CPC vs CPM Bidding: Referenced article on Marketing Land
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The objective that LinkedIn Ads is optimizing towards is not the objective you are optimizing for as an advertiser. And that means you can take advantage of it, if you know how the objectives work.
Welcome to the LinkedIn Ads Show. Here’s your host, AJ Wilcox.
Hey there LinkedIn Ads fanatics. So objectives on LinkedIn came out in early 2019. And we even had Episode Four with Amita Paul from LinkedIn about how LinkedIn is thinking about these objectives. And if you’ve managed Facebook Ads before, this was probably a very comfortable change. But I certainly did not appreciate the transition to objectives, as it added a lot more complexity to us as advertisers for not much additional value. But now that we’ve got experience with all of the objectives, we found the tips, tricks, and hacks on how to use them to our advantage, and I’m super excited to share them with you. Highlighting a couple of recent reviews, Neil Benson over on pod chaser says, “I took a Jays LinkedIn ads course on LinkedIn learning, and now I’m diving into his podcast to get deeper into the topics I need to learn to drive wildly successful LinkedIn ads campaigns. It’s only been two days since AJ showed me how to create a campaign and I’ve spent $60 for eight leads so far. By the time I’ve listened to all the episodes, we’ll know how many of those leads became paying students.” Neil, thank you so much for leaving such an awesome review. That makes my little ginger heart so proud that you’re seeing results already. So keep it up cheering you on. And then Christie McCabe, who is an Aussie from the Gold Coast in Queensland, Australia. She works at an agency called Clevvi. And she says, “The go to podcasts for LinkedIn ad strategy. AJ has always been my go to resource for any questions related to LinkedIn advertising, I was so excited to see he launched a podcast so I can upscale while commuting, walking, etc. His podcast episodes are succinct, informative, and so giving valuable information and examples. AJ is genuine and helpful, sharing years of study and trials with us, which is so appreciated.” Christy, you totally made my day. Thank you so much for saying such kind words. And if you found value by listening to the podcast, please do leave a review. And I want to help feature you. Okay, let’s hit it.
So we’re diving headlong into objectives here. And before we had objectives, what was it like? Well, we just had two bidding options, there was CPC bidding, cost per click, and there was CPM bidding, cost per thousand impressions. And if you look at anything that LinkedIn published, they would always say the same thing, “if your goal is getting impressions bid CPM, and if your goal is getting clicks, bid CPC”, and it probably took me a little bit too long to figure this out. But that’s really not good advice. And I ended up writing an article for MarketingLand back in 2015. And I’ve linked to it in the show notes. But it details the reason why this is actually really bad advice. And it it’s because as a performance marketer, my goal is to get the lowest cost per result possible. And so I’ve done a lot of testing on different bid models, bidding high and low in both CPC and CPM. And I found that whatever bid model is that you’re using whatever produces the lowest cost per click, also results in the lowest cost per impression, and vice versa. And the one factor here that all of this depends on which bid model you want to use, it’s totally based off of your click through rate or your engagement rate. And so this is the concept that I developed where you’ve probably heard me say before, if your click through rates for sponsored content are over 1%, that’s when you want to bid CPM. And when they’re under that you want to bid CPC, but low. And regardless of what your actual goal or objective is, if you want the lowest cost per impression, or lowest cost per click, lowest cost per lead, you could follow this guideline, and that would give it to you. You’ve probably heard of eCPC or eCPM, and that means your effective cost per click or your effective cost per impression. And the way this works is if you’re bidding for impressions, you can still see, in the dashboard, what your effective cost per click would be. So check this out and see no matter what objective and no matter what bid type you’re using, go and take a look at the CPC column inside of campaign manager. You can even customize the columns and put CPC next to CPM and see if this holds true. And of course, you’re all sophisticated marketers, so you might not be saying the same thing. But I hear a lot of people saying, well, cost per click isn’t the end all be all. And it’s true cost is important, but it’s not the most important thing. But when we’re comparing bid models, you have to assume that your conversion rate is going to stay the same and be held constant. And so if you do this, if you’re looking to reduce your cost per lead, the way you do that is by reducing your cost per click. So we’re always looking for any way to reduce the costs. And of course, still fill your budget. And inevitably, when you tell your LinkedIn rep, that this is what you’re doing, you’re trying to lower your cost per click, they will certainly tell you that you need to bid more competitively because that will give you a better conversion rate, and lead quality. And so I’ve done a lot of testing around this. I wanted to find out, if I bid really high did my lead quality increase? And if I bid really low, and I was scraping the bottom of the barrel for these leftover audience members, did my lead quality decrease? And in every case, we actually haven’t found a difference in lead quality. And we’ve run a lot of data through this test. So I don’t think that holds water. But of course, I’d love to hear from you if you’ve found differently. So then LinkedIn rolled out objectives in early 2019. It was actually in late 2018, where it was an open beta, that anyone could switch back to the old interface if they wanted. But when we saw this, the very same issues came up again. And that is, when you look at the objectives, LinkedIn says to pick the objective that you want to optimize for. And that’s what they’ll go after, they’ll try to optimize for the same thing. But we found very quickly that that’s not always correct, or even most of the time. So to understand this concept, you’ll need to separate the idea in your head, that the objective that you choose in LinkedIn is actually the best objective for you if your goal matches that objective name. I