Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Professional social networking site LinkedIn has made new inroads into the digital advertising market, with higher demand driving up prices on the platform as brands seek to reallocate spending from Elon Musk’s X.
Annual advertising revenues at the Microsoft-owned group rose to nearly $4bn in 2023, up 10.1 per cent year on year, according to estimates from research group Insider Intelligence. It also predicted further growth of 14.1 per cent in 2024.
Marketing agency executives and advertising industry insiders told the Financial Times that prices for LinkedIn adverts — which are sold by auction and therefore set by market demand — were rising amid a surge of interest from advertisers. In some cases, prices have increased as much as 30 per cent over the past year, one executive said.
These people added LinkedIn was reaping the benefits of introducing ways to better target its 1bn users and as big brands increasingly leave X.
“This is LinkedIn season,” said Leesha Anderson, the vice-president of digital marketing and social media at Outcast ad agency. “Most have switched over to LinkedIn over the past year . . . A few weeks ago most of our clients were off X. Now they are all off X.”
Last month, Musk told groups including Apple, Disney and Walmart that have abandoned X following an antisemitism row to “go fuck” themselves. In a December pitch deck for marketers seen by the Financial Times, LinkedIn told brands they could “work with a partner who respects the world you operate in”.
Once a home largely to job hunting and networking, LinkedIn has been investing in building out a feed closer to one on a social media platform, attracting users who share career advice, executive essays and other viral content.
It remains a minnow compared to larger rivals, accounting for only 1.5 per cent of digital advertising spending by brands in the US, according to Insider Intelligence. This compares with 27 per cent and 21 per cent for Google and Meta, respectively.
Penry Price, LinkedIn’s vice-president of marketing solutions, said that demand was likely coming from “more brands” wanting to wield its unique targeting, which is helped by data it holds around people’s job history and intentions.
That ability is “very different than the traditional way brands and marketers will target”, he said. Businesses can target their B2B sales by company, seniority or job title, or a combination, for example. LinkedIn data from April said that members with C-suite titles grew by 11 per cent year on year.
Marketers said they are getting a return on investment of as much as 20 per cent, meaning for every $100 spent, advertisers would receive profits of $120.
Nevertheless, the costs remain high. One media buyer said that they had observed premium LinkedIn campaigns where the cost per 1,000 impressions of an advert was as much as $300, compared with a respective cost of between $10 and $15 on Meta.
The Kite Factory, an agency, said the majority of campaigns were between £14 and £20 ($17 and $25) for 1,000 impressions versus lower rates of well under £10 ($12.50) found on X.
“These rates are notably inflated compared to like-for-like LinkedIn buys a year or so ago,” said Simi Gill, senior digital account director of The Kite Factory. “This is likely a direct result of this shift in demand towards it, and therefore higher advertiser competition, as budget is diverted from X.”
The company has plans to extend its reach beyond the LinkedIn platform.
One service that is being tested will allow brands to use LinkedIn data to target individuals on connected TV apps. The offering will allow it to serve ads on Roku, Peacock, Pluto and Fox Sports, and will expand to Hulu and Disney+, according to documents seen by the FT.
It is also testing a premium advertising slot, where brands can be featured next to vetted publisher content, similar to the Amplify slot offered by X, according to two people with knowledge of the matter. The offering is due to be rolled out more widely next year. LinkedIn declined to comment on the new slot.
“LinkedIn has developed into a largely truthful environment where people, businesses and brands post content that is both thought through and thoughtful,” said Richard Exon, founder of Joint, a UK-based ad agency “Remember when Twitter was like that?”
Read the full article here