When to Scale Your LinkedIn Ads Budget - Ep 39 - a podcast by AJ Wilcox
from 2020-10-28T09:00
Show Resources:
Episode 10 - High Performing Offers
LinkedIn Learning course about LinkedIn Ads by AJ Wilcox: LinkedIn Advertising Course
Contact us at Podcast@B2Linked.com with ideas for what you'd like AJ to cover.
Show Transcript:
Your LinkedIn Ads are performing well, but your boss or client isn't giving you much budget. This week, we're making the case for scaling on the LinkedIn Ads Show.
Welcome to the LinkedIn Ads Show. Here's your host, AJ Wilcox.
Hey there LinkedIn Ads fanatics. So we highlighted someone back on the q&a episode, her name is Felicia Gheorghe, and she asked this question and I thought it was definitely deserving of a more detailed dive. I tend to recommend some pretty large numbers in budget and spend. And so she asked, "Hey, I'm struggling with really low budget over here. What numbers do I bring up to justify and convince that scaling up and add is necessary?" And this is a really good question. Because when we're faced with really small budgets, and our boss or our client won't give us additional, we really do have to build the business case around, "Hey, this really is performing well, you should feed it while it's working." So we'll get into all of that today. In the news, I just got back from vacation and so I'm struggling to record this at like seven o'clock at night. I think I just decided I'm never going to take another vacation again. But a nice little piece of news, B2Linked just turned six years old last week, so Happy Birthday to us. And a friend of the show, Kylee Lessard, who's a product marketing manager at LinkedIn. She shared a poll last week and I wanted to just share the results of this because I thought this was really interesting for everyone. She asked, "What kind of stories content do you want to see from brands on LinkedIn?" And the options were info, like news events and products. Educational, like data, insights, tips, tricks. And people, employees and culture. And then there's another other category where people could vote in. And I personally think that educational content, like data, insights, tips, tricks, would be the most interesting content to me. So that's what I voted for. And as soon as we can see the results here, 57% voted the same way I did. People with employees and culture came in second place with 26%. And news and info came in a measly 13%. And I think this answered perfectly a question that I've had for a long time, which is, in a business to business context, what sort of content do you put in a stories, ad or even in a company's story. So based off of this poll, I'm going to start with more of that educational content. Thanks, Kylie for hosting that poll. And a friend this week, who is part of the alpha for stories ads, he shared something that was a little disheartening to me, but it's probably not in its final revision. He said that when you're part of the alpha, you don't bid for stories inventory separately from a separate campaign, you do it as basically a checkbox onto a sponsored content campaign. So if you have something that sponsored content running, then this would just be another Inventory slot that you could stick sponsored content into. Personally, I think that would be a terrible user experience, if that were to continue. So I hope we get our own inventory with it. And then from an advertising perspective, I really hope that we're getting our own inventory and we can bid specifically for it, because that means low costs get in before the competition happens. So we'll see in the beta or when it finally comes out for release, I'm crossing my fingers that we get a really low floor bid so we can really start talking about the great deals that can be had on LinkedIn. I wanted to highlight a review from CRBladen, who's in Great Britain. He said, "He speaks my language. I love ajs podcast. He's super knowledgeable and give sound and strategic advice for LinkedIn marketers. As a freelance LinkedIn marketer, it's great to hear someone geek out over LinkedIn Ads and share my passion for the platform. Thanks, AJ." Hey CRBladen, thanks so much for saying that. I will geek out with you anytime. I would love to feature you as well, talking to you listener, to leave a review on whatever podcast platform you listen to. And I would absolutely love to give you a shout out. All right, with that being said, let's hit it. So diving into this issue of starting with a low budget and then wanting to prove out the model so that you can scale, it's really helpful to have listened to Episode 14. That's all about basically how to have success with small budgets. So feel free to pause this one, and then go and binge listen to Episode 14 and come back or quite honestly, they're okay in reverse as well. So to me making the case about taking a smaller budget and growing it either to my boss or the company's owner or the client, it all comes down to confidence. And I certainly don't know all of your individual situations because everyone's situation is different. But I've talked to some who have low budgets because maybe one they've been burned by an agency that's done bad work, and so they're Trying to lower their risk, Two maybe they have money, but the Exec team needs to see the quote unquote, results, before going all in. Three, they don't understand how digital marketing works. And then it's