A Smart Bidding Strategy is Key to Driving Trade Show Attendance from LinkedIn Ads; Don’t Underbid!

LinkedIn Sponsored Updates (SU) and Right Hand Side (RHS) ads are sold through a real-time auction, most specifically a generalized second price (GSP) auction.

Each time a LinkedIn member visits a page, and there is an opportunity to display a SU/RHS ad to a LinkedIn member that meets your targeting parameters, your ad will be entered into this GSP auction along with other advertisers looking to reach this member.

If you want to maximize attendance and other actions from your SU/RHS ads, you first need to win these auctions that determine which advertisers’ ads are served.

It doesn’t really matter how great your ads are if people don’t see them, and the more you underbid, the more likely this is to happen as you lose impressions to other advertisers who outbid you.

Your bid is one of the key drivers* of whether or not you win the auction so it is important to understand how it works.

In LinkedIn’s GSP auction, the winner only pays one cent more than the second highest bidder, hence the name “second price auction”, whether the bidding is on a CPM or CPC basis.

Let’s take a look at an example here…

Advertiser A bids $3.50

Advertiser B bids $2.50

Advertiser A wins but only pays $2.51

This is different from the more popular auction model that comes to mind when most people think of an auction i.e. the ones you see in TV shows, where the winner pays the price that they bid.

If you had to pay the price you bid (and did not know what other advertisers bid), then you might be worried about bidding too much higher than the next highest bidder – and hold back on your bid.

However, in LinkedIn’s GSP auction, you don’t have to worry about this because you are charged just one cent more than the second highest bid, so you should bid the full amount you are willing to pay to reach/engage your target. 

Consider a recent ad buy we ran for a major trade show, which involved over 1.8 million online display ads sourced through a GSP auction.  We tripled our max bid over the flight window, and the higher our bid, the higher the spread between the bid price and paid price. 

This is a key point… your bid determines whether you win or lose but not what you pay for an impression/click if you win.

You risk missing opportunities to reach buyers and other potential attendees by underbidding. Of course, overpaying to reach your target is costly as well for different reasons. So bid wisely!

* LinkedIn’s auction model also factors the “relevance” of an ad.

Posted on December 18, 2014