Intro to LinkedIn Ads Optimization

We are tired of the agencies that set it and forget it.

As we have mentioned in many of our other optimization guides - campaign setup is only 10% of the overall optimization you can do for your LinkedIn Ads.

Of the remaining 90%, 80% is all about what it takes to get the results you want after your campaign launches.

What does it mean to Optimize Your LinkedIn Ads?

LinkedIn advertising optimization means that you are using the qualitative and quantitative data natively in the platform to make strategic updates & predict tests that will improve your campaign performance.

That's a long way of saying that our goal with optimization is to improve performance & increase marketing pipeline.
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When should you optimize your LinkedIn Ads?

For the first 14 days after your campaign launches, you should be in your account making the optimizations we cover in this guide.

After the first 14 days, you should check your account for optimization opportunities every 2-3 days.

By doing this, you will be saving a few dollars every day in ad spend that can be re-allocated to your optimized campaign.
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The logic behind ad optimizations

Disclaimer - we are assuming your LinkedIn Ads account is optimized AND your campaign setup was put together following our optimization guide.

This means audiences, conversions, campaigns groups & campaign settings were already optimized.

You can view our previous tutorial on optimized LinkedIn Ads campaign setup.
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Campaign groups review

When we start our optimization process, we start at the campaign group level.

We review each part of the marketing funnel and it's respective performance.

Under columns, we like to review the performance tab then select breakdown to conversions.

By selecting this view, we are able to see standard performance metrics like Impressions, Clicks, CTR, CPC, Conversions, and Spend - while also seeing the exact conversions that were triggered in each campaign group.

This is helpful if you have setup your conversions in varying attribution models - because some campaigns influence conversions in other campaigns - and tying that data together helps paint a clear picture on what your leads have seen already.
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Metrics we hyperfocus on

On LinkedIn we are hyper-focused on "rate-centric" metrics.

This means that we deeply care about click thru rate (CTR), cost per click (CPC), and cost per lead (CPL).

These metrics are important because they are levers (leading indicators) that we can adjust to positively impact marketing pipeline.
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CTR

CTR is calculated simply by dividing clicks by impressions, and it is usually represented as a percentage.

The higher the percent, the better.

On average, LinkedIn CTR is .5% for top of funnel (TOF) campaigns.
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CPC

Cost per click is calculated by taking the total cost of the campaign by the clicks, and it is represented as a dollar amount.

The lower the dollar amount, the better.

On LinkedIn, CPC ranges based on your audience - but if you are tracking less than a $10 CPC then you are about average.
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CPL

Cost per lead is calculated by the total cost of the campaign by the number of leads, and it is represented as a dollar amount.

The lower the dollar amount, the better.

It's best to calculate this value as the cost per qualified lead (CPQL) since unqualified leads are as useless as no leads.

Generally speaking, we like to keep engaged leads less than $100 per TOF campaigns.
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Ideology on Campaign Group Performance

As a rule of thumb, your "non-rate" metrics like impressions, clicks, cost, etc. will decrease as people progress through your marketing funnel.

However, your "rate-metrics" should improve as people move through the marketing funnel.

For example, in the cold layer of your campaigns, your impressions will be very high, your clicks will be low, and as a result your CPC & CPL will be high.

This means that you are spending a lot of your marketing budget in this introductory phases to move people down in your marketing funnel.
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How rate metrics improve as you progress in the marketing funnel

But, as people interact with your ads and you are able to retarget them with new ads in your warm layer campaign group - then your impressions will decrease but clicks will increase and as a result your CTR will increase.

If your CTR is increasing, then your CPC is decreasing meaning you are spending less to move people down your funnel.

So when reviewing your groups, you should see a general improvement of your rates as you progress down the marketing funnel.
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How to optimize LinkedIn Ads

Now that we understand the ideology behind ad performance, let's discuss strategies to improve our metrics.

How to improve non-rate metrics

Generally speaking, we don't optimize around impressions however it's important to discuss how to increase the number of people that enter the top of the marketing funnel.

Impressions revolve around your ideal customer profile (ICP) & budget.
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As your audience increases, rates decline

As a rule of thumb, as you increase your audience size, you will spend more & negatively impact your rate metrics like CTR & CPC.

For this reason, we suggest audiences that are below 50,000 but sometimes as small as 500.

