LinkedIn Ads have two main bidding options for advertisers:
- Pay-Per-Click (PPC or CPC) – You are charged when someone clicks your ad.
- Cost per 1,000 Impression (CPM) – You are charged every time your ad is shown 1,000 times.
Why Choose CPC?
CPC bidding is the preferred method for most advertisers because it is performance based. Nobody clicked your ad? Doesn’t cost you a penny. Someone clicks the ad and goes to your site? Cha-ching, you pay LinkedIn. When you know the exact cost for each click you can work through your conversion funnel to ensure your advertising is profitable. Let’s walk through a quick example:
Average cost/click = $2.50
Average value of new customer = $1500
Conversion rate of leads to customers = 10%
Target cost/lead (CPL) = $150
With simple math you can see that you need 1 lead for every 60 clicks. That’s a conversion rate of 1.67%. In this example, if your traffic/landing page can generate a conversion rate better than 1.67% you are generating profitable new business and should expand your efforts.
When to Use CPM Bidding
This bidding type dates back to the early days of the internet when it was all about “hits”. You will be charged every time your ad is shown 1,000 times regardless if anyone clicked the ad or not. I recommend this approach in only two situations:
- You have prior experience with CPM advertising
- Brand-building where impressions are valuable by themselves
Other Important Notes
- Your card will immediately be charged a one-time activation fee of $5 when you register. This is applied to clicks as your ad begins to run and your card will be charged afterward for accrued clicks.
- The minimum CPC bid is $2.00.
- Minimum daily budget for a campaign is $10