Episode 8: LinkedIn Advertising… Is it worth it?
January 18th, 2021 | Podcast Episode
With a flick of a thumb your ad is no longer relevant. This is because someone doesn’t think your ad is interesting enough and they use their thumb to scroll to the next post. If you want to create content that stops people in their tracks you’ll want to listen to this episode! Learn how to grab your audience's attention and lead them to act with growth hacking strategies and tactics used by successful Creative Director Camille Smura. Learn what to A/B test for so that you always put your best foot forward with your video content.
Welcome to Growth Hack by Papi Digital and tricks to master the algorithms from industry insiders. Now here's your host, Julian Espinosa back everyone. To another episode of the poppy pocket. This is Julian Espinosa. We have a special guest here. His name is AJ Wilcox, who is a LinkedIn ad expert, and we're going to be cracking open. Something that gets asked quite a bit is. Should I advertise on LinkedIn. Welcome. Hey AJ.
Thanks so much Julian. Excited to be here. Yeah. Thank you for coming. We've done a lot of preparation for this episode, so I'm really excited to crack this open. Yeah. Having fun conversations, fun geeky conversations with you. It's preparing is also fun. Really, really geeky. One. One thing that a lot of people may or may not know is what you can do on LinkedIn.
So you can obviously post and share content on LinkedIn, but the other side of the equation is you can actually run advertising on LinkedIn. So the question you get is should I advertise on LinkedIn and is my business ready to be advertised on LinkedIn? And. This is what AJ does for a living. He runs paid media for clients on LinkedIn.
What I'd like to do is if you could take a couple moments to describe what you do for a living, how long have you been doing it? And a little bit about your background. Sure thing. Well, I've been doing digital marketing for about the last 12, maybe 13 years. And I started out as an SEO guy, but about eight years ago. Yeah, exactly. I stumbled on to LinkedIn ads and just fell in love with the platform, the level of targeting we get the types of customers in B2B that we get to work with. Yeah, big lifetime values very specific audiences. I just fell in love with it. And you know, B2 linked we're about five years old now and started out, you know, we're an agency that only focuses on LinkedIn ads, probably 90% of what we do is the done for you agency service, where we manage someone else's account.
And then about 10% is may teaching, training, consulting, auditing. Others on how to manage their own accounts. So yeah, that's kind of me in a nutshell. Awesome. Awesome. What made you want to start LinkedIn? Five years ago? You know, I, I never really wanted to, but I showed up on my very first day of a, of a B2B SAAS company running all of the digital marketing.
And I laid out to my, my new boss, the CMO, all of my digital plans. And she was like, okay, all those sound great. Go ahead and execute it. But just so you know, we started a pilot with LinkedIn ads about two weeks ago. So dive in, see what you can do. And I didn't want to look like an idiot to my new boss. So I did what she said.
I dove in, started trying to figure things out and over the next two and a half years, I grew that to become LinkedIn's largest spending account worldwide. So I learned a few things along the way while spending millions of dollars. That's amazing. What kind of company was it? A is a business to business, SAAS software kind of company targeting executives, you know, PR pretty much a perfect fit for LinkedIn.
Right, right, right. Well, that's a perfect segue. So the main overarching question that I've gotten from. People commenting on people asking me and on a daily basis, should I advertise on LinkedIn? So let's just answer the question for everyone. That's been asking this who should advertise on LinkedIn. Yeah. And I think there are certain things that you need to understand about what the platform is and who's there. To help answer this question, right? So we know that any time that someone creates a profile on LinkedIn, they're telling them you know what your job title is, all of your work history, what company you work for LinkedIn knows your company's name.
They know what size you are, they know what industry. And so all of these signals that every single person with a profile puts off. And you as a B2B marketer, when you're trying to, let's say you sell an accounting software, you're selling it only to people who are accountants at certain sizes of companies or in certain industries.
And so LinkedIn ads become extremely powerful because you can target only the exact right people by the data that really only LinkedIn has. You're not putting this information everywhere else. So that's an interesting point that you bring up is I talk about data. All the time. So talk to us and define.
Data. So I know you described it a little bit about these data points, but can you give it a, like a holistic view of the internet as a whole, and then bringing it back down to why LinkedIn is so great. Yeah. Anytime that we're advertising, we get to advertise by whatever facet that the platform will give you.
