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LinkedIn Learning course about LinkedIn Ads by AJ Wilcox: LinkedIn Advertising Course

COVID-19 insights and resources for advertisers

The digital advertiser’s guide to COVID-19

Bidding Budgeting Episode

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Show Transcript:

How much money should you budget for your LinkedIn ads? We’ll break it down cleanly so you know exactly how much to dedicate.

Hey there LinkedIn Ads fanatics, I get asked a lot about how much advertisers need to budget for their LinkedIn Ads. It’s usually prefaced by, “Hey, I know you’re gonna say it depends, but I’m gonna ask anyway”. Well, the truth is, I love this question, because I actually have a straightforward answer to it. And I’m eager to teach you all about it. We’ll be covering in this episode, specifically, how much on average you’ll need to spend to get the results you’re looking for, as well as how long you’ll need to actually spend this budget over. Okay, jumping into the news. Last week, I gave you some really cool stats about what’s changing from LinkedIn’s perspective during this whole COVID situation. And I was going through that material trying to find some new insight. And what I found was LinkedIn gave me access to something that Microsoft put out, which was their resource for COVID-19 insights and resources for advertisers. So I decided to take a peek through there and see if there was anything of value. What I found was a document entitled The Digital Advertisers Guide to COVID-19. And I got really excited. This is right up my alley. And so I started reading and what occurred to me is that it definitely came from Microsoft. It said exactly what you expect it to say, from a company who makes a lot of money from paid search. They talk about how paid search is the most profitable channel, blahdy, blahdy, blah. And while I do agree that capturing the bottom of the funnel through search intent is extremely valuable. As you’ll know if you listen to episode nine of this podcast about Google versus LinkedIn. I would say though, that during the whole COVID panic, there’s been panic that has caused budgets to get pulled back. And so while people are still exploring purchase decisions, there is some reticence or some hesitancy to sign contracts right now. So search channels that are bringing people in right now who you’re assuming are ready to buy is probably going to result in a high cost per opportunity or a high cost per closed deal. And as you know from Episode 19 search tends to bring in lower quality leads for a product or service that tends to be high cost. You’ll get a lot of people acting like tire kickers and mom and pops who can’t afford you. So even though Microsoft published this, and probably a lot of it is accurate during a non-COVID time. I personally think that LinkedIn is the channel that you want to invest in now to fill your sales pipeline amidst the current uncertainty. Now is the right time to be starting those relationships that weren’t going to close for 3, 6, 9 months anyway. And you’re filling them with exactly the right people who are going to be able to buy Okay, as a quick review, highlight, I wanted to highlight the next three reviews here that were left on the podcast. just.zee from Spain said “This one is a must. I’m truly enjoying listening to this show. Each episode is packed with tips. No BS pure gold.” Thank you so much just.zee, that’s exactly what we’re aiming for here. Then a Mr. Bradshaw from the US says “soothing voice, better than calm. AJ’s voice is buttery smooth. I used to pay for a subscription to calm but now I listened to AJ as his voice is sooth me into deep, deep sleep.” John Bradshaw is actually a good friend of mine who left that as a joke. So John, I’m still shouting you out. But you know, I’ve listened to my voice. I know it’s not buttery smooth. So I hope I’m not breaking your senses of pitch or good vocal practices. Then Sam McRoberts of the US says “AJ is a LinkedIn Ads wizard. This podcast is chock full of LinkedIn advertising wisdom from a guy who knows more about the platform than any other advertiser. Hands down, highly recommended.” Sam is a another friend of mine. And he actually runs his own podcast and he’s one of the worldwide SEO experts that I learned from. So Sam, thanks so much for leaving the review. Your review means so much to me, because I know your status in the industry as an SEO Pro. And I would love to feature you in this section, feel free and please go and leave a review so I can shout you out. And with that being said, let’s hit it.

