Should my Startup Invest in LinkedIn ads?

This question of whether to invest in LinkedIn ads is top of every tech startup Founder's mind, but not one that has an easy straightforward answer. 

And if you are getting a straightforward "yes" or "no" answer from your social media consultant - you should fire them immediately. 

Drawing upon my background working at LinkedIn, 15+ years in marketing and has managed multi-million dollar LinkedIn ad budgets for various Tech Enterprise and Startup clients, I know a thing or two about paid LinkedIn ads. 

And as such I know they are not a right fit for every startup.

Below I'll share some of the considerations that I walk my tech startup clients through to make a decision on whether they should invest in LinkedIn ads:

Considerations of LinkedIn Ads

1) Premium Context - Your ads are hosted in a brand-safe, premium environment. Thanks to LinkedIn's commitment to member experience, the chances of your ad appearing next to unsavory content are minimal, setting it apart from other platforms. This makes LinkedIn an ideal choice for tech startups looking to showcase their brand in a premium light and benefit from the theory of marketing signaling. 

2) Quality of Your Website - While it's possible to run native LinkedIn ads without a website, it's a bad customer experience as there's no opportunity for them to explore your brand further. I advise my tech startups to have a polished online presence before doing so. For optimal ad performance, ensure you have a mobile-optimized website or landing page for seamless navigation. If you lead users from LinkedIn's mobile-friendly environment to a non-optimized website, expect significant conversion drop-off.

3) First Party Data - Unlike many platforms reliant on third-party data for targeting, LinkedIn's biggest asset is it's valuable first-party data, elevating its targeting capabilities. If you're new to these terms, here's a quick overview:

• Third-party is data that is collected and aggregated by external sources or data providers, not directly by the social platform or the business itself. It often includes demographic information, interests, and behaviors gathered from various online and offline sources. 
• First party is data that a social platform or a business collects directly from its own interactions with users. It is the most valuable and reliable type of data because it comes directly from the source. It has a higher verifiability and targeting capacity than third-party. LinkedIn members are incentivized to keep their profiles up-to-date for personal brand, networking and job opportunities.  

4) Reaching B2B Decision Makers - With over 1B+ professionals on LinkedIn where 4 out of 5 drive purchase decisions, it's the ultimate platform for B2B startups seeking qualified leads. Reaching niche business audiences like financial accountants, VCs, CEOs, or software engineers is a breeze, while on other social platforms, you'll struggle to find ways to target those niche audiences and often get a lower percentage of relevant audience. But if you can reach these same audiences easily elsewhere, try that first for cost efficiency. 

5) Depth of Targeting - LinkedIn's strength lies in its precise targeting layers, encompassing job titles, functions, experience, revenue, website retargeting, and more. It outshines other social platforms in this regard. Yet, if your aim is broad upper-funnel reach, platforms like Google, TikTok or Instagram may be more cost effective for your startup.

6) Resources for Campaign Creation - Often tech startups jump into running ads without considering if they have everything they need to be successful. Some of the questions I'll ask:

• Do you have your messaging locked down?
• Do you have unique assets or content created?
• Have you done a Product-Market-Fit analysis?
• Do you have a clear sense of your Audience personas?
• Have you set up your LinkedIn insight tag for conversion tracking?
• Do you have someone to not only set up the campaigns, but optimize and report on them?

If you answered no to the bulk of these questions, it may not be the right time to run ads or you can hire us to help you with these. 

7) Knowledge of the LinkedIn platform - Many tech startups wrongly assume that LinkedIn ads are just like any other platform, and even experienced digital marketing experts can make huge mistakes with them. These missteps can greatly affect the success of your startup's ad campaigns. I often hear startups claim that LinkedIn doesn't yield results for them, but when I review their ad accounts, it's like stumbling upon a chaotic Black Friday sale at Walmart's discount bin.

8) Do you need to capture or create demand? Social ad platforms excel at kindling demand, not lassoing it. They demand your patience for meticulous A/B testing of formats, messaging, audiences, and more. If quick ROI is your goal, LinkedIn ads (or any social media ads for that matter) might not be your best bet. Go for SEM if you're after short-term results that capture existing demand. Invest in social ads if you're wanting to creating a long term sustainable revenue model. 

9) Determine your ROAS - Premium environments demand premium prices so it's important that your tech startup determine if there is a positive estimated ROAS. To determine your Estimated ROAS (Return on Ad Spend):

• Set up your LinkedIn Campaign Manager account (i.e. your ad account)
• Set your objective in your Campaign Manager ad account based on what you want to achieve (i.e. Brand Awareness, Website Conversions, Video Views, Lead Generation etc.)
• Estimate your Audience Size: In your Campaign Manager ad account you can use their various target facets including title, experience, revenue, website retargeting etc. You will need at least 1000 members or 300 if you are using LinkedIn's ABM targeting - Matched Audiences.
• Select your Ad Format: There are various types of LinkedIn ads that you can choose from (i.e. Single image, carousel, video, message, text, lead gen form, display etc.)
• Use the Budget Forecasting Tool: Estimate CPC, CPV or CPM (based on objective selected). This will give you an audience big range which will tell you at that point in time what other audiences are bidding against in the LinkedIn digital auction. 
• Determine Good, Better, Best conversion - Based on those budget forecasting tool website traffic estimates you can then come up with a good, better and best scenario based on your historical website conversion rates and average order value. For example in the below hypothetical analysis there is an average conversion rate of 10%, 15% and 20% of the total website visitors and the hypothetical average order value (i.e. what your customers typically pay for your products / services) to determined a ROAS. 

So are LinkedIn ads right for your startup?

These are some general considerations for determining an investment in LinkedIn ads, but there also may be nuances to your business, industry and audience that impact your decision. If interested in LinkedIn ads reach out to us for social media consulting, our LinkedIn Ads Masterclass, and executive ghostwriting. 

Contact Us to Unleash your Brand's Potential.

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