our job to educate them on investing enough to make sure we have a sizable amount that tells us whether or not it's working. Or number four here, they just don't have the money to invest. And I know this is a hot take, potentially, but I don't think it's our job as marketers to change the financial culture of the company. So if you really feel like your growth is being stifled because you're killing it on LinkedIn Ads, and you want to scale, but you just can't make a case for them to grant you more budget, then I would say it's not your job to fight that battle. And it might be better just to drop the client, or maybe even switch companies if your internal. And I know this is a LinkedIn Ads podcast, but the nature of LinkedIn ads is really high risk. First of all, it's expensive. And so any mistake you make is automatically an expensive mistake. And then also the traffic is more mid to top of funnel. So it's these long sales cycles, and people just aren't ready to make big commitments yet. And so if you have an executive who's looking to see quote, unquote, results, for my experience, that usually means that they're looking for a return on their investment, which isn't going to happen fast with LinkedIn Ads 99% of the time, because it's specifically for longer sales cycles. It's catching people outside of their level of intent. So the risks to you as a marketer in going out on a limb to fight for additional budget, just because you have confidence in the results, it puts you at risk of really looking bad to your boss or bad to the client. And certainly that's scary. That's something that we really need to consider. On the flip side of that, though, I do think that you as a marketer have the responsibility to first of all, be aware of the financial situation of the company, and the number to be aware of the financial culture of the company, so that you don't stick out like a sore thumb by pushing them to increase budgets, and then end up losing your job or looking bad or leaving a bad taste in someone's mouth. And based on that, you definitely want to pick your battles, because maybe your company has the money. And you know that LinkedIn Ads has the best potential for the highest quality leads, and you need to fight to change your executives minds. Or maybe your company doesn't have the money to scale. So you decide to sit back and just keep doing the best job you can, even with a low budget, even if you are highly confident that it would scale. So if it's a battle you want to fight, then absolutely go for it. But your relationship with the exec team, I feel like is super valuable. And LinkedIn Ads is a high risk platform by nature. So guard your reputation and guard your job before you go on a fight just to increase your budget. So if you're looking for the formula on how to scale, definitely go back and listen to Episode 22. It's all about how to take good results and scale them up. But what we're going to cover today is how to identify whether there's something there that's worth scaling, and really how to analyze your traffic, your conversions, your lead quality. So we're gonna dive a little bit deeper in here.
8:20
Case Study
I want to share a case study from a client that we worked with. And the company is called pilot.com. And they provide SAS software for bookkeepers. And our partners, they're ultra sharp marketers, which is always a plus. They were spending a really healthy five figure per month budget. And they were spending that with us for many months. And then suddenly they came to us and said that they wanted to increase their budget by nine times overnight, ASAP. Well, scalability and efficiency are kind of our thing. So we did this with a plone. we rebuilt the account structure to sustain that kind of growth, which if you're curious, go back and listen to episode seven on how we do that. And we were totally successful at nine xing the budget overnight. And it was incredible. We stayed perfectly within the efficiency thresholds of the cost per MQL that we needed. So I'm sure patting myself on the back. And I'm telling myself this story that we did such a great job at managing the ads that they went and had an internal meeting and started comparing to the other channels. And they were instantly blown away when they saw the numbers that LinkedIn Ads performance was so mammoth compared to the others that they realized they needed to suddenly nine x their budget, but the truth probably is more than if we would have been paying attention to the signs along the way. We could have been a lot more proactive in suggesting smaller budget increases early on, and we could have taken advantage of the faster growth opportunities as we saw them and gained confidence in their LinkedIn leads. We're definitely not a salesy type of organization. We're not pushy to our clients. So we're the last ones who are proactively, going to our clients and saying you should spend more. Because as an agency, I feel really dirty suggesting that because as clients spend more, we make more. And so it seems really disingenuous. But if we would have done that, if we could have taken advantage of the three to six months beforehand where we could have made smaller gains, I think we would have been further ahead than if we just waited for this realization that the LinkedIn leads are gold. And we should suddenly nine x our traffic and have that drop like a ton of bricks.