This ultimately depends on your ICP & decision makers you are trying to convert.

Last, in general, as you increase budget & loosen the targeting, then you increase impressions.

Remember, more impressions is not equal to more qualified impressions (aka more of the wrong people seeing your ad doesn't help anything but increase costs).
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How to improve rate metrics

We can reverse engineer the optimization process here by thinking about the logic from non rate metrics.

If larger, less refined audiences are primarily in your campaign then these will negatively impact your rates (CTR, CPC, CPL).

So a great optimization is to review your audience 1-2 weeks after you launch your ad campaign.
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When to consider your audience targeting

In the review process, it's important to compare your campaign's CTR and CPC with the industry rates of the audience you are targeting.

If your rates are lower than the averages, then the first thing to consider is your audience itself.

Refining it is the fastest way to improve rates.
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How to refine your audience

To make an informed decision on if your audience is interacting with your content, then we review the demographic breakdown in LinkedIn.

This this view, you can review job function, job title, companies and more.

If you notice job titles or companies interacting with your ads or getting a large impression share, then consider adding them as excluded audience attributes in your campaign audience targeting.

There is so much more data in your account that you can use to exclude and save dollars of ad spend.
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When to consider new creative

Rate metrics are also directly affected by creative & ad fatigue.

Under the delivery column of your LinkedIn Campaign Manager, you can see the ad frequency at the campaign group & campaign level.

This informs you with the number of times someone has seen your ad.
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How to fix ad fatigue

We like to keep these below 5 to prevent fatigue.

If your delivery is below 5, but your rates are still below the industry average, then consider the content itself.

We aren't going to dive into creating content in this post, but the goal is to share content with your prospects that they actually find useful.

A great way of thinking about the content you use as ads is to think, "Would I pay for this?"

If you not, then rethink your approach.
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How rate metrics impact revenue

Alright, alright - a lot of you don't care about CTR - but you should because it actually does affect marketing pipeline.

Let's walk through an example here:

Consider your campaign get's 10,000 impressions in 1 month.

The unoptimized campaign has a CTR of .5% while the optimized campaign get's a 2% CTR.

In this case, the unoptimized campaign gets 50 clicks while the optimized gets 200.

You have spent the same amount for those 10,000 impressions but the difference is going to be leads.
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How to calculate leads from clicks

To bridge the gap between clicks to leads - you must know your landing page's conversion rate (CVR).

Let's consider that our average conversion rate for our landing pages is 3%.

With a 3% CVR, the unoptimized campaign receives 1.5 leads while the optimized campaign receives 6 leads.
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How to calculate pipeline from leads

In the B2B world, deal sizes vary, so marketing pipeline is a term that is used to describe the future opportunities for the company to make revenue.

This is attributed to marketing due to the lead coming from an advertisement.

In our example, let's assume a conservative lead to marketing qualified lead rate of 60% and the opportunity rate at 30%.

This means that the 1.5 leads doesn't result in noticeable marketing pipeline, while the 6 leads results in 1 new deal for the B2B company.

That value for marketing pipeline is thus attributed to our LinkedIn Ads performance.
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How to calculate ROAS from marketing pipeline

Finishing up, we are able to calculate the return on advertising spend when we have a view into the company's customer relationship manager (CRM).

The marketing pipeline is calculated by multiplying the average deal size of one customer by the average customer lifetime.

If the average deal size is $1000 and the lifetime of customer hovers in at 12 months - then we can attribute $12,000 in marketing pipeline from that opportunity.

If we spent $1500 to get 10,000 impressions on LinkedIn - then we simply divide the marketing pipeline by the cost of the campaign to get our ROAS of 8.

Our customers usually see, 3-4x ROAS within the first 3 months of working with us.
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Why ad optimization is an exponential process

Optimization yields exponential returns.

Here's why:

When you save $1 from improving your rate metrics, then that $1 is saved while also being reallocated to your optimized ad campaign.

So when you save $1, you are effectively doubling it's value when it is reinvested in the campaign in the following period.

This stretches your budget & increases performance iteratively every quarter.

Working with experts is key to doing this right. Contact us for a complimentary LinkedIn Ads audit.

Until next time.

This is Ian "The Paid Media Guy" Binek, signing off.