What factors affect LinkedIn advertising costs?

In the modern world, digital advertising is one of the most important aspects of any organisation’s marketing strategy. As companies grow, many choose to invest in placing content on online platforms such as Google and Meta to boost brand awareness, generate leads and drive conversions.

One social media advertising medium that shouldn’t be overlooked is LinkedIn. Launched in 2003, the channel has grown from strength to strength and is now home to over 900 million users, most of whom are professionals who visit the site regularly.

However, it’s no secret that LinkedIn can be more expensive than other platforms when it comes to advertising. For B2B marketers, the higher price tends to be worth it, as LinkedIn has a more refined user base of professional people in decision-making positions within their organisations.

In 2023, the average cost of LinkedIn ads per bid type is:

• Cost per click: £4.45
• Cost per 1,000 impressions: £26.98
• Cost per send: £0.16

Despite being more expensive to place ads on than many other mediums, LinkedIn equips marketers with a wide range of targeted methods to engage and convert the right people. 

Moreover, organisations are recognising that the higher price is worth it. But to understand how much your potential ads might cost, knowing what factors affect the price is vital.

What factors influence the cost of LinkedIn ads?

There are several factors that affect your advertising budget when it comes to LinkedIn. Ads are sold via an online auction in which buyers bid on ad space. Basically, this means if you want to run a campaign, you’ll need to compete with other advertisers looking to target the same people.

Winning these auctions is based on the amount of money you bid, as well as the competition for your target audience. To reach a narrow, highly specific group of users, it’s likely going to cost more.

Furthermore, the location and size of your target audience will feed into your final costs, as LinkedIn will calculate the price based on the above and determine how expensive a winning bid should be.

Finally, the advert you want to run on LinkedIn will be assigned a relevance score – also known as a campaign quality score – which assesses how engaging and relevant your ad is. A higher score here will lead to lower costs, which is the platform’s smart way of pushing marketers to create great ads.

Are LinkedIn ads worth the cost?

Marketers who run ads on LinkedIn reported approximately 65 per cent of their campaigns had produced a favourable return on investment. Additionally, 80 per cent of the website’s members are professionals who drive business decisions within their respective organisations.

There is a plethora of statistics that suggest LinkedIn might be the best source of B2B lead generation. So, in terms of connecting with the right audience and bringing high-quality leads to your business, the quality of LinkedIn ads is probably worth paying for and most definitely something you should consider.