LinkedIn Advertising Benchmarks 2023: Everything Small Businesses Need to Know

As an experienced entrepreneurship consultant, I often get asked by small business owners about LinkedIn advertising and what benchmarks they should be aiming for in 2024 as they look to generate more leads and revenue.

With the right benchmarks and optimization strategies, LinkedIn ads can become a powerful channel in your marketing mix. In this comprehensive guide, I‘ll share the latest research, expert perspectives, and real-world experiences to help you set effective goals and maximize your ad performance on LinkedIn.

Types of LinkedIn Ads

Before we dive into the numbers, let‘s quickly recap the main LinkedIn ad formats available:

Sponsored Content

Sponsored Content blends seamlessly into the LinkedIn feed in the form of Sponsored Updates. This versatile format works well for objectives ranging from brand awareness to consideration and conversions.

Pros: native user experience, broad reach
Cons: lower direct response rates
Benchmarks: 0.5-0.7% CTR, lower CPC

Lead Gen Forms

Lead Gen Forms let users submit contact information without leaving LinkedIn. The pre-populated fields improve conversion rates.

Pros: highly targeted, built-in lead capture
Cons: limited flexibility, lower awareness impact
Benchmarks: 15-25%+ conversion rate, higher CPL

Text Ads

Text ads on LinkedIn resemble search or display ads. They stand out less than other native formats but tend to drive more site traffic.

Pros: very measurable, self-service, lower cost
Cons: banner blindness, less impactful creative
Benchmarks: 0.4-0.6% CTR, ~$8 CPC

Message Ads

Message ads facilitate personalized outreach to LinkedIn members via Sponsored InMail and allow for two-way conversations.

Pros: direct communication channel
Cons: intrusive if not targeted properly
Benchmarks: 10-30% open rates, high engagement

Key Performance Benchmarks

Now let‘s explore the 2023 LinkedIn advertising benchmarks you should aim for across the most common metrics:

Metric 2023 Benchmarks Notes
Click-Through Rate (CTR) 0.5% to 0.8% Varies significantly by objective, creative type, placement
Cost Per Click (CPC) $5 to $15+ Ranges widely based on competition, match types
Engagement Rate 1% to 5%+ Calculated as clicks divided by impressions
Conversion Rate 10% to 30%+ Define conversions clearly based on campaign goals
Cost Per Lead (CPL) $50 to $500+ Quite wide range, know acceptable CPL for ROI
Cost Per Acquisition (CPA) $100 to $5,000+ Dependent largely on product/service pricing

Notes: Benchmarks based on cross-section of client experiences and industry research from LinkedIn and TopRankMarketing

As you can see from the above benchmarks, performance can cover a very wide spectrum depending on factors like ad format, match types, targeting, bid strategy, and creative. Don‘t get discouraged by the variability—with regular testing and optimization, it is quite feasible to reach the upper bounds of these LinkedIn advertising benchmarks.

Cost Benchmark Examples for Key Verticals

To provide a bit more tangible guidance, here are current cost benchmark ranges for some of the top industries advertising on LinkedIn:

  • Software: CPL $100-$300, CPA $500-$2,000
  • Business Services: CPL $150-$600, CPA $800-$5,000
  • Financial Services: CPL $250-$800, CPA $1,500-$8,000
  • Higher Education: CPL $150-$500, CPA $300-$1,200

SaaS and middle-funnel service providers should aim for CPAs around 2-4x yearly contract value. Bottom-funnel legal/financial services can justify higher CPAs due to lifetime value.

Critical Elements for LinkedIn Ad Success

Beyond the numbers, here are a few vital strategy elements to unlock success with your LinkedIn ads:

Laser-Targeting: Leverage LinkedIn‘s unmatched B2B targeting and audience building to create high-relevancy scores.

Multiple Ad Sets: Test at least 3 variations per campaign for messaging, creative, and audience.

KPI Alignment: Set specific conversion goals per initiative and structure ads accordingly.

Bid Optimization: Use automated bid strategies extensively to optimize for key events.

Reporting Rigor: Analyze performance trends to identify optimization opportunities.

By combining the right benchmarks with these LinkedIn advertising best practices, you can expect to see substantially improved campaign efficiency, conversion rates, and ROI compared to more generic approaches.

Key Takeaways

Here are the essential points for small businesses advertising on LinkedIn in 2024:

  • Leverage a variety of ad formats with testing to determine the optimal channel mix
  • Review the benchmarks outlined for your target metrics but focus more on historical performance
  • Set incremental improvement goals month over month as you refine targeting and creative
  • Implement disciplined testing, optimization, and reporting rigor for continuous improvements
  • Contact an experienced LinkedIn ads specialist if needing help getting campaigns established and ramped

I hope these real-world insights give you greater confidence in unlocking the potential for LinkedIn advertising. Reach out if you need any assistance getting ramped up or optimized—I‘m always happy to help fellow small business owners succeed with LinkedIn and other digital marketing initiatives. Just shoot me an InMail!