When it comes to advertising on LinkedIn, understanding how the platform's ad auction works can make a significant difference in your campaign's performance. The key lies in choosing the right bidding strategy, whether it's manual bidding or maximum delivery.
In this post, we’ll explore how LinkedIn’s ad auction system works, what types of bidding options are available to you, and the scenarios where manual bidding or maximum delivery might be the better option.
Let’s dive in.
LinkedIn’s ad auction determines which ads get served to your target audience and how much you’ll pay for those ads. Every time there's an opportunity to show an ad, LinkedIn holds an auction where your ad competes with others targeting the same audience.
Here’s how it works: LinkedIn’s auction system multiplies two factors—your bid price and your relevancy score. The ad with the highest combined score wins the auction.
Bid Price: This is the amount you’re willing to pay for a key result, such as clicks, impressions, or conversions.
Relevancy Score: This score reflects how likely your ad is to resonate with the audience. It's influenced by factors like expected click-through rates (CTR), engagement (likes, comments, shares), and overall ad quality.
For example, let’s say Ad 1 has a bid of $12 and a relevancy score of 4, resulting in a total score of 48. Meanwhile, Ad 2 has a lower bid of $8 but a higher relevancy score of 9, giving it a total score of 72.
Despite the lower bid, Ad 2 wins the auction because it is more relevant to the audience.
Another critical point is that LinkedIn uses a second-price auction model. This means you won’t pay your full bid amount; instead, you’ll only pay $0.01 more than the next highest bid.
So, if you bid $8 and the next highest bidder offers $4, you’ll pay $4.01.
LinkedIn offers three main bidding strategies, each suited to different campaign goals and levels of control:
Maximum Delivery (Automated Bidding): This strategy leverages machine learning to adjust your bids automatically, aiming to deliver the most results for your budget. It's designed for efficiency and ensures your entire budget is utilized effectively.
Cost Cap: In this strategy, you set a maximum cost per key result (like clicks or leads), and LinkedIn optimizes your bids to stay under this cap. This is great for budget control while still taking advantage of LinkedIn’s auction system.
Manual Bidding: You set the exact amount you’re willing to bid for a result. This offers the highest level of control but requires active monitoring to ensure your bids are competitive.
Now, let’s take a closer look at manual bidding and maximum delivery — two very different approaches — and when you might choose one over the other.
Manual bidding allows you to set the amount you’re willing to pay for key results, such as clicks, impressions, or video views. You’re in full control of the bid, meaning you can decide exactly how much you want to spend to win each auction.
Achieve a high level of control over your campaign by setting the bid for each result.
First, set a specific bid amount based on your budget and the competitiveness of the auction.
Next, monitor performance regularly and adjust bids as needed to ensure your ads stay competitive.
Ensure that you control the cost per key result while managing how much you're willing to pay in auctions.
With manual bidding, you have the flexibility to adjust your bids based on campaign performance, but it does require hands-on management. It’s ideal when you have a solid understanding of your audience and want to directly influence how much you’re willing to pay for specific results.
However, this approach can be time-consuming and may not deliver as consistently as automated strategies if you don’t regularly monitor and optimize your bids.
Maximum delivery, also known as automated bidding, is a hands-off approach where LinkedIn uses machine learning to optimize your bids based on your campaign objective. The system’s goal is to deliver the most results possible within your budget constraints.
Maximize results for your campaign by allowing LinkedIn’s machine learning to handle bid adjustments automatically.
First, set your budget and objective, and let LinkedIn’s system optimize bids to achieve the most impressions, clicks, or conversions.
Next, use this strategy when you want to ensure your full budget is spent without the need for constant oversight.
Maximize campaign results while ensuring the entire budget is utilized efficiently.
Maximum delivery is perfect for advertisers who don’t have the time to monitor their campaigns closely. It works best when you’re comfortable letting LinkedIn manage your bids and you have a good benchmark for what to expect in terms of costs (such as cost-per-click or cost-per-impression).
Choosing between manual bidding and maximum delivery depends on several factors, including how much control you want over your campaign and how much time you have to manage it.
You Need Control: If you want precise control over how much you’re willing to pay for each key result, manual bidding gives you that flexibility. You set the exact bid amount, which means you can adjust it based on competition or campaign performance.
Hands-On Management: If you have the time to regularly monitor and optimize your campaigns, manual bidding lets you react quickly to changes in performance.
Targeted Budgeting: When you need to strictly control costs or when budget constraints are tight, manual bidding ensures you don’t overspend on any particular result.
You Want Efficiency: Maximum delivery is ideal when you want to maximize the number of impressions or conversions within your budget. It’s particularly effective when you know the expected cost per result and want LinkedIn’s system to optimize for you.
Limited Time for Management: If you don’t have the time to frequently adjust bids, this strategy allows you to set a budget and let the system handle the rest. You can focus on other tasks while trusting that your campaign is being optimized efficiently.
High CTR Campaigns: If your campaign has a significantly above-average click-through rate (CTR), maximum delivery can sometimes be more cost-effective than manual bidding. The automation ensures that your ads are served to the right people at the right time without requiring constant adjustments.
A good rule of thumb for maximum delivery is that it’s often the better choice when:
You Have a Benchmark: You already know what you can expect in terms of costs for clicks, impressions, etc., so you can step in in case the prices are skyrocketing (which can happen, if you’re not attentive or pair maximum delivery with certain optimizations).
You Lack Time: You don’t have the time to continuously monitor and adjust your bids, so you need an automated system to ensure your budget is fully utilized.
You Have a Strong CTR: If you have a high click-through rate (2-2.5 times the average), automated bidding can be cheaper on a cost-per-impression basis than manual bidding.
When it comes to LinkedIn advertising, both manual bidding and maximum delivery offer unique advantages.
Manual bidding gives you total control over your bid amounts, but it requires active management to stay competitive.
Maximum delivery, on the other hand, offers a more automated approach that maximizes your results while ensuring your budget is used efficiently.
Ultimately, the best choice depends on your campaign goals, time availability, and comfort with LinkedIn’s optimization algorithms. For campaigns where you need to carefully control costs or have time to monitor performance, manual bidding may be the way to go. If you’re looking for efficiency and don’t want to spend time constantly adjusting your bids, maximum delivery is the better option.
By understanding the strengths and weaknesses of each strategy, you can make more informed decisions that lead to better results for your LinkedIn ad campaigns.
In our own experience, and our own go to, as we’re closely monitoring the accounts we're working on, we’re mostly inclined to use manual bidding, as we usually see the best results coming from that bidding method.
However, and as mentioned above, it comes with a cost in terms of time and you’d also need some experience managing LinkedIn ads before you can really make it work in a fluent manner.
Do you want to get tips and tricks on how to gain even more from your LinkedIn Ads?
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