What should my starting LinkedIn Ads budget be?

Anthony BlatnerLinkedIn Ads

Planning your LinkedIn Ads budget

Setting your LinkedIn Ads budget is an important, yet often unclear, step of your campaign planning.

To drive great results consistently, you need to plan out your advertising campaigns and your greater marketing strategy, including budget.

This post walks through where you should start, and why. (Scaling will come later!)

It’s easy to get started with LinkedIn Ads and get exciting early results with a small initial budget. You may be getting a few leads, and it’s validating to see CEO job titles or enterprise companies entering your funnel.

The challenge some face is getting caught in the “dip”: When you’re capturing a few leads and you’re waiting for the purchases to roll in… But if you’re not driving enough opportunities, you may not have anyone who reaches the end of your sales process.

So, once you’ve proven that you’re getting quality leads into your pipeline, then you’re off to the races and your sales & marketing funnel becomes a numbers game.

Understanding the buying phases of your target market

First, it’s important to understand the makeup of any target market:

Pyramid showing the percentages of people who are in each buying phase for a typical audience

Source: “The Ultimate Sales Machine”, Chet Holmes (Great book!)

In any target market, about 3% of people are ready to purchase.

That’s why lead nurturing, via email, InMail, phone, and more are very important.

So, if you’re getting any less than 30 leads per month, then statistically you may not have anyone who is ready to buy.

And further, you should take into account your sales team’s close rate from a SQL (sales qualified lead = someone who has a need) to a customer.

  • Most B2B teams are around a 20% close rate. 1, 2.
  • LinkedIn’s average cost/lead is $40-80 per lead.

How to calculate your starting LinkedIn Ads budget:

Therefore, to get a sale from your LinkedIn Ads campaign, your budget should be:

(Budget / $40-80 per Lead) * 3% ready to purchase * 20% close rate > 1 sale

Budget > $13,333.33

If any of your metrics are higher or lower, plug them in. Round up to make sure you’re safely over that with room for testing.

So, there are two insights about your LinkedIn Ad campaign:

  1. Your customer LTV should be greater than $15,000 to have a positive ROI.
  2. Your advertising budget should be at least $15,000 to drive a sale.

This can be over the course of one month, or it can be over multiple months.

The upside is that this is just the starting point. Once you’ve got your funnel built, we can start driving optimizations for you on and off the LinkedIn platform.

So, if you’re wondering what to start with, we find that:

Accounts that have long-term success with LinkedIn Ads are
capturing 60+ leads per month and budgeting $5,000+ per month.

Those accounts are driving a high volume of leads, MQLs, SQLs, and converting them into new sales.

As your conversion rates increase at each step of your sales & marketing funnel, from lead magnet to lead nurturing, so will your ROI.

And if your campaigns are already crushing it, and you’re wondering how to scale, keep an eye out for our next post!

We’ve helped 100+ great companies get great customers with LinkedIn Ads, so if you need help with your campaigns then grab a time to chat with us here.