Now when we talk about budgeting, there are two different kinds of budgeting that that might bring to mind. There’s the kind that’s like, over a specific amount of time, this is how much budget you have to allocate to a channel. And then you have the daily budgets, like the platform you might enter in and how much you are only going to allow the platform to spend per day. If you’re hoping to learn what you should be spending per day, we covered that pretty well in Episode Six, the bidding and budgeting section. So we’re not going to be covering that here. Instead We’re going to be talking about how much money you need to dedicate on usually a monthly basis. But some people plan their their budgets by quarter or maybe even by two weeks sprint, by year, etc. And for most performance advertisers we are interested in how much do we have to spend on a platform to really invest and learn something and evaluate whether the platform should receive more of our future budget or not. But at the same time, not spending so much that we’re spending inefficiently. So there’s a little bit of a range here, and I like to call it the Goldilocks zone, spending enough to learn and test and optimize properly, but don’t spend too much that you wasted money. You want to spend just enough right in the middle of that Goldilocks zone. And of course many of you know the fairy tale of Goldilocks and the Three Bears where Goldilocks comes in and finds that the Papas porridge is too hot. The baby’s porridge is too cold and the mother’s is just right in the middle. So that’s where we want to be with advertising. And we are going to talk specifically about amounts that you should spend based on averages. And of course, this means you’ll want to spend thoughtfully and with an efficient strategy, which is why even advanced PPC pros end up hiring us. I mean, anyone can do this themselves. But there’s a lot of value in bringing on someone who can cut past that learning curve and ensure that every dollar is spent properly. So any spend spent on inefficiencies is wasted and it won’t teach you anything. I’m going to mention statistical significance quite a bit through here. And I really just want to spend a moment and define why it is and what it means. So statistical significance in advertising to me is looking at results and being able to trust the outcomes as being something that I can predict to continue happening in the future. And there are lots of different percentages of statistical significance. In digital marketing. I’ve been taught to hold everything to a 95% confidence interval. But it’s important to know that if you’re only being held to a 90%, or maybe an 82%, or something like that, that’s okay. That just means that your numbers will all shift lower. And you may be able to make decisions a little bit faster than what I suggest. I also want to mention something about outliers, because there are some outliers with extreme performance that you can spot very quickly. And so when you’ve spent $200 at the very beginning of your platform spend, and you have a ton of opt ins and conversions. That’s an outlier. That’s a really good thing. But it also means that you don’t necessarily have to spend what I’m telling you to spend to finish evaluating the platform. You struck gold already. And then conversely, if you’ve spent $1,000, and you don’t have a single opt in yet, you don’t have to continue spending more and more and more to try to get statistical significance, because your performance is so poor that chances are even if your performance did increase significantly, you would probably still be paying too much per opt in. But most of your tests are going to land in between somewhere not an outlier. Even if performance looks a little bit good or a little bit poor, you’ll need a lot more data gathering. So if something is very wrong or very right, you can get your answer a lot more quickly than here. And you probably don’t need to wait for significance. Or maybe you could test it, you already have significance, especially if performance is great. Everything here I’m going to be sharing with you is based on benchmarks. So if you haven’t listened to Episode 15, all about benchmarking, you’ll want to make sure you go and do that. And the reason why is everything here is based off of averages. And so if you’re paying more than the baseline, $8 to $11 per click, it means you’ll have to spend significantly more to get the same level of data that I’m talking about. And of course, if you’re paying less per click because of advantages that you learned from episode six of this podcast or maybe your advertising in a location like outside of North America, or in different languages where LinkedIn charges significantly less, then that means that you can spend significantly less budget to still reach the same levels. Also, if you are pushing people towards a high friction offer, like talk to my sales team, get a demo, buy something, you’ll need to spend much more than what I recommend to get statistical significance because you need a large volume of conversions coming in. And when you have an offer that has a low conversion rate, then of course, you’ll need a lot more of them. Conversely, if you have a conversion rate that’s significantly higher than 15%, then you’ll reach significance much faster and you can also spend less to hit the same level of significance. And then finally, if your sales team isn’t as buttoned up, or your nurture sales process isn’t as efficient, you will need to spend more because you won’t have as many Sales qualified leads or proposals or closes the steps deeper in your sales process to figure out how you’re going to get to a return on your investment.

