Jun 9, 2020
Show Resources:
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
Contact us at Podcast@B2Linked.com with ideas for what you'd like AJ to cover.
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.
Welcome to the LinkedIn Ads Show. Here's your host, AJ Wilcox.
0:20
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.
4:29
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.
10:10
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.
14:47
The LinkedIn Ads show is proudly brought to you by B2Linked.com,
the LinkedIn Ads experts.
14:56
If the performance of your LinkedIn Ads is important to you
B2Linked is the agency you'll want to work with, we manage
LinkedIn's largest accounts. We're the only media buying agency to
be official LinkedIn partners, and performance to your goals is our
only priority. So fill out the contact form on any page of
B2Linked.com to get in touch, and we'd love to help you absolutely
demolish your goals.
15:19
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.
24:38
Thank you for listening to the LinkedIn Ads Show. Hungry for more?
AJ Wilcox, take it away.
24:46
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 Podcast@B2Linked.com 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.