know that’s a little complex. So I’ll give you an example here. If your objective is lead generation, because your boss said, we need to generate leads, then you’d probably go and try to select lead generation as your objective. And then you find out after selecting the lead generation objective, that all that means is now your ads are going to have a native lead generation form attached to them. And you may have wanted to generate a lead from your landing page form. So it certainly is worth understanding LinkedIn’s definition of objectives. And of course, we’ll find ways to use this to your advantage as well. The principle here is that the objective that you select in a campaign means that LinkedIn attempts to optimize towards that objective, but the definition of optimize is going to be different, I think, for you as the advertiser, then it means to LinkedIn. For LinkedIn, optimizing means volume, and they’re usually not too concerned with cost efficiency. And for my experience, the advertisers goal is usually quite the opposite. Efficiency first, and volume second. The reason why LinkedIn optimizes towards this, I think they figured out very early on that it’s worse to have an advertiser say, I put in my credit card, I developed campaigns, and it didn’t spend anything, than it was to have someone come and say, I tried out LinkedIn Ads, and they were too expensive. And you might feel like this is more of a cash grab, like if LinkedIn is gonna charge people anyway, you might as well take their entire budget. But in talking to LinkedIn’s product management team, I don’t feel like that’s the case, I don’t feel like this is purposely grabby or being greedy or trying to rip anyone off. But I certainly see how this can feel. And I feel like that when a new advertiser goes in to create their first campaign, it’s really daunting to look at this list of seven objectives, and immediately have to pick, ahhh, this is what I feel like is more my objective today. And I’d love to simplify this. So in my mind, it’s so much easier to take out the things that aren’t really all that valuable, leaving you with only the best ones to try. So let’s walk through some of the objectives that I recommend avoiding.
Objectives To Avoid
The first is brand awareness as an objective, and I recommend this zero percent of the time, it’s quite literally worthless. The reason why is the only thing that brand awareness as an objective has to optimize towards is people seeing the ad. And seeing the ad is exactly the same thing as an impression. And it doesn’t make any sense to me that an ad platform can optimize towards showing impressions to people who happen to see impressions. And it would be okay, even if there’s really no algorithm attached here. Except if you look at your bidding and budgeting, you can’t actually change your bid. If you choose brand awareness as your objective, the only option you have, which really isn’t an option is CPM bidding. So having a platform optimized towards showing impressions, it’s not really a thing, I would just ignore this one altogether. If my goal is awareness, I would much rather go for something like the engagement objective, and then have the freedom to change my bid style based off of what I need, as well as whatever is going to give me the best costs.
The next one, and I know this is going to be controversial, but it’s website conversions. I see people using this objective every single day. And it makes a lot of sense. If my goal is to get conversions, of course I would want to optimize towards that. But the challenge here is LinkedIn is attempting to optimize towards those that it feels are most likely to convert. But LinkedIn really has imperfect data here. The only data it really has is back in 2016, when they launched conversion tracking, and of course, there were so many people who installed it incorrectly, we’ve seen plenty of that, where it’s firing a conversion for every landing page view or something like that. It meant that the data really isn’t all that great. And the fact that this didn’t come out till 2016, when everyone else has had conversion tracking for years and years and years, it means that there’s a pretty small data set here. But of course, we have lead generation form ads. And for that, conversion tracking is absolutely perfect. It’s flawless. This is a conversion that is occurring on Linkedin.com. LinkedIn sees everything about that conversion about who did it. And so that data is really good. But of course, we’ve only had that for a little while, too, we’ve had that for I think two or three years. So even if we assume all of the data is perfect, you look at Facebook, and Facebook probably has the best data scientists in the world working there. Facebook also has tons and tons of interaction and interest data. And I don’t really know, but I’m guessing it’s probably 1,000 to 10,000 times more data that Facebook has about us than what LinkedIn has about us. And even with all of that crazy amount of data, Facebook still recommends 50 to 100 conversions per week, per ad set for their conversion objective to work properly. So think about that 50 conversions per week per campaign, how many advertisers do you know who are spending large enough and having a high enough conversion rate to even do that on LinkedIn? Do you know? I can count on one hand the number of accounts, I know who can actually hit that. So I don’t have a whole lot of faith in the website conversions objective, I just don’t think that we have enough data most of the time for it to work. We’ve done quite a bit of testing. And what we’ve found is turning on website conversions objective versus just website visits, it was totally a coin flip as to whether things would improve or deprove, if that’s a word. So sure, the data is maybe imperfect and the algorithm doesn’t really have enough data to work with. But the real nail in the coffin for me on website conversions objective is that all of those advertisers who are using the conversions objective, they are providing extra competition in the auction, and they are willing to bid more for conversions. And so everyone’s bidding each other up. So your cost per click and cost per conversion will likely be much higher on website conversions than it would be for just traditional website visits. And I don’t think it’s a bad thing to test, I would just start with website visits first, and then launch a website conversions version of it side by side and just test to see if you got any value out of it. Like I said, for me, the experience has really been a coin flip as to whether it’s it does anything at all.
