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Show Transcript

Have you noticed a sudden jump in costs on the LinkedIn Ads platform? You’re not alone. We’re talking about why you’re seeing rising costs on this week’s episode of the LinkedIn Ads Show.

Welcome to the LinkedIn Ads Show. Here’s your host, AJ Wilcox.

Hey, hey, hey there. LinkedIn Ads fanatics. As he said, I’m AJ Wilcox. I’m the host of the weekly podcast, The LinkedIn Ads Show. I’m thrilled to welcome you to the show for advanced B2B marketers. who are looking to evolve through mastering LinkedIn ads and achieving true pro status.

Today, we’re addressing something that advertisers have been noticing over the course of the last several months, and actually even years if you look back. The complaint is steady or sudden rising costs on the LinkedIn Ads platform. Several of the ad reps for our clients have brought it up recently on calls, meetings, and even quarterly business reviews. And it’s concerning a lot of advertisers for obvious reasons. We don’t like it when our costs have to increase. So we’re going to go through the reasons why costs are rising on LinkedIn. And the number one reason we’re seeing this happen right now. We’re going through five reasons why the costs are rising suddenly on LinkedIn right now, and you’ll want to stick around to reason number one.

The LinkedIn Ads Show is proudly brought to you by B2Linked.com, the LinkedIn Ads experts.

B2Linked is the ad agency 100 percent dedicated to LinkedIn Ads. And we have been since 2014, you know, back before it was cool. We’ve mastered the platform, we’ve figured out how to get you the best traffic at the very lowest costs. Which, on a platform like LinkedIn that charges a premium, and recently even a higher premium, We found that this is the best way to increase your ROI. We’ve even built reporting capabilities and tools that LinkedIn themselves can’t provide, so we give our clients the very best insights. If that sounds interesting to you and you’d want to explore possibly working together, Schedule your free discovery call at b2linked.com/discovery.

Alright, first off in the news, something I had no idea about that’s coming. It was surfaced by one of our LinkedIn Ads fanatics in the fanatics community. And by the way, if you want early access to all of these insights before they’re made public, come join in on the action, go to fanatics.b2linked.com.

Now this one was surfaced by Rumyana Kercheva. And she shared this that she got recently from her LinkedIn ad reps. She said there’s a new campaign metric that’s being released called dwell time. Now, dwell time measures the amount of time that members spend looking at a particular ad. And it’s a metric you can use to decide how interested these members are in specific ads, . Now this should be rolling out in campaign manager starting in late May. So many of you may already have this, and it should be in all accounts by mid July. This is something I’m actually really excited about because dwell time is really interesting as a metric. We’ve known that this is a metric that LinkedIn uses on the organic content side as a signal for how valuable the content is, and it’s absolutely pivotal, for LinkedIn determining how much reach your posts get. So being able to use this for ads makes perfect sense to me, and I’m really excited to get at least one more signal on how effective our ads are to our target audience. For me, this metric is going to slot right in between impressions and clicks. I’ll likely use it in my reporting to create a ratio showing average dwell time per impression, or, if that number is too small and it doesn’t seem to make as much sense, I may end up doing an average dwell time per click. I’ll obviously need to play with this a bit and see which is more helpful. And of course, I’ll come and share with you what I find.

Alright do you have a question, review, or feedback for the show? Message me on LinkedIn, or email us at podcast@2linked.com. And you can attach a link to a voice recording from you, and I can play them right here on the show. I’m happy to keep you anonymous, or I’ll share your details and shout you out as well. So, record yourself asking a question, and I’d absolutely love to hear it. I wanted to read one of the reviews that we’ve received here recently.

Max Eccles from the Netherlands says, “By far the best podcast on LinkedIn advertising. Five stars. This podcast is an incredible resource for LinkedIn advertisers. I refer to it to get the most up to date news, tips, and tactics for getting the most out of my campaign budgets on LinkedIn. AJ is a super smart guy with lots of experience to learn from, and he gives away so much value in the episodes. Really glad I found it.”