10:30
Comparison
So as you're running your campaigns, what you first want to do is take a look at your metrics. And it's pretty easy to see that the top line performance and engagement metrics, but I know you you're a sophisticated marketer, and you're going to go deeper than that. You're going to dive into your CRM and pull out your cost per MQL, cost Per SQL, cost per SAL, cost per proposal, cost per closed deal. And then what you want to do is compare your numbers to the benchmarks that I shared in Episode 15. And if you know that you're significantly above benchmark in everything, your confidence should be really high that you're on the right track. And that given a higher budget, you could probably do a great job. And as soon as you start looking at those bottom of the funnel types of metrics like MQLs, SQLs, closes, you'll definitely want to compare this to your other marketing channels. Because let's say for instance, your cost per SAL on Google is like $3,000 and on LinkedIn, it's 2000, there'd be a really good case to be made for taking budget from Google. And I think you also need to realize that your account is in a constant evolution of your ammo that we've talked about before. It's your audiences, your messages and your offers. And I'm sure that you know that your cost per MQL, cost per SQL, and deeper, these are lagging metrics. And so if you look at them now, they'll tell you the story of what was happening in the account weeks or even months ago. So as you evolve your offers and messaging tests, there may be significant room for improvement, that just given a little bit more time to bake out, you can actually realize, and I've said this before, but my recommendation is don't compare with Facebook on like a cost per click, or click through rate, or cost per lead level because LinkedIn is significantly more expensive and the targeting is so much more precise. If you do compare and start robbing LinkedIn of your budget, just because Facebook is cheaper on a cost per lead basis, you'll likely end up cheating yourself out of the real value of LinkedIn, which is the lead quality. And similarly, don't compare your results with Google ads if you're looking at just cost per click, click through rate and CPL because search channels score really high in intent, which makes sense because you're targeting the people who are already looking for what it is you do, but they score really low in the budget and authority categories, which tells you if someone is actually able to purchase from you, and do they have the authority to do that. They're fundamentally very different channels. And they tend to actually work really well hand in hand, rather than head to head. Okay, here's the quick sponsor break, and then we'll dive into the order of confidence for scaling.
13:19
The LinkedIn Ads Show is proudly brought to you by B2Linked.com, the LinkedIn Ads experts.
If the performance of your LinkedIn Ads is important to you, B2Linked is the agency you'll want to work with. We've spent over $130 million on LinkedIn ads, and no one outperforms us on getting you the lowest cost per lead. We're official LinkedIn partners, and we don't have a sales team so you'll deal only with LinkedIn ads, experts from day one. Fill out the contact form on any page of B2Linked.com and we'd love to chat with you about your campaigns. Or heck, show up to our offices on horseback. No matter how you get in touch, we'd love to work with you.
14:00
Order of Confidence For Scale
Alright, let's jump into the order of confidence. And what I mean by order of confidence is, as you're advertising, you're going to amass certain metrics. And then based off of how good those metrics are, it will probably give you more confidence that either what you're doing is working, or it's not working, and you should change tactics. So if you're looking at your ads, and you're looking at just the impressions number, what does this tell you? Well, really not very much. Your bidding really qualifies the ad to be worth LinkedIn's while to show to people to give it impressions and that's not very confidence inspiring in my book. But then you go to the next rung down and we start looking at click through rates. Now definitely compared to the benchmarks that we laid out in Episode 15. And that will tell you whether you're being successful at crafting a message that people are either more or less likely to click on. And this is great, but it also doesn't make a strong case for getting additional budget to scale. You've just proven that you can write something that people want to click on. So now you're looking at the conversions or leads number. You're generating conversions and leads and that's great. It means you're offering something that people actually want. And this is quite a bit more inspiring. Similarly, if you're looking at your conversion rate, you can find that you've got enough conversions coming in that you can start to feel confident in how effective your offer is, at getting people, especially cold traffic to reveal themselves to you, to fill out a form. If you have a 12% conversion rate, that tells you that one out of every eight people that you engage with on the ad will end up converting and that feeling is a lot more confidence inspiring to me. You can also now calculate based on your cost per click, what you can expect your cost per lead to be. If you divide your cost per click by your conversion rate percentage, that will tell you what your cost per conversion is. So if you know what your max cost per lead is, and you know what your conversion rate is, you can use basic algebra to figure out how much you're able to bid for traffic, and still stay underneath your goal cost per conversion. So let's say that you have a 12% conversion rate. And you've determined that you want to stay under $120 per conversion. So in this case, we're trying to solve for cost per click, so that's our variable. We're going to divide that by 12%, or .12. So let's say that you have a 12% conversion rate. And you've determined that you want to stay under $120 per conversion. So again, this is basic algebra, so try to follow along. Because good crap, this would work so much better if you could see this So our formula here is your cost per click over your conversion rate equals 120. Our conversion rate is .12, or 12%. here. And so if you evaluate that, you end up multiplying both sides by 12%, you end up with a max cost per click of $14.40. And so in that case, I would go and set a manual bid of maybe even up to $14.50 or $14.75. So I'm going to land somewhere around there. And like I said, that's pretty confidence inspiring. But we can go deeper here. If you're looking at the MQLs or marketing qualified leads level, now you're seeing that