In our most recent blog, we discussed the value of LinkedIn Ads. So, today let’s find out how you should determine a good Conversion benchmark for your Ads campaign.
If you are running digital ads of any kind, I’m sure you feel the adrenaline rush when you see the clicks on ads and traffic coming to your desired destination. But are you sure that traffic has the potential to convert into business?
Let’s focus on two key terms – Cost per click (CPC) and Conversions.
Cost per click is commonly used in most advertising platforms to display the amount charged for each click on your ad. It is simply calculated by dividing the total cost by the number of clicks gained. Most marketers stop here. While CPC indicates the engagement on the ads it won’t help you calculate the ROI.
Conversions, on the other hand, are actions defined in the campaign to measure the success of an ad click. You can define the action you want the user to take when he engages with your ad. For e.g., submit a lead form, request a demo, etc.
Ask yourself: “How much is an action or conversion worth to you”? If a conversion happened on a “Request a Demo” form, what potential revenue can it bring to you?
For example: Out of 10 demo requests on the form, your sales team can close 1 at $5,000. Therefore, your conversion cost is $500 per lead. If you spend less than $500 (5000/10) to get a high-quality lead that has the potential of converting, then you have a positive ROI. Anything higher than $500 will be a waste of resources and won’t be worth the money.
It’s true that this cost per conversion is notably high compared to Facebook ads that can get you a conversion between $50-80 – but the target is B2C. When we are talking about B2B marketing and making a sale of high-value enterprise products/services the conversion cost is expected to be much higher. Also, keep in mind the lifetime value of a closed account to the business.
Like any other ad platform, LinkedIn also has a lot of metrics that are tricky and can be misleading. Having a line of sight on the Conversions and the value it can bring to the business will help you identify if you are spending the right amount on LinkedIn ads.
Before deciding whether an investment is worth it, you must have a clear understanding of the ROI you should expect for what you are offering in B2B. Of course, following through with a strategically designed campaign is of equal importance.
Reach out to us to discuss this topic further and to review your LinkedIn Ads campaign.
