LinkedIn Ads CTRs and Why They Matter - Ep 59

LinkedIn Ads Show

Show Resources

Here were the resources we covered in the episode: Ad Saturation

Benchmarking your LinkedIn Ads performance

How the LinkedIn Ad Auction works

Performance Chart

NEW LinkedIn Learning course about LinkedIn Ads by AJ Wilcox

Contact us at [e-mail] with ideas for what you'd like AJ to cover.

Show Transcript

Click through rates on your LinkedIn Ads don't matter at all, and you shouldn't pay attention to them. Well, I've heard this argument and I totally disagree. We're talking about click through rates and why they matter on this week's LinkedIn Ads Show.

Welcome to the LinkedIn Ads show. Here's your host, AJ Wilcox.

Hey there, LinkedIn Ads fanatics! My digital marketing beginnings were in Google ads. And for years, I would hear the argument about both click through rates and quality score. People saying they don't matter, you shouldn't focus your attention on them. Just don't pay attention at all. I've seen the same case made for LinkedIn Ads. But I'm here to tell you that click through rates are incredibly important on this platform. Sure, it's not something that you'll want to report to your boss or to your client, quite honestly, they're not going to care. But for you, as an ad manager, it's one of the strongest signals that you can use to spot problems in your account, as well as leverage to get better results. So let's hit it.