The next objective here is video views. So there is definitely a good reason to use video views objective, but I only recommend it to about 5% of video advertisers. And I know your jaw just dropped. So I’m going to explain this. Running video ads, especially on LinkedIn, it’s just higher risk than running static ads. And that’s because with a video ad, you really have two calls to action in everything. The first call to action is please watch this video. And then your second call to action is whatever you want them to do afterwards, click to our landing page or fill out this form. And in order to count as a view on LinkedIn, someone just has to watch for two seconds or more as it’s playing there in their feed. And for my experience, it’s usually about a quarter of everyone who will count as a view. So if you have 1,000 impressions, you’ll probably end up with 250 views. And that’s not much of a commitment to stick around for two or more seconds. So it doesn’t tell me that someone’s actually interested. Which means if I’m paying by a cost per view of a video, or even cost per impression, I won’t really know how that’s performing because my cost per view or cost per impression, it will just look higher than what it was when I was running a static ad against it. And I’m not telling you don’t run video because video is a very powerful medium and LinkedIn video ads can be really good, especially because they just released the ability for us to to retarget video viewers. But what many of you may not know is that if you choose your objective of website visits, you can actually run video creative inside of that, which means you can still show your ad to people and it’s video, it’s going to play automatically. But now you’re only going to pay when someone actually clicks on whatever your landing page is. And the same thing works with lead generation objective. You’re only going to pay when someone opens up the form. And because opening the form or clicking to my landing page is a much stronger action, it’s a much better signal to me to know whether or not I have a good engagement rate or poor. So I’m a big fan of start your video campaigns out on a cost per click basis. And then if you find that your engagement rate is really high, then it makes sense to launch a video views campaign, and then bid by either cost per view, or cost per impression, whichever is less expensive. And that’ll have you saving some money. And like we talked about before, with whatever objective that minimizes your cost per impression will also minimize your cost per click, the same rule applies with a cost per view as well. So you just want to see your effective cost per view, effective cost per impression, and effective cost per click as low as possible. And you use whatever objective or whatever bidding model gets you there.
And the last objective I would tell you to avoid is job applicants. Now, if you’re just using LinkedIn for recruiting, it’s totally possible that this could be a really good objective for you. But quite honestly, I haven’t used it very much. And I can’t see how this would actually be more beneficial than just using any of the other objectives, and targeting just those with the trait of job seekers. And of course, that way, you’d actually have more freedom, you could choose whichever ad format you wanted, you could choose whichever bid model you wanted. So I just don’t see much of an advantage to having this as an objective. But please let me know if you’ve experienced otherwise. Okay, we’re gonna take a quick sponsor break, and then we’ll dive back into which objectives you do want to use.
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Objectives You’ll Want To Use and How To Use Them
Alright, let’s jump back into the objectives that you’ll want to use and how to use them. So when I’m considering which objective I want to run for a campaign, the first thing I’m going to do is decide whether my traffic is going to my website, or I’m keeping them on LinkedIn. And if you’re trying to decide between the pros and cons there, check out Episode 17 on lead generation form ads, and that’ll go way deep into it and you’ll know your answer there. And if you want your traffic to go to your website or a landing page, you can’t go wrong with website visits. I love it because it’s the lowest risk type of ad format and objective. The reason for that is you’re going to pay only when someone clicks to your website. So you’re not going to pay when someone clicks like or when they go to follow your company, or when they just click to go see your company, or how about when they comment below. All of those actions would otherwise be payable, but because you selected website visits as your objective, you’re only going to pay for those clicks to your landing page. It makes it ultra low risk. And it’s a great place to start. And if you are sending traffic to your landing page or your website, you can totally own it. You can track all of your tracking with really complex or beautiful UTM parameters. You can retarget that traffic with your other channels like Facebook and Google. And inevitably, you’ll end up with higher lead quality, because that person has been to your website, and they’ve received a stronger branding impression than they would have by not visiting your website. And you also have a lot of freedom here and how you bid, you can bid cost per click cost per thousand impressions and auto bidding. You’ll even now see target cost per click, which we’ve talked about before, not my favorite bidding model. But there’s a lot of freedom here and how you bid. But if you do want to just keep your traffic on LinkedIn and take advantage of the higher conversion rates that you get by not transitioning someone from one website to another. You can do that with LinkedIn’s lead generation form ads, which can be attached to any sponsored content. That’s your newsfeed ads, or any sort of sponsored messaging ads, so sponsored messages or conversation ads.