Okay, so let’s jump into what spending on LinkedIn actually gets you. Because here’s where I get to get really concrete with numbers, and why I love the question about how much should you budget for LinkedIn. And of course, there are a lot of nuances like you’ve already heard before. And of course, we’ll say a lot of ways that it depends, but we’ll get to all of those shortly. And let’s get into the concrete numbers here. Okay, so if your goal is to get statistical significance around your click through rates, you can usually get that in North America across all of my benchmarks with about $1,000 in ad spend. What you’ll learn here is you’ll figure out which messaging or motivation gets people to take action, it gets them to click. And so let’s say your ad copy. You have one version that is aspirational. It makes people feel like the Hiro, and another one that’s fear based telling them that if they don’t use your product or service that something bad’s going to happen, they’ll lose their job, or they’ll look dumb in a board meeting. Within about $1,000 in ad spend, you’ll find out how your precise audience relates to those motivations. And this can be really helpful if you’re just testing. What does my ideal audience like? What are they willing to click on? What are they curious about. Then yeah, you really don’t have to spend that much. 1,000 total dollars gets you that. And then, of course, depending on what kind of offer and how you’re bidding, it will likely get you some leads along the way as well. But I wouldn’t worry too much about leads at this low spend stage. Now we get to what I really recommend for a new advertiser coming into the platform, I recommend spending $5,000. What this is going to get you is statistical significance around your conversion rates, as long as you’re starting with assets that convert between about 10 to 15%, which is actually average for gated content offers. What $5,000 in ad spend is going to get you on average is somewhere between about 45 to 93 opt ins. Now, if you are splitting this between either two separate offers, or maybe it’s the same offer, but you have two different motivations on ad copy, what you will likely get is 95% statistical significance on which of these offers or which of these ads converts better. You’ll also get enough leads to actually see the impact on the business. This isn’t two or three, onesy, twosies coming through. This is enough leads that you can actually look at and evaluate at some scale. And of course, a certain percentage of those are going to turn into marketing qualified leads or sales qualified leads, which will start to give you an idea of how these leads are quality wise and how they’re going to start moving through the funnel. And when you go and talk to your sales team or you talk to the owner, you’ll see that you’re getting enough leads to actually get anecdotal Feedback from those teams or from the owner on lead quality. It’s not all just about the actual numbers. It’s about the perception of them by the sales team as well. You need their buy in to realize, yes, LinkedIn ads are amazing. And we should continue to fund this. Because most of the business to business that we run on LinkedIn Ads has longer sales cycles. Statistically, you won’t have a closed deal in your first month. But you will statistically end up closing at least one of the leads you generated during month one. But just realize, you know, these long sales cycles, if it usually takes you 6, 8, 12, 15 months to close a deal, you can’t expect LinkedIn to be magical and close deals faster than they usually close. In fact, it’s a social platform, meaning that they weren’t already at the bottom of the funnel. So the sales cycle traditionally takes a little bit longer. So give yourself a little bit of space and set those expectations properly internally, so that no one’s expecting LinkedIn ads to be turn it on. Get instant ROI. And be a silver bullet. Okay, so what if you’re saying, Oh, AJ, you’re talking about 1000 $5,000 budgets, those are tiny, we have a much larger budget to work with. Well, this is fantastic because what you’ll get is a statistically significant test every $5,000 in spend that you do. And it means that you can test much faster, you can run multiple tests at a time, you can actually run tests over a 2, 3, 4 day period. And keep seasonality, keep your timeline really tight, so that seasonality can’t creep in and ruin or spoil some of your results. So use that as an opportunity to test more, test faster. Okay, here’s a quick sponsor break, and then we’ll get to dive into the timeframe over which you actually spend this budget.