your leads are actually turning into marketing qualified leads. For most B2B organizations, this means that the lead quality is high enough for them to qualify to move on to have someone in the sales department take a look at them. And this is confidence inspiring, because you at this point, you know that your targeting is good, you know that your leads aren't garbage, they're passing that initial threshold. The next step is really looking at lead quality and this can be either anecdotal feedback that you get from a sales team, or you have a lead scoring mechanism inside, let's say, your CRM or marketing automation system. When you get enough leads, that you start to get feedback on their quality, this gives you a lot more confidence in your LinkedIn ads performance. And I've also found that anecdotal feedback, even if it's not statistically significant, it can sway sales teams, or sway executives, simply because this is a second voice, a second testimony that what you're what you're saying is true. The next stage is SQL or sales qualified lead. And every B2B company has different names for these stages so this is just the basics. But, you might call it an SAL, you might call it a BPO, whatever you call it, it's just the next qualifying stage. And this stage is actually my favorite stage to track and for marketing to be held accountable to because it incorporates both the lead quality, because it incorporates both the lead quality from my targeting, as well as the cost efficiency that we're driving. At this stage, you're starting to see your leads be qualified in the sales process is having promise. And these could start leading to close deals and this is amazing. This really gives me the ultimate confidence in my advertising efforts. Because now I can present a cost per SQL and an SQL conversion rate. And I can go to the executive team or I can go to the client and inspire a lot of confidence in additional budget, especially if you can say, oh, and in the last few weeks, we've made some big additions to the platform, and it's likely going to do even better than that as the database out. And of course, if you're a big spender or you've just been driving this traffic long enough, you can start to see proposals come in when your leads start getting proposals at volume. And let's say they have a near 50% chance of closing. This gives excellent confidence that actually efforts are turning into a return on investment. Even if it takes that deal, three months to go from proposal to close, if you've got 10 of these things, and you know that they have a 50% chance of closing, that might as well be money in the bank. But of course, what every business owner wants is closed deals. And so when you start amassing enough data, that you can generate closed deals, and track them at some kind of volume. I think that's all the confidence that you'll ever need. But of course, we definitely need to talk about limitations, because not every audience is scalable. Not every offer is scalable. So let's jump into some of the things that might stop you from being able to scale. The first is your audience size, let's say that you want to scale and you even have the budget. But if your audience sizes are too small, you just won't be able to spend more budget on them. And as you implement the things that we learned for Episode 22, all about scaling, you might find that you've already hit this level of diminishing returns, because your audience just isn't big enough. And unfortunately, this is just kind of the way it is, it's possible that you've already found the optimal amount of scale in your account. And that's actually good to find out where your limitations are.
21:12
Limitations
The next limitation, though, is a lot easier to deal with. And this is your click through rate. It might be that everything you launch has click through rates between, let's say, 0.4%, and 0.5%. So even if your audience is nicely sized, because so few people are actually clicking on your ads, you just can't generate enough traffic to spend what you want. In this case, the limiting factor for you is most likely your offer itself. Go back and listen to Episode 10 to learn all about offers. If you can go and create an offer that is so attractive that all of a sudden, every ad that you write gets a click through rate of 1% or higher, this will instantly give you opportunities to double your traffic, and even drop your cost per click significantly. There was one notable case where we had two different ads, both going to the same audience. One was getting a click through rate of like 1.3%. And the other was getting like 0.6%. And so I looked at that and said, "Wow, the ad that's getting a 1.2% click through rate is obviously a much better ad. Let's scale that." But then as soon as we started looking at the conversions that were coming from it, we found that the ad that got clicked on less the one with 0.6% click through rate ended up having a conversion rate that was three times higher. So we paused that high performing ad, even though it was amazing at getting people to click because conversions are so much more important. Remember as advertisers, the closer you can get to the money, the more valuable your decisions and actions are. All right, I've got the episode resources for you coming right up. So stick around.
22:59
Thank you for listening to the LinkedIn ads Show. Hungry for more? AJ Wilcox, take it away.
23:10
Resources
If you haven't already, check out Episode 14 all about low budgets. And then Episode 22 is all about how to scale up effectively and efficiently. We mentioned account structure, which Episode Seven goes into. And then you should definitely listen to Episode 15 all about benchmarks to let you know if you're doing a good job, or if you're totally falling off the horse. And of course, a classic, one of our most popular episodes Episode 10, all about crafting the right offer and the right call to action. If you are one of your colleagues is looking to learn LinkedIn, point them towards the LinkedIn Learning course on LinkedIn advertising. I am the humble author of that. But I can say it's a really surprisingly good course especially for the price that LinkedIn Learning charges for which I think is $25 or free. You'll see the link right down below in the show notes where you can click right to it. Also make sure to subscribe on whatever podcast player you're listening to right now. And then please do rate and review the podcast. If you review, I'd love to shout you out. With any episode ideas or feedback, hit us up at podcast at B2Linked.com. And with that being said, we'll see you back here next week. Cheering you on in your LinkedIn Ads initiatives.
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