First of all, what is click through rate? Well, the simple definition is it's your clicks divided by your impressions. So it becomes a percentage rate. And when you have nothing to compare it to, then it really doesn't mean anything. But if you've listened to Episode 15 of the podcast, if you haven't, feel free to go back and check it out, it's all about benchmarks. And when you have a benchmark to compare your results to, all of a sudden it becomes increasingly important. Plus, you can always compare to past performance, if this is a campaign that you've been running for some time. What I like about click through rate is it really is the easiest way to tell if your ads are interesting to your audience or not. And one of the arguments that I've heard is that your click through rate doesn't matter if you're paying by the click anyway. And sure all admit that. If you're paying by the click, and you're happy with the costs per click that you're getting, and you're spending all the budget that you won't really want to, then you really don't have to care too much about your click through rates. But as soon as you want to scale up and spend more, or if you decide that you want to optimize your efforts to either decrease costs, or improve your conversion rates, this becomes an entirely different story. So I'm here to tell you that your click through rate matters. And you shouldn't dismiss it just because it's front end data. Your click through rate really begins your data story. Of course, it is only the beginning. But hey, we all judge books by their covers, don't we? In order to tell the full story of why click through rates are so meaningful here on LinkedIn, we need to talk a little bit about relevancy scores. And the history here is that back in early days of Google Ads back when it was Google AdWords, they needed a way to prioritize which advertisers ads that they showed above another one. So let's say that you have two advertisers who are both bidding $3 for a click, the platform obviously wants to maximize its revenue and make Google more money. But when two advertisers are both willing to pay $3 for a click, then you really can't tell which one should be prioritized. So what they did is they started looking at click through rates. And if one advertiser had a 3% click through rate, and another had a 1% click through rate, they're both willing to pay $3 per click, but the one with the 3%, click through rate is going to make Google money the same money three times as often. So this became quality score. It's a metric that Google advertisers have had to care about for a long time. Well, it's a really good system. And of course, all of the modern ad platforms all incorporate this to some degree. For instance, on LinkedIn, it's called relevancy score. On Facebook, it's called relevance ccore. On Twitter, it's called quality adjusted bid. I have no idea why they chose that, but yeah, sure, it works. And the effect of what this does is for the platform, it maximizes the platform's revenue. They're going to make sure that those who are making the platform more money, get their ads served more often, and continue getting a boost, making them money. And for the advertisers, if you're doing a great job, if your ads get a lot of engagement from your audience, then it rewards you, you essentially get more impressions and more clicks at cheaper costs than a poorer performing competitor might. Conversely, it punishes advertisers who aren't profitable to the network. And if you're early to a platform, and there's just not much competition there, no worries. A bad advertiser can work for a while. But as soon as competition continues to rise, it'll eventually push bad advertisers out. And that's really what relevancy score, quality score, whatever you want to call it, does. It weights all the benefits to the advertisers who are doing great and punishes bad advertisers. Back when I was focused on Google ads, and this was early days, I know it's probably very, very different now, but back when I was working with it, there were 22 different factors that Google claimed went into its quality score. And it would be things like how often the ads get engaged with and clicked on, for sure, that's a big one. But they would also look at the landing page and decide how relevant it was. And they looked at page load times, and all of these different factors. And then you have the LinkedIn Ads platform that was developed back in 2007. And it had the same mechanism, but it was a lot more nascent, a lot more simple, which is actually good. I think it works in our advantage. I wouldn't be surprised if LinkedIn continues to update and make it more sophisticated in the future. But as of right now, it's still pretty simple. The way that you can calculate how LinkedIn figures out what your relevancy score should be, it's a combination of two elements. It's your historical click through rate. So how people have clicked on your ads in the past, combined with your current click through rate, how people are interacting with your ads right now. Is historical click through rate more important than current? That I don't know, what I do know is that historical is a strong enough element that on accounts where we've had a lot of spend and performance in history, it can be really difficult to dethrone the winning ad. And what that tells me is that one ad has such a high relevancy score, that it can't be dethroned with launching something newer. And the benefits to you to having a high relevancy score are absolutely obvious. It allows you to beat out your competition for impressions in the auction without having to bid as much. So think of it like this, you could be paying 20% less than your competitor for every single click, meaning that you're bringing in leads that are costing 20% less than your competitor. And who wouldn't want to make sure that they were paying 20%, less than a competitor had to pay for exactly the same thing. And all of this because of a silly little metric that you can't even see. And let me back up there, you actually can see it. But I'd argue that it's not ultra helpful. If you go into campaign manager and hit Export, and you generate a campaign performance report, you can scroll over until you see a column called quality score. And first of all, LinkedIn calls it relevancy score. So why in the world is Google's name for it quality score in our reporting, I don't know why. But I digress here. If I look there, and I see that a campaign has a relevancy score of four, and that's a scale out of 10. I know that that's bad. So I'm probably going to want to go into that campaign and make some kind of a change to see if what I did actually improves it. So I come and check back a couple days later. And my relevancy score still says four. So I checked back another week later, and it still says four. And what I want to impress on you is, if this were a metric that were updated every day, or on a regular schedule that we could predict, this would be really useful for us to optimize. We could see something bad or even good, make changes, and then see the results of it. So because we don't know how often this is updated, it really isn't all that useful to us as advertisers. It might be interesting to see, at some point, this campaign had a relevancy score of four or of seven, but it doesn't help us very much in optimization. So you're asking, well, AJ, if we don't use that metric, how can we actually tell how it is we're doing? Well, remember how I said that relevancy score was calculated by basically two different types of your click through rate. So what I recommend doing is go and compare your click through rates to benchmark. And again, Episode 15 of the podcast goes over all of benchmarks. You can basically use your click through rate as an analogy to what your relevancy score would be. So for instance, if you know that the average click through rate on sponsored content is something like .44%, and you're getting a 1.6% click through rate, you could look at that and say, ah, we are three, four times above benchmark that tells us something really, really good. We probably have a very high relevancy score, maybe it's a an eight, nine, ten, something like that. And don't get too caught up in your relevancy score, just realize that it's a mechanism that's there and it might help explain how performance changes or how the platform reacts to your test over time. And by itself, it doesn't mean anything. All it is is a multiplier that either helps or hurts you in the auction. And you should also remember that this is a comparative metric, which means if you have a relevancy score of 10, and your competitor also has a 10. Neither of you really get much of a benefit at all. But of course, you're both going to crush your competitors who have relevancy scores of three and four. So we've talked about how relevancy score gives you a multiplier or a weight in the auction. Let's talk about how the auction actually works on LinkedIn, and LinkedIn. actually released a really good video about a year ago on their YouTube channel about how the auction works, how your cost per click are calculated. So I've linked to that in the show notes. It's only about four minutes long and it's definitely worth your time to help you understand. But basically how it works is that your bid gets multiplied by your relevancy score in the auction to give you a combined score. And then what happens is your combined score, every time a possible impression, a piece of ad inventory opens up, there becomes a little auction in between you and your competitors or that audience. And they compare your combined score to that of your competitors. Whoever has the highest combined score, theoretically pays one cent more than whatever the second place person, the loser in that auction, would have paid. Now I say supposedly, because it sure doesn't seem like we only pay a cent more than what the loser pays. And we've done quite a bit of testing around this. We haven't seen this work, but we assume that what LinkedIn saying here is correct. And it is a second price auction, which is the same model as Google has. So one way that this might work for you is, let's say that you and a competitor are both bidding $10. If your ads have a higher click through rate, chances are you're gonna get shown more than they do. But let's turn the tables here a little bit. Let's say that you're bidding $6 and they're bidding $12. If your click through rate is double theirs, or even higher, it's in LinkedIn best interest to keep showing your ads, even though you're only bidding $6, you're not bidding very aggressively, and your competitor was willing to pay $12. But still, your click through rate was higher, and LinkedIn is gonna get paid more by showing you. So you're gonna end up even with non-competitive bids, getting shown more often at lower costs than really anyone else in the auction. So you can probably see now why we're talking about click through rate being so important, because your click through rate determines what your relevancy score is. And then that determines how much you pay and how much you get shown in LinkedIn's auction. And this is, of course, talking about if we're bidding by cost per click. But if you're using LinkedIn's either cost per impression bidding or automated delivery or max delivery, it changes the scales a little bit, when you're paying by the impression, LinkedIn looks at it and goes, hmm, well, we get paid either way just for showing this ad. So we don't have to worry too much about the auction or too much about relevancy score. So if you are having troubles getting your ads shown, a lot of times we'll either turn on auto bidding, or bid CPM. And it's a nice easy way to bypass the auction. With that being said, if your ads aren't getting clicked on, chances are they're costing you too much and there's a lot you can do to turn that around and actually get better engagement. All right, here's a quick sponsor break. And then we're going to dive into what click through rates do for you in ad optimization.