Max, thanks so much for leaving such a kind review. I couldn’t be more grateful for it. And I’m so grateful that you’ve gotten so much out of it. Nothing makes me happier than to see advertisers getting higher performance because of something I’ve shared. Alright, this goes for everyone else. If you haven’t left a review yet, I would love to feature you. You can do that on Apple Podcasts, or like I said before, send me a voice recording and I’ll seek to play it right here on the show.

Alright, with that being said, let’s hit it. Costs have been rising quickly on LinkedIn, and many are freaking out, wondering what they’re doing wrong. We’re going to be counting down the top five reasons that costs are increasing right now, so make sure you stick around to the end.

LinkedIn’s frequency caps for Sponsored Content Campaigns
Starting out with reason number five that costs are rising. LinkedIn’s Frequency Caps for Sponsored Content campaigns. Alright, so here’s the backstory. Years ago, LinkedIn used to have a frequency cap on Sponsored Content campaigns where the most your ads could be shown to any one individual user was once every 48 hours. And this was, of course, to keep your audience from getting spammed by your company’s ads over and over and over. And that obviously doesn’t do great things for every user’s experience on LinkedIn. And when you look back, LinkedIn used to recommend two creatives per campaign. Then sometime around 2018, they introduced a new frequency cap rule, and they called it the 4 in 48 rule. It allowed you to reach the same user up to four times in a 48 hour period, so that’s twice per day. And all you needed to do to unlock this functionality was to have four creatives per campaign. And surprise, surprise, LinkedIn slowly adjusted their recommendations to customers to now saying, hey, you should be putting three to four creatives in all of your campaigns. Fast forward then to around 2020, LinkedIn changed the frequency caps to a five in 48 rule. And we actually covered this in episode 78 of the podcast about frequency caps. So if you’ve been listening for a while, you may remember this. Lo and behold, LinkedIn reps started recommending. Four to five creatives per campaign. Really interesting. Then in October of 2023, we found out that LinkedIn changed the frequency caps again, and this time it’s to a new seven in 48 rule. I shared about this in episode 114 in the updated frequency caps episode. And sure enough, imagine that LinkedIn reps are all of a sudden recommending to customers that you should have six to seven creatives per campaign. Coincidence? Nope, not at all. So why is LinkedIn always adjusting their recommendations to try to get you to show your ads the maximum number of times per day? It’s simple. And as you would probably expect, it comes down to money. What it does is it makes the auction more competitive. Raising costs for all advertisers and hence making LinkedIn a lot more money. Alright, so how does this actually work? We’re going to use a really overly simplified scenario to illustrate it. So, follow me here. Let’s assume that there are 100 ad impressions available for your target audience in a day. And let’s say that there are also 100 advertisers bidding to try to reach that audience. So back early days, every advertiser who’s competing gets to show one impression per day. And let’s say the going rate for clicks is $10 per click. So as soon as LinkedIn adjusts this frequency cap to allow a single company to take three or more of those impressions, now 30 of the advertisers can take all the impressions and the other 70 advertisers who were serving impressions to this audience before just got cut out. And that is until they bid higher. So these 70 advertisers used to get traffic for $10 per click from this audience. But now, they find that they can’t actually get their daily impression until they’re bidding $12, or 13, or 15. This is an endless cycle. When these 70 advertisers then have to raise their bids, they start getting impressions again, but the other advertisers are going to have to raise their bids in response. The result now is that there are fewer impressions to go around because advertisers with larger budgets and those who are willing to bid higher They get their ads shown more and everyone else needs to bid higher to try to compete with them.

And make no mistake about it, LinkedIn loves this effect. It’s taking a finite resource of a number of impressions that are happening on the platform and suddenly jacking up the price of that same finite inventory. It’s pitting advertisers against each other, trying to get them to outbid each other, and LinkedIn is now making lots of extra money. Now, I’m certain that LinkedIn would naturally make more anyway. As more and more advertisers are joining the platform, Audience competition is going to naturally rise anyway. But what we’re seeing here with the frequency cap increases is that this is being done artificially and it’s causing prices to rise much more quickly than it would be if it were just natural competition increasing. Alright, so how then can you combat this? My best advice to you, don’t listen to your LinkedIn reps advice when they tell you that you should increase the number of creatives in your campaign because, quote unquote, advertisers who do see higher performance. Now, I’m sure that advice from your reps isn’t a blatant lie, but it’s definitely a self serving recommendation that won’t increase your ad performance much, but it will raise prices for everyone.