So for instance Facebook could give you something like whether someone is interested in a certain topic, LinkedIn can give you what their job title is or what their level of seniority or what company size they're at. And so when this data is out there on a profile, the ad platform can define who you are and make it possible for an advertiser to say, I only want to show my ads to a very narrow subsection of this audience. And it's using that data to figure it out. Which profile is going to fit inside of that data set. So right. Literally theory but does that answer the question? It does. So digital marketers, we are tasked to understand what data points exist on the internet and figure out what channel is best for our customer in your case, since you're strictly B2B, you know, what data sets LinkedIn provides.
And, you know, when you talk to a client for the very first time, if the data points that they need exist on LinkedIn, right? Totally. Yeah. And what we've found is LinkedIn ads are pretty expensive compared to other channels. So you wouldn't go to them unless LinkedIn had something that other channels don't. And that really is it's this business dataset that, you know, no one else has this level of information about who someone is professionally than LinkedIn. So it becomes the obvious. If I'm getting poor lead quality from Facebook, because I can't get my targeting tight enough around business users, then LinkedIn's where to go. Right. And you brought up a word that I love, expensive, right? Yeah. So I think expensive is completely relative. Right. And that comes down to economics. So explain it to me like I'm five years old. Walk me through economics and, and then relate it back down to LinkedIn. Great. So LinkedIn will charge you in a variety of different ways, but my recommendation is you always start with saying, Hey, here's the maximum I'm willing to pay for a click.
So you go to the platform, you define who your audience is. You define a message that you want to show to that audience. And then you're going to say, I am willing to pay $6. Per click. And how would someone know what they should pay per click? LinkedIn will tell you a range. They will tell you, you know, you define your audience and they'll say, Hey, most people who are going after this audience are bidding nine or $11. And the range that they tend to fall in is they give you this range. That means nothing to me. Where I like to start. I like to start at the very bottom. I want to, that was about to say, no, we just pay the least amount as we can. Exactly. Right. And I think it's this, this growth mentality where we say like, Hey, I want to see what can I get for the least amount of money?
So you bid the very minimum you go in and you put $2 or whatever in the box. And LinkedIn will come back and say, Oh, the minimum bid is actually. If $4 and 75 cents, and then you can go, Oh, cool. I know what the floor is. I'm going to bid for 75 and what happens. You're not incentivizing the network to show your ads all that much.
Right? So there's a chance that you won't get very much traffic. Right. But if you've got a $30 a day budget, And even at the very base bids, you can still spend $30. You just spent that the most economical way possible on the platform. And that's where I want to find, I want to find, you know, to spend my entire budget. What's the very minimum I can spot. That makes, that makes a lot. Exactly. Yeah. It makes a lot of sense. So, so you're going to start out, basically paying whatever LinkedIn. We'll allow you to pay, which is, you know, the very least, right. And that's, you're going to gather a certain amount of traffic to your website with, you know, from those clicks and then a certain percentage of the people who land on your, your website. Let's say it's some kind of a lead focused page. Like I like a like a landing page, a certain percentage of the people who land there will fill out the form and become a conversion. With really, really good offers on LinkedIn. We see 20% conversion rates and with really poor offers or like talk to a sales rep, you know, something that's just, it's too high friction.
You might see like a one and a half to 4% conversion. Got it. So imagine if you're paying $6 a click to get people to your landing page, and then you have a 20% conversion rate. You're probably going to end up paying about $25 per conversion. Maybe even less, if you have a poor conversion rate, like, you know, call it 4%, you'll probably be up in the $200 plus kind of range for a conversion.
So, so let's define that a little bit further and let's kind of look at it. So what you're saying is if your offer. Isn't strong or your landing page. Isn't strong. You're going to be paying more per lead is what you're saying. Absolutely. Okay. And that's not, not necessarily a problem if like we work with some clients who go, Hey, our only offer is send them right to a, to a demo request.
Of course there are very few people on LinkedIn who are surfing around looking to like get involved in the sales process, lesson and buy a product. So you end up with a really low conversion rate. Let's say it's like one and a half percent, but then. Anyone who comes through as a sales ready lead. So you go, well, I'm paying $400 per conversion, but this is someone who's willing to hop on a demo and I've got a 50% close rate.
So maybe that's worth it to me to do $800 for a to actually acquire someone. But the vast majority of people on LinkedIn, you've got to start with an offer that really is attractive. That can get 15 to 20% of people to want to fill out that form and, you know, download your content. Yeah, 10 20 times that many contacts in your database for the same price and chances are, if you're contacting 10 to 20 people you know, at least 10 to 20% of those people are going to be willing to hop on a phone call with you, right.