13:01 The LinkedIn Ads Show is proudly brought to you by B2Linked.com, the LinkedIn Ads experts.

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Alright, let's jump into why click through rate matters in your ad optimization. Your click through rate really is a good measure of how attractive your ads are. It's really the first warning light of problems all the way down your ad funnel. If you have a bad click through rate, it could be that you wrote your ad copy in a non compelling way. Or maybe the image wasn't strong enough, or it didn't stand out enough to get people to stop scrolling and so they ended up just scrolling right past it. Or maybe people did see your ad, but your offer itself wasn't interesting enough for them to want to click. If I'm seeing high costs per click, and even high cost per lead. Click through rate is going to be the first thing I check to see oh, how are we doing here? It also can rule out your ads as being the problem. Let's say you have a really high cost per lead. If you look at your ads, and they have a click through rate that is several times the benchmark or significantly above it, you can almost rule out okay, well, it probably wasn't the ads, let's go look at the next step. Let's look at the landing page or the form we're using. Do we have good enough social proof on our landing page or featured in the ad? Or did our landing page load fast enough? All of those types of things. And if you get nothing else out of this episode, what I want you to understand is click through rate really ties together with all of the performance in your your account, it leads directly to your relevancy score. So those two are connected. And then that plays in to see how much you're going to pay depending on how you're bidding. So your costs per click are dependent on your relevancy score, and your click through rates. And if you're paying more for clicks, you're going to pay more for leads, assuming that your conversion rate stays static. So these are all connected. And so you as an ad manager, you're going to want to be paying close attention to this. But again, you're not going to want to go and report, I increase click through rates by 30%, to your boss or to your client, they honestly don't care, they are going to care about metrics that are a lot closer to the bottom of the funnel or the money. I should also mention that your relevancy score is really a cyclical kind of thing because when you have a good relevancy score, you'll get placed in better ad inventory, usually higher on the page, higher in the news feed, you'll be the top of the three text ads, etc. And when you're in the better ad positions, you show up closer to the top when people are willing to click. If your ad is four pages down in the feed, chances are the only people who are seeing it are the mindless scrollers. And you don't want them, they're not going to click. And if you want your budget to scale, let's say things are going really, really well and now you want to spend twice as much next month. Well, your relevancy score is the key to unlocking more impressions. Because as you get more impressions that will allow you to get obviously more clicks more leads, and spend more budget. I've found for scale, your click through rate is the easiest lever to pull. If you know that you want to scale up, but as you try, you just end up paying more and not getting too much more then launching new ads or launching new offers that have a higher click through rate is by far the easiest way to get that additional scale without paying way too much for it. In Episode 29, we talked about ad saturation. So if you're not familiar with that episode, go familiarize yourself with it. But I found that your click through rate, especially watching it over time, is the strongest signal that you can have to track whether your ads or your offers are saturating an audience. And the easiest way to do this is to go into your performance chart in your account. That's episode 52, if you're not familiar with that one. And you can plot any campaign or ad, buy click through rate over time. And what you might see is that 30 days ago, the average click through rate was, let's say 0.8%. But over the course of a month, now it's crept down to where it's 0.5%. That's a signal that you continue to show the ad to the same people who've already seen it before and probably aren't going to click, you definitely want to catch this and launch something new, constantly refreshing your account, because you don't want those click through rates to fall over time. Because that factors into your historical click through rate, which can earn you poor relevancy scores. So stay on top of it don't ever sit on your LinkedIn Ads.