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Okay, let’s jump into timeframes here. So what I have been talking about here in the past is spending $1,000 to get significance around conversion rates and cost per conversion. But you might be asking yourself, Well, maybe I don’t have that level of spend on a monthly basis. How long do I have to actually spend? Now, I do recommend this on a monthly basis for a lot of different reasons. But it’s important to understand that when we’re looking at statistical significance, we’re looking only for a collection, a pool of data. We’re not taking into account necessarily timeline. So if you are patient, if you have executive buy in to run that $5,000 budget Over the course of five months, feel free. But my warning to you is that when we’ve worked with clients doing this, even when they say they get executive buy in, inevitably, someone will get impatient. Your boss will come to you, the business owner will come asking during month one and say, “hey, how is LinkedIn ads looking?” And of course, the proper answer is quit asking you moron. This is we need a lot more data here before we actually call it. But some people tend to let their their pride their ego and shoot from the hip a little bit. And a lot of times, they’ll come and say, well, it doesn’t look like it’s working. Let’s cut budget and push it to somewhere else. So if you can speed it up, if you can even save your monthly budget up until you have a, let’s say $5,000 for a month. What it’s going to do is allow you to avoid those seasonality sways and not allow anyone to get impatient. All right. So let me give you an example here on seasonality sways. If you are spending over For a five month period for a test, and you happen to go over the month of December, which for B2B is terrible, or maybe you’re going over the summer. The summer usually has a pretty significant lull. Or what if you were advertising from February on. And it just so happened that your tests landed in the middle of the COVID panic, these are all things that would really significantly sway your data and make it so your data is going to be a little bit messier, or you may not be able to rely on it. So if you can force all of this into a single month, do it. And what I also like about this is that you’ll be getting statistical significance monthly. So that means a new test every single month, so that you’re learning. And of course, if you do this for one month, and you get enough data to say that, wow, LinkedIn ads is not working well, for us. It’s a poor performer. If I’m paying an agency to manage it, I would sure love to know by the end of month one, but the channel isn’t for me. So I can quit and not pay another month of management fee just to draw that out. Now, we’ve worked with a lot of different advertisers. And of course, they are all over the board, all different offers all different industries, all different sales cycles, and all different lifetime values. But what we find is, on average, our clients are spending between about $1,000 to $4,000 in ad spend to close a deal. And of course, it does take testing and optimization to get to that point. So maybe starting out, they were trending for 2, 3 times higher than that. So that’s why I told you in Episode One, that I recommend LinkedIn Ads only for those with a high lifetime value for prospecting a new customer. But once you’ve optimized a little bit. Once you’ve found the formula that works and we’ll talk about ammo alignment here in just a minute. Once you’ve found that formula, you’ll really start to feel like your LinkedIn Ads are working for you not working against you. Because we work with so many different accounts and we work when we find what the averages are. I’m very sensitive to when, quote unquote growth hackers come in and talk about, hey, on LinkedIn ads, I put 30 cents into it, and I generated millions of dollars in revenue. So while yes, maybe they are telling you the truth, maybe they’re not just blowing smoke, I want to suggest that you don’t expect the same outcome for you. Be realistic. And that’s why I’ve given you the benchmarking episode. So you can approach this thoughtfully and not just expect that tomorrow, you’re going to close a multi million dollar deal. There certainly is a level of serendipity and luck associated with advertising on any channel, really. You may accidentally get lucky on your very first ad launch and get 7% click through rates on your first ad, and it got you cost per click under 50 cents. We’ve had several clients do this. And then conversely, you are statistically just as likely to totally bomb and do really poorly. So you do want to set proper action. Don’t set the expectation that it’s going to be like the growth hackers talk about how someone found a hack somewhere and you can replicate exactly the same thing. The rules to LinkedIn ads are exactly the same as every other social platform, you need to get alignment in your AMO. That is my acronym for the three things that you need for a successful social campaign. This is AMO, it stands for your audience, your message and your offer. Episode 14 goes more into depth on ammo alignment. But here’s the basics. Your audience is who it is you’re targeting. So you start by going for the very most core of people who are feeling the pain that your product or service solves. The error message is how people actually see your ad. What’s the ad format? Which imagery are you using? What ad copy are you using to try to motivate them to get interested? And then O is your offer. This is what you’re actually asking people to do, your call to action A lot of times this will be a piece of gated content on LinkedIn. And so what we’re really testing for in the early stages of testing LinkedIn as a platform, we’re trying to find where your audience, your message and your offer are aligned. Because when they are in alignment, you’ll see crazy results. And LinkedIn becomes something that is predictable. It’s a lead generation machine. And when you’re not in alignment, it feels like you’re pulling teeth to try to make the platform work. It feels difficult to get LinkedIn to give you traffic, or you just have to spend money endlessly to try to coerce people into converting. So I’ve shared a few warnings here before, but I want to just re emphasize this, because I want everyone listening to this podcast to look extremely successful and look like the heroes in your either agencies or in house role. So first off, don’t spend a few hundred dollars and then make a determination on the channel. Because the real value of LinkedIn is not in the cost per click. If you’re trying to get the lowest cost per lead, go to Facebook, if you’re measuring your channels just on cost per lead, or just on cost per opt in, LinkedIn will always look extremely expensive. But the real value in LinkedIn is the targeting to make sure you’re hitting exactly the right people who are likely and able to purchase from you. So the real value is tracking all the way down to the cost per sales qualified lead or some kind of qualified stage. Because when you’re tracking all the way to cost per sales, qualified lead, that’s when LinkedIn starts looking really good compared to other platforms, Facebook and Google included. So be realistic until you’ve spent thousands of dollars you likely won’t have enough data to make the call about conversions unless you have a runaway success with 65% conversion rates, which we’ve seen before, but certainly not often. Another word of warning here is don’t cheap out on the platform. If you stand to make $50,000 off of a closed deal, don’t approach it. LinkedIn with a few hundred dollars, and then assume it’s not a good channel when it didn’t make you money. Realize that a deal that is worth $50,000 over the lifetime is a much higher consideration type of offer. And it’s going to take more time. And it’s going to take more deliberation on your clients perspective to decide to close that deal. So the higher your lifetime value, the more you will have to invest in LinkedIn ads to make it work. So if you’re doing what I recommend, and you’re budgeting $5,000 a month for LinkedIn ads, and you’re seeing a lot of opt ins come in and then quite a few of those turn into marketing qualified leads, and then maybe 20%, 30% of those turning into sales qualified leads. If you see this progression, you won’t need a close deal to tell you that this is a good channel, you’ll see the data accumulating and starting to graduate through the stages and that will tell you that yes, even though I’m not closing deals right now even though we are not revenue net positive here. We feel comfortable continuing to invest in LinkedIn Ads. It’s producing, it’s likely to be a good channel for us. If you are extremely limited on budget, let’s say you have a very small budget that you have to spend over a long period of time, and you want to maximize that. Make sure to listen to Episode 14 of this podcast because we go specifically into small budget strategies on how to make sure every dollar is spent efficiently so that you get the best chance of success on the platform. Okay, I’ve got the episode resources coming right up. So stick around.