You end up getting more for. The same amount of money. So we're now down to the conversion, right? And so we want to define two to two there's two types of conversions there's converting into a lead, and then there's the converting into a customer. So what we've sort of been discussing at this at this particular moment is converting into a lead, not a closed deal, a converting into a lead.
So let's say you have using your math. You've got three. Three leads. They each cost you $400. That's if I'm doing a math, right. That's $1,200. Right? If you close one on a sale, now you're paying $1,200 to acquire a customer. Right? Exactly. So let's talk about when we say, who should advertise on LinkedIn, let's talk about the economics on.
Margins for a business and sort of what it's worth to a customer. And, and, and th th from that angle. Yeah. So it's really not uncommon to spend between $800 and 4,000 in advertising in order to close a deal. So I like to draw this line in the sand. That's like, If a customer is worth $15,000 or more to you in, in their lifetime, then LinkedIn ads becomes an absolute no-brainer because if you're, if you're spending 800 to 4,000 on ads, that gives you even like with no loaded cost, you're not factoring in an agency or the sales rep who has to close the lead.
You're looking at like a three to four times ROI and that's pretty cool. So certainly people are making it work with smaller deal sizes, but that's the one I like to throw out there. Right. So 15 K is kind of your bar is your barometer. And when you say 15 K is LTV lifetime value, right? Yeah. So the lifetime value of your business of a per client, if it's in the range of 15,000, they, in your mind, they become qualified.
Now you're suggesting that there's some clients that. Maybe potentially don't meet that, but in a sense, maybe their conversion is really high and they have a really good offer. So then that number can shrink based on how good the campaign performs and how good the offer really is. You nailed it. Yeah. If someone has double the close rate, because there they have an amazing sales team or great at nurturing that 15 K drops down to a seven and a half K quick, this kind of gets to the point when I talk to to clients.
As good as we are. Right. As good as we are at buying the media and playing with the clicks and doing the thing, it all comes down to the brand and then the offer. Right? So I'd like to, like for a moment, step away on who should advertise a link on LinkedIn. If we can apply some philosophy here, how do you approach that in your mindset? Right. When it comes down to like, we're only as good as our client and how do you have that conversation with the customer? I started thinking about this originally because I had a client who they'd been around for about three months and I thought for sure they were going to fall. They were going to be firing us because we couldn't get our cost per lead under like $138.
And this is content downloads. This was like, like eBooks that, you know, the stuff that really should, people should be willing to get their information in exchange for Overnight, they send us a new offer and it was called the the definitive guide to onboarding and they were in HR. So, you know, they're talking about employee onboarding, we started running ads.
We didn't do anything different. And immediately overnight, we were getting a $23 cost per conversion on that. Wow. So that's a reduction of, I don't know the percentage, but that's a big. Big reduction. Yeah. Drop to like a fifth of where it was. And and that was when I realized we hadn't done anything differently. They had just given us offers that the audience didn't care about, like, you're not, if someone offers you something, that's like, here's a free ebook, but it doesn't actually solve a problem. Or you're not curious about the topic. It just seems like garbage. Of course, no one's going to download it, but you give them something that they actually want.
I guess what I'm saying is there's no amount of lipstick that you can put on that pig. If someone gives you a crappy offer, no amount of imagery, no amount of ad copy testing to make something convert. That isn't actually true. Makes sense. Makes sense. Cool. Let's go back. So now that we've talked about what, what information we're giving to LinkedIn, we talked about the economics of how much a business Should be making from a customer before considering LinkedIn.
Let's talk about what targeting mechanisms you use that are relevant to knowing if the business it makes sense for our business. Yeah. So as I'm listing these off, consider who your ideal customer is and see if any of these would make sense. Okay. So we can target by job title by what department someone is in, in the company, their level of seniority.
Each member gets up to 50 skills that they can attach to themselves. So we can target by skill. We can target by the names of the groups that they're members of in LinkedIn groups company, name, company, size company, industry, level of education, what they studied, where they graduated. Interests, retargeting matched audiences of email, upload and company name upload the list just goes on and on and on.
That's probably only about a, maybe a third of what's actually available. The ones I started out by naming were, you know, the ones that we rely on the most heavily. Do you feel that when you meet a customer, they have a good handle on their customer avatar their customer profile? Yeah, I think most do.