18:05 So let's say that your click through rate is high. But your conversion rate is low. Like we talked about before, it could be that your landing page experience or your forms that there's an issue there. But what if they're not what if your ad and your landing page and your forms, they're all pretty congruent, this could be a sign that your ads are click baity. Or maybe you're using salacious imagery that makes people want to click, but it's not a serious interested click, it's a curiosity click. Maybe your ads are a thirst trap, you're featuring a really attractive person in your ad, and someone clicks because they want to see more of that attractive person and they're like, Oh, they're not there on the landing page. I'm going to be done here. But assuming that you wrote your ad, not in a way to trick people. A poor conversion rate usually means that your ads are fine, but your landing page experience is not. But that doesn't mean that your click through rate metric isn't important though, because it really does. It's the first page to your whole story. And whether it's high or low, will help you diagnose issues or spot high performance all the way through your funnel. And of course, you're always going to be wanting to watch for any sources of friction. And you want to remove that friction obviously anytime you can. You really do have to think about your whole strategy and realize that click through rate is just a piece of this whole strategy. And just because your click through rates are bad, it doesn't mean your whole strategy is broken. Dennis Yu, the famous Facebook ads expert, talks about things being a warning light or like a check engine light. Think of your click through rate as really just being a check engine light. It's an indicator that something could be wrong and that it should be looked at but it doesn't mean that the car is going to crash or break down in the next mile. All right, I've got the episode resources for you coming right up. So stick around

Thank you for listening to the LinkedIn Ads Show Hungry for more? AJ Wilcox, take it away.

20:08 Okay, like we talked about in the episode, you'll see in the show notes down below the episode about benchmarking your performance, as well as the episode about how to use the performance chart. You'll also see the link to the video that LinkedIn released about how the LinkedIn auction works. Definitely well worth a watch. I get asked a lot about courses, I've released a course in tandem with LinkedIn. It's on the LinkedIn Learning platform. You'll see a link down below. It's an incredibly inexpensive course and it's only about an hour and a half. It's fantastic. High quality, great learnings and that's enough, usually to get a new advertiser off the ground. On whatever platform you're listening to this on, look down and hit the subscribe button. We'd absolutely love to have you around for the next episode. And if you like what you're hearing, please do rate the podcast and leave us a review. I'll shout out your review live on air. Well, as live as it is. It's pre-recorded, obviously about a week in advance. But either way, I'd love to shout you out. With any questions, thoughts, suggestions, reach out to us at [e-mail]. And with that being said, we'll see you back here next week, cheering you on in your LinkedIn Ads initiatives.