Advertisers are rethinking their budgets as LinkedIn’s ad rates climb, making the platform less attractive compared to other social media giants.
LinkedIn’s advertising costs have skyrocketed, prompting brands to reconsider their investment. Over the past two years, CPM rates on the platform have more than doubled, currently standing 15-20% higher than those on other social media channels. This sharp rise is pushing many businesses, especially small and medium enterprises, to cut their LinkedIn ad spends by an estimated 20%.
Advertisers Feeling the Pinch
“LinkedIn is just way too expensive to be worth it most of the time,” says a frustrated marketer. This sentiment echoes across the advertising community. Many brands are pulling back on their LinkedIn budgets due to the high costs and fierce competition. Storyboard18’s recent insights reveal that while big brands with hefty budgets continue to invest, smaller companies are shifting their funds to platforms like Meta, which offer a wider reach and lower cost-per-click (CPC).
Experts highlight that LinkedIn’s share of total digital ad spend in India is still lagging behind other major platforms. Mid-sized brands are focusing their efforts where they can get more bang for their buck, achieving better cost-effective results elsewhere.
Rising Costs, Falling Returns
LinkedIn’s Cost Per Mille (CPM) and Cost Per Click (CPC) have nearly doubled in the last two years. Deepak Mann, VP of Marketing at 1% Club, mentions that LinkedIn is now seen more as a branding tool rather than a direct sales driver. The higher expenses on LinkedIn can impact budgets two to three times more than other advertising channels. Additionally, users on LinkedIn are less receptive to ads, further diminishing their effectiveness.
Yasin Hamidani, director at Media Care Brand Solutions, points out that in India, LinkedIn’s CPM rates are significantly higher than other platforms. This makes it less attractive for brands aiming for broad consumer outreach, as opposed to targeting niche B2B audiences where LinkedIn still holds value.
Key Reasons for Budget Cuts:
- Higher CPM and CPC rates: LinkedIn ads are 15-20% more expensive.
- Lower audience engagement: Users are less responsive to ads.
- Better alternatives available: Platforms like Meta offer broader reach at lower costs.
Shifting Strategies in Digital Advertising
As LinkedIn’s ad costs rise, companies are diversifying their digital advertising strategies. Many are reallocating their budgets to platforms that offer greater reach and lower costs, such as Meta, Snapchat, and X (formerly Twitter). Sahil Chopra, Founder and CEO of iCubesWire, notes that unless a brand is specifically targeting niche B2B audiences, achieving a strong ROI on LinkedIn without a substantial budget is challenging.
LinkedIn’s auction-based model further exacerbates the issue. High demand for certain professional segments, like IT or Finance, drives up ad prices. Without precise targeting, the high expenditure often doesn’t translate into equivalent returns. Shailendra Singh Mehta, Head of Paid Media at AdLift, a global digital marketing agency, adds that compared to Google or Meta, LinkedIn can feel restrictive, especially for B2C brands or businesses with tight budgets.
Platform |
Average CPM Increase |
Target Audience |
---|---|---|
LinkedIn |
20% |
B2B Professionals |
Meta |
10% |
General Consumers |
Snapchat |
15% |
Younger Demographics |
X |
12% |
Broad Audience |
The Missing LINK
Despite the challenges, LinkedIn still holds significant value for targeting business professionals and high-value conversions. Companies in sectors like IT, finance, and SaaS find the platform indispensable due to the high lifetime customer value. The quality of leads on LinkedIn is often superior because the platform is filled with professionals actively seeking relevant business content, leading to stronger conversions.
However, LinkedIn’s effectiveness is limited for B2C clients. The platform’s audience primarily consists of B2B professionals, which restricts its utility for consumer-focused campaigns. Mehta explains that some brands report lower ROI from LinkedIn ads because the platform has a narrower audience compared to Facebook or Google. If a brand’s target audience isn’t highly active on LinkedIn, engagement rates drop, affecting overall ROI.
Bullet Points:
- High ad costs limit accessibility for smaller businesses.
- Niche targeting benefits B2B but not B2C brands.
- Alternative platforms offer better engagement for general audiences.
Bridging the Gap
Experts believe that despite the decline in ad spends, LinkedIn remains ideal for B2B companies targeting decision-makers. The investment can be justified in sectors where the lifetime customer value is high, such as IT, finance, and SaaS. The quality of leads on LinkedIn is often higher because professionals on the platform are actively seeking relevant business content, leading to stronger conversions compared to more consumer-focused platforms like Meta.
Shailendra Singh Mehta points out that the premium pricing of LinkedIn reflects the value of reaching high-intent B2B audiences. Fewer but more qualified leads can justify the higher costs, especially for campaigns focused on conversions and long-term customer relationships. However, Petal Gangurde, Chief of Brand & Culture at XYXX Apparels, notes that there’s a lack of information about LinkedIn’s ad ecosystem. This gap can hinder its potential as a retention and upsell tool for high-ticket items like automobiles or services like BFSI.
“LinkedIn needs to educate and aggressively push for more investment by sharing more case studies, building up the channel with brand marketing teams, and creating ad formats and targeting options that can be utilized by brands in categories beyond finance, automobiles, gadgets, and so on,” Gangurde suggests.
Additionally, Gangurde agrees that the organic content and creators on LinkedIn have become so repetitive that the audience has lost interest in engaging with the platform.