I would say probably 80% of the customers we work with. We say, who's the persona you go after. And they can just give me a list of like, you know, even if it's just, someone's like here are five LinkedIn profiles of our top customers, they can give me something or they'll explain, Oh, it's this kind of job title.
They're responsible for these things. About 20% come to us and they go, we don't know who our customer is, and that's actually a really cool test bed for us because we can cast the net really wide and do this, what I call micro segmenting of the audience. And over time we can tell them like, Oh, Hey, it's this pocket over here. It's manager level in X industry T seems to be the most interested in your content. And don't worry about VP level in why industry they don't care about. Got it. Got it. Got it. Got it. And that's about 20% of the business that you get. Yeah. Yeah. I think some people go, we have a product and you look at the job titles of our customers and they're all over the board.
We don't even know where to stick a pin in that and a LinkedIn in, in addition to being a great lead generation platform, it's also kind of a cool silent It looks like a case study, right. Where you're monitoring a group and understanding who's responding and who isn't, and it can give you clues that who your audience actually is.
Yes. Nice. So that leads us to what, what are good examples of customers that would be a good fit. And then the counterpoint, what are really bad examples of businesses that shouldn't be advertising on LinkedIn. And I'd like to get specific. Sure. I think if you are doing high value, lead generation of any kind, mostly this is business to business, but there is some business to consumer that tends to work well on LinkedIn. It's a great fit right there. Basically, if you are trying to advertise to a specific kind of business user and LinkedIn has that data and no one else does that's a clue that the platform is probably really good. But there's also white color recruiting works really well. And that's technically B to C but you're targeting someone by what their work experience is.
So let's say you're trying to hire a new marketing manager for your company. You can target the job title of marketing manager in your geographic area and run an ad that just says. Yeah. W you look qualified. Do you want to talk and you'll end up getting a lot of qualified applicants that way, who are passive candidates that recruiters really tend to like so that's a great example.
Higher education, because we have really cool targeting around, like what degree you got, what school you graduated from when you graduated. That opens it up really well, especially to, to MBA schools when they're looking to recruit potential new students. So those are three examples that tend to work really well. Also financial services. I know American express and visa are both big advertisers and Mercedes even has a case study on LinkedIn's website that they proved that they could sell cars to a busy executor. Wow. There you go. What's a horrible example. Horrible. I got to go with e-commerce on this one.
Okay. You have to realize that any time that you're showing an ad to someone on LinkedIn, chances are, they've never heard of you before. So this is an absolute cold first touch. And anytime you ask someone to open up their wallet, when you've never had an interaction before they don't know, like, or trust you, it's going to fail.
So many times we've, we've given it a try. We've done really, really solid e-commerce tests. Even with the high price goods and we just haven't been able to make it work. It's it's asking too much too soon and LinkedIn's costs usually eat away at margin pretty quick. There you go. Well, th that's interesting. We have another episode we'll we'll re be recording called can you do remarketing on LinkedIn so we can potentially touch on can e-commerce work on. You know, doing the remarketing and is it even worth it? Cause there's other channels out there. So we'll have a whole conversation about that.
Awesome. I'll be ready for that one. Yeah, no, I'm excited for that one. With that being said, I, I know you have a lot of online assets. Can you talk us, talk us through, if anyone wanted more information about kind of what you do or information about LinkedIn? What do you have out there? Sure. If you go to our YouTube channel, you just go to YouTube and type B2 linked.
We have like four or five videos so far that just break down very simply Yeah. Th the questions that you might have about LinkedIn ads. So that's a great place to go. If you want a course that just walks you through. Here's how to do everything. LinkedIn learning actually chose me to be the author for their LinkedIn advertising course, which I was incredibly flattered to be chosen for it.
Is that LinkedIn corporate? Yeah, it's, it's basically lynda.com the training platform when LinkedIn bought them, they basically invited me to come and redo the advertising course. So, so that one's there. If you go search LinkedIn learning or Lynda, you just look for the LinkedIn advertising course.
That's a good one. And if you want to take a stab at running ads yourself I've got a cool getting started checklist. That's just free for anyone to download you. Go to B2 links.com/checklist, and you can download it. Awesome. Awesome. Well, AGA thank you so much for having having you on our podcast and we look to having you back soon.
My pleasure, Julian. All right, bye.