channels, but no other channel offers targeting by job title and company.
LinkedIn does something in B2B selling that other channels cannot: it targets a person by their job title, their company, their industry and their company size.
The price of that is the cost per click. A click on LinkedIn can cost several times its equivalent on Google or Meta. That is why LinkedIn only makes sense in businesses with a high customer lifetime value.
1. Setup
Your company page has to be live and complete, the ad brings traffic to it
Open an ad account in Campaign Manager
Install the LinkedIn Insight Tag on your site
Define your conversion actions, a form submission or a demo request
2. Targeting — where the real value is
LinkedIn's distinguishing feature is the depth of its targeting. But stacking the layers quickly makes the audience unusable.
Job title, seniority, job function
Company industry, headcount, named account list
Skills and member groups
Cost rises quickly once the audience drops below 50,000
3. Ad formats
Format | When to use it |
|---|---|
Single image | General purpose, the most common |
Lead Gen Form | Form filled inside LinkedIn, high conversion rate |
Document ad | Getting a report or deck downloaded |
Message ad | Straight to the inbox, expensive |
4. The budget reality
LinkedIn has a daily minimum and the cost per click is high. Collecting meaningful data on a small monthly budget is difficult.
The measure should be cost per qualified lead, not cost per click. An expensive click that reaches the right person is worth more than a hundred cheap, irrelevant ones.
The measurement problem of a long sales cycle
In B2B a decision spreads over three months. The person sees the LinkedIn ad, searches for your brand on Google two weeks later, and fills in the form a month after that.
A last-click model credits that sale to Google and LinkedIn appears to have contributed nothing. Cut the budget on that basis and you have shut down the channel that was working.
Evaluating channels in isolation produces systematically wrong decisions in a long sales cycle.
Sources
Ad budget calculator
Change the five numbers below to match your own business. The budget is calculated backwards from your goal.
The monthly sales figure you want ads to bring in.
What a customer spends on average. Short for AOV, average order value.
What is left as a percentage after you subtract product cost from the sale price. If $1,000 leaves you $300, that is 30 percent.
How much of that gross profit you are willing to spend on ads. Common range is 40 to 60 percent, spending all of it means breaking even.
How many of a hundred visitors buy. Short for CVR, conversion rate. If you do not know it, 1 to 2 percent is a reasonable start.
Your monthly ad budget
$45,000
About $1,480 per day
300
Orders needed
How many orders per month it takes to hit the revenue goal.
$150
Target CPA
Cost per acquisition. The most one sale is allowed to cost you.
15,000
Visits needed
How many people have to reach the site to produce those orders.
$3.00
Implied CPC
Cost per click. The most you can pay for a single click and still hit the target.
6.67x
Target ROAS
Return on ad spend. How much revenue every 1 unit of spend has to bring back.
How the number was reached
- Divide the revenue goal $300,000 by the average order value $1,000. You need 300 orders a month.
- 30% of the order value is profit, so each order leaves $300 of gross profit.
- You spend 50% of that profit on ads. One sale may cost at most $150, and that is your target CPA.
- 300 orders times $150 is $45,000 per month.
- At a 2% conversion rate those orders need 15,000 visits. Budget divided by visits means you can pay $3.00 per click.
This is not a guess, it is the arithmetic result of the goals you entered. Change a number and the result changes with it. The closer your conversion rate and margin are to your real data, the closer this is to reality.
Frequently asked questions
Is LinkedIn advertising expensive?
Does it make sense for a small business?
Lead Gen Form or send them to the site?
Can I advertise without the Insight Tag?
MORE ARTICLES