Max Delivery
All right, counting down, reason number four why costs are rising too rapidly on LinkedIn is the use of maximum delivery bidding. LinkedIn has another recommendation that it parrots and enforces through the default options. You’ve very likely heard the advice from LinkedIn or your reps to use maximum delivery bidding. It’s the default bidding option on all the ad formats that support it. That’s all of the newsfeed ads that we call Sponsored Content, as well as now, anything that is Sponsored Messaging. Episode 89 on bidding is an absolute masterclass on this, but the biggest takeaway for you is that maximum delivery bidding is the most expensive way to pay for your traffic on LinkedIn 90 percent of the time. What it does is it allows LinkedIn to bid as high as it needs to, on a CPM basis to spend your daily budget. I consider this akin to handing your wallet to a platform and expecting they’ll have your best interests at heart and they’ll only take what they need. So not only is the max delivery option automatically checked for every new campaign, the option that is the least expensive way to pay for your LinkedIn traffic that 90 percent of the time, This is called manual CPC bidding, and this option is actually hidden. That’s right, you actually have to click an option that takes up a whole row in the interface, called Show Additional Options, for this single row option to pop up that says Manual CPC Bid. This would actually be pretty laughable to me if it didn’t cost us all a lot more money on the platform. Similar to how the higher frequency caps allow advertisers with bigger budgets to push smaller advertisers out of the auction, when the default bidding method allows LinkedIn to bid as high as it needs to, to spend the daily budget, it causes all of these advertisers to be artificially bidding up against each other for their budgets, causing prices to rise. Alright, so how should you counter this? This one’s actually pretty easy. Follow the bidding recommendations that we outlined in episode 89 for how to get the lowest pricing for you, which includes the recommendation on when to bid CPC and when to use maximum delivery, and of course, when you’re using CPC, how high and low do you bid. By following the smart bidding strategies that we talked through, this will cause you to always pay the least amount possible for your LinkedIn Ads traffic. And if everyone did this, we’d all pay significantly less.

More Advertisers Joining In and Expanding Budget
Alright, reason number three why costs are rising, more advertisers are joining in and expanding their budgets. Now, this is completely natural and this is okay. It’s basic supply versus demand. I started publicly LinkedIn Ads back starting in 2014. And, for probably about seven years, it felt like I was shouting into an empty room, and I was the only one who cared about the platform. Then, in the last few years, there have been so many more people sharing LinkedIn Ads advice online, and even other LinkedIn Ads only agencies started popping up. All of this excitement is proof that LinkedIn Ads are hot, and only getting hotter. As new advertisers join in, because they’ve heard that LinkedIn Ads is the best channel for their company, Everyone’s costs are going to naturally rise, because the demand of advertisers to reach this finite audience is rising. That is, unless the effect is balanced out by the supply of ad inventory also increasing. So what increases the supply of ad inventory? Well, this would be LinkedIn attracting new members joining, or even those existing members finding more and more value in spending time on the platform, and so they end up being here more often, and generating more ad impressions. So as they end up spending more time on the platform, they create a whole bunch of new ad inventory that now can be shared across all the advertisers who have the demand for it. Every time someone logs in and scrolls through their newsfeed, it creates more of that supply of ad inventory. If organic usage of the platform was growing as fast as advertiser demand for those audiences, We would actually see costs staying the same and not increasing. Alright, so you’re looking for actionable takeaways here. What can you do about this? Well, really, not much. Other than going out and trying to convince a bunch of people to jump on LinkedIn and get much more active. And there are already plenty of us doing that already.