Thank you for listening to the LinkedIn Ads Show. Hungry for more? AJ Wilcox, take it away.

Okay, those resources I talked about in the news. Microsoft has their COVID-19 insights and resources for advertisers. It’s broken down actually by industry. So depending on what industry you are, you can go and look and see what But some of the effects that they’ve measured are. And do keep in mind that the majority of their insights come from a search perspective, so they may not be as valuable to you as a social marketer. But I know many of us here in social marketing came from a search background. And so it might still be interesting to peruse, over. And of course, the digital advertisers guide to COVID-19, the ebook, I’ve linked to that here in the show notes below. So check that out. And of course, if you are new to LinkedIn advertising, the best course I have for you is the LinkedIn Learning course on LinkedIn Advertising, I happen to be the author, so I’ve put the link to the course down here below. But what I want you to understand is right around an hour, this course teaches you what I would teach you if I were doing a one to one training over the course of about an hour and a half. And in person, I’m charging $500 an hour, the course only charges $25 for the whole course. Or if you’re a LinkedIn premium member, it’s free to watch those. So Highly recommend, check out that course. And please, whatever podcast player you’re on, do subscribe to this podcast. If LinkedIn Ads is important to you as a channel in your digital marketing, then I want you to have every leg up possible. So do subscribe, make sure you catch all of our future episodes. And please do rate and review the podcast I would especially love to see your reviews and I don’t mind if they’re critical, feel free to write it down on me. I want to improve this podcast. So if you have any ways to to improve, maybe still leave a top notch review, but reach out to us at with any critical feedback, anything you’d recommend, anything you’d like to see or hear. Okay, I’ll see you back here next week. I’m cheering you on in your LinkedIn Ads initiatives.