You’ll remember from Episode 17, how we talked about lead gen forms produced the cheapest leads possible, generally conversion rates that are 10 to 50% higher than if you sent to a landing page. But because LinkedIn made it so easy, you’re probably going to see a diminished quality of lead. As of recently we can start to retarget anyone who interacts with that form, so whether someone opened it or whether they filled it out, both of those actions we can target or exclude from our campaigns now, which is amazing. They’ve got the same flexibility in bidding, we can bid by cost per click cost per thousand impressions, or an auto bid.
And then you have engagement as an objective. Now, I love engagement, simply because it allows me to hack the algorithm a little bit. The deal with engagement is you actually pay for any interaction on the ad, you’re going to pay whether someone clicks to your landing page, or whether they click like, comment, share, a click to your company page, or any other interaction. And so if you’re bidding cost per click, that sure could add up to a bunch of people who aren’t taking the actions you want them to take. But here’s why I like it so much. The bid floors on engagement are 35% lower than they are when you choose website visits or lead generation objective. So basically, that means that if you use engagement as an objective, it’s possible to get a 35% reduction in your costs. And if you check out Episode 26, all about what makes LinkedIn Ads so expensive, you’ll learn more about this. So here’s how I decide whether or not I want to use the engagement objective. I’m going to launch a website visits campaign or a lead generation campaign. And if I look at those sponsored content, and I see that less than 35% of my clicks are coming from social actions, then I know it’s going to be cheaper to use the engagement objective and be able to bid 35% lower and go ahead and pay for those extra interactions. We’ve done this where the ads that we launch, they just don’t tend to get interactions, they don’t tend to get likes, comments, shares or company follows. And this is great, we run those as engagement ads and of course, 100% of the clicks or near it are going to the landing page, and we’re able to pay 35% less. It’s pretty cool. And of course, if you know this, if you know how the objectives are charged, and what they optimized towards, you can have some cool hacks, you can do some fun things. Some examples of this could be things like a quiz that where you’re specifically asking for engagement, but you set the objective as website visits. So all those actions will be free and you’ll only pay for a few people clicking. And of course, you can send that traffic to somewhere where it might be valuable anyway, like a demo page or something. And this can play double duty here as well. Because I’m sure as many of you know, anytime that someone takes a social action on LinkedIn, liking, comment, or resharing, it then helps that post go viral. It becomes eligible to be seen by that person’s followers and connections. So if you can do this in an ad and get people to want to engage socially, then you’ll get a ton more viral views and clicks. A similar kind of hack you could do is you could run a video ad on cost per click with website visits as your objective. And then make the call to action a social engagement. Like if you agree or comment with why you disagree, something like that. And again, that would also help it really go viral. And please reach out. Let me know any cool and interesting ways that you’ve found to hack LinkedIn’s objectives to get better pricing. Okay, I’ve got the episode resources coming up for you. So stick around.
Thank you for listening to the LinkedIn Ads Show. Hungry for more? AJ Wilcox, take it away.
As promised, check down below in the show notes for the article that I wrote on MarketingLand back in 2016 about bid type objectives. It’s certainly older, but it’ll help you understand the principle of whatever bidding gets you the lowest impression cost will also get you the lowest cost per click. You’ll see a link to Episode 17 on lead gen forms, which will help you understand your objectives, as well as Episode 26 about why LinkedIn ads are so expensive. That’ll help you understand the engagement objective and when and how it’s less expensive. Check out the course on LinkedIn learning or LinkedIn Ads. I’m the author of it. And it’s an incredibly inexpensive and great way to train yourself or your staff, whoever is looking to get started at LinkedIn Ads. On whatever player you’re listening, look down and hit the subscribe button and as soon as you found value in anything that I’ve shared, make sure to rate. And please leave a review. I would love to shout you out. I give shoutouts to anyone who leaves a review. With any questions or topic suggestions, reach out to us at Podcast@B2Linked.com. And with that being said, we’ll see you back here next week. Cheering you on in your LinkedIn Ads initiatives.