Doc Ads on Engagement Objective
Moving right along, reason number two why costs are rising too rapidly is Document Ads using the engagement objective. Now, we’ve been having a lot of success recently with document ads. I tried them when they very first came out a couple years ago, and they weren’t that great. But then in the last year I started noticing certain kinds of documents are performing very well. We started advising clients on this, and we’ve gotten documents that are getting up into the 5 to 8 percent click through rates on the engagement objective. Now, this sounds really impressive, and it definitely still is. I don’t want to take anything away from that accomplishment. so much. But, realize that when you’re using the engagement objective, a click is anyone who will flip to the second slide. Or worse, someone who clicks the see more if your intro copy goes over 160 characters. So lots of people are curious enough to swipe to that second slide in a document ad. In LinkedIn’s ad auction, when the majority of ads out there are getting between 04 percent to 0.6 percent click through rate, and then all of a sudden, your competitors introduce ads that are getting 10 times that, it does crazy things to the auction. All of a sudden, the majority of advertisers go from having a relevancy score of 5 to 6 down to a relevancy score of 2 to 3. It brings costs way down for the advertisers who are using the document ads intelligently, but everyone else all of a sudden finds out that they need to bid higher In order to get any impressions at all. And now they’re paying significantly more to get the same traffic as before. Alright So how do you counteract this? Pretty simple. If you’re not already using them, I highly suggest launching Document Ads and make sure that the document is really engaging, especially on mobile. You’ll get to be one of these few advertisers who are getting significantly lower costs. And then making everyone else have to bid higher to get their traffic.

Wider Adoption of Thought Leader Ads!
Alright, so you’ve made it here to reason number one, that costs are rising on LinkedIn. This is wider adoption of LinkedIn’s Thought Leader Ads. Now this of course follows the same line of thought as we were just talking about with document ads. When they perform so well, they’re causing the normal ad formats to cost more. Thought Leader Ads are doing this too, but they’re doing it to a much larger degree. Because I don’t know if you’ve noticed, but I haven’t seen too many companies racing to put together engaging documents. But every company can and should be using LinkedIn’s Thought Leader Ads. So it’s filling up ad inventory fast, and it’s leaving advertisers who aren’t using them to have to compete by bidding higher, or simply getting fewer impressions. At the B2B event this year, LinkedIn shared a stat that Thought Leader Ads get 1. 8 times the engagement of a normal company post ad. But I’m guessing that there are a significant number of advertisers who are not writing very engaging, thallier ads. So, mediocre results are being averaged in. Because when we launch them for our clients, we’re seeing averages of 5 to 10 times the performance in terms of click through rate. And we’re seeing costs sometimes being less than a dollar in North America. So when you have such a stark contrast between company posts getting click through rates in the 0.4 to 0.6 percent range, and then these personal posts are getting 3% to 6%, costs are going to look really bad for advertisers who aren’t leveraging the higher performing ad formats. Alright, so what should you do about it? Well, I think it’s pretty obvious. If you haven’t already, make sure you’re using and experimenting with Thought Leader Ads. Episode 128 is all about the easiest ways to launch them, so check that out. All these deep dive episodes that I’ve been mentioning, they’re all linked in the show notes below. So make sure to check them out, and make sure that they’re part of your next binge session.

To recap, I want to help you keep your costs lower on LinkedIn. Here are the five things that you should do. Number five, ignore the advice to put five to seven creatives in each campaign. Number four, only bid max delivery when it’s in your best interest, not LinkedIn’s. Number three, the more people who spend time on LinkedIn, the better, and you should be spending more time on there, too. Number two, create and use high performing document ads. And number one, if you’re not already using thought leader ads that are high performing, get on it.

Are you a LinkedIn ads fanatic and you want to surround yourself with the very best? Join the LinkedIn Ads fanatics community by going to fanatics.b2linked.com. For a very low monthly fee, you’ll get access to our four courses that take you from beginner to expert. Plus you’ll get to interface with all the other LinkedIn Ads experts who are sharing what’s working for them and asking your advice. There’s even an upgraded option to get on a weekly group call with me. So I’ll be excited to see you in there. If this is your first time listening, welcome, excited to have you here. Make sure to hit that subscribe button. So you hear from us week after week. But if you are a loyal listener, you’ve been listening for a while, please do me the biggest favor that you possibly could and go and rate and review the podcast on Apple Podcasts. It takes less than two minutes, and it is by far the best way you can say thank you for the hours and hours that putting these episodes together every week takes me and my team. With any questions, suggestions, or corrections, reach out to us at podcast@b2linked.com. And with that being said, we’ll see you back here next week and I’m cheering you on in your LinkedIn Ads initiatives.

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