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The ROI of LinkedIn Sponsored Updates [Case Study]

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As a B2B SaaS company, we’re maniacally focused on metrics. As content marketers, we’re determined to crack the code on ROI and develop a cost-effective methodology for driving leads and increasing brand awareness. The following case study is our personal account of the effectiveness of LinkedIn Sponsored Updates fueled by content for lead generation. The numbers have not been changed. It is our hope that our experiment will be valuable to you and your company while planning your own LinkedIn strategy.  
In October 2013, we began amplifying content through LinkedIn Sponsored Updates. We ran a series of 20 sponsored updates (campaigns) over 2 months, with each campaign promoting a piece of content to our selected target audience. Through these campaigns, we gained 288 net new followers and, for every $1,000 spent on Sponsored Updates, we acquired 71 names. What was the ROI of these efforts? How does the ROI of these efforts compare to other advertising and methods of paid promotion?

Every B2B company defines each level of their sales cycle differently. Here is how we think about ours:

  • Name: At the earliest stage of the sales cycle, we identify names and contact info of prospects.
  • Lead: A name converts to a lead when the person expresses real sales interest.
  • Opportunity: A lead converts to an opportunity when we have successful meetings with leads who show intent to buy.
  • Closed Won Deal: An opportunity converts to a closed won deal when a contract has been signed.

Direct ROI Assessment

First, was this a cost-efficient way to gather names? Comparing LinkedIn Sponsored Updates to other inbound marketing channels, the cost per name (CPN) through LinkedIn Sponsored Updates has been 20% less than CPN through native advertising and 75% less than CPN through Google Adwords. The cost of LinkedIn Sponsored Updates includes the direct price of the LinkedIn campaigns, as well as the internal cost of creating 9 original blog posts and 5 white papers to populate the sponsored posts. For these campaigns, content costs comprised 8% of our total expenditure for LinkedIn Sponsored Updates. The cost of native advertising, in which we sponsor gated content in online industry publications includes the direct price of sponsoring a post in a publication such as Adweek or AdAge, as well as the internal cost of creating that post and the white paper it promotes. Content costs comprised 6% of our total expenditure for native ads.

Both CPNs of LinkedIn Sponsored Updates and of native advertising have decreased with time as content continues to be viewed and shared, and more names are collected. CPNs will decrease at a greater rate for a longer time if the content goes viral and continues to deliver returns after a campaign is launched. Native ads, for example, will occupy a better position on the publisher’s page if the content is a high performing, viral piece for the publisher’s audience. Additionally, the CPN for each piece of LinkedIn Sponsored Update content tends to be lower than the previously sponsored piece due to the boost in followers from prior pieces, as well as increased engagement as we build trust with our followers through continual output of quality content. By contrast, CPN from Google Adwords, with which we have been running campaigns for almost two years, has been stabilized for a while and does not diminish with time.
Second, what is the value of these names? We rank the quality of every name that comes through our system. Quality is assessed across a blend of criteria. Have we engaged a decision-maker? Do they have the intent to buy? Does the company have budget for content marketing? The answers to these questions are indicative of how likely a lead is to convert to a closed won deal. 60 – 65% of names that come in via a content marketing resource (LinkedIn, native ads) rank medium-high or high quality. Only 20 – 30% of names that come in via Adwords rank medium-high or high quality. Consumption of targeted, relevant content essentially acts as a qualifier of leads.
Conversion rates of these names to leads, then to opportunities, then to closed won deals are tracked by quality of name. By multiplying together these historic conversion rates along the sales funnel, we conclude that medium-high to high quality names are 3 times as likely to convert to closed won deals as medium and low quality names are. We derive the value of a name by multiplying its conversion rate by the average annual contract value (ACV) of a closed won deal. Using appropriate weights to account for the percentage of higher quality names acquired through each marketing channel, we find that names acquired through content marketing channels like LinkedIn and native ads are 50% more valuable than those acquired through Adwords.
We then calculate the ROI for each type of inbound marketing by dividing the value of a name by the cost of a name. Results are summarized in the table below:

As the table shows, for every $1 spent on Sponsored Updates, we will earn $17.60 in revenue. As CPN continues to decrease with social sharing and new views of the content, ROI will increase for both content marketing channels. These ROIs are actually conservative estimates using annual contract value instead of lifetime value of clients, as our average client stays with us for more than a year.

How This Translates to Your ROI

All things held equal in terms of the number of LinkedIn campaigns, quality of publication chosen for native ads, and efficacy of your content selection and strategy, your ROI for such tactics would vary from ours based primarily on your average deal size (monthly recurring revenue) and your conversion rates. Assuming your conversion rates are similar to ours, then your average deal size could be as low as $558 per month for you to break even with year-long clients acquired through content fueled LinkedIn campaigns, $670 for you to break even on a native ad campaign, and $3,222 for you to break even on Google Adwords campaigns. These figures are derived from the same formula used to calculate our name values: Conversion rate on higher quality leads x % of high quality leads x ACV + conversion rate on lower quality leads x % of lower quality leads x ACV = 1, and solving for ACV. If you’re not a typical SaaS business with recurring revenue, you’ll want to replace ACV in the calculation with expected lifetime value of your customers. CPN can also be driven down by lowering content costs allocated to each campaign or channel by leveraging each piece of content created across multiple channels.

Other Benefits Beyond Direct Lead Generation

Apart from this hard ROI, we also see benefits of brand boost, increased traffic to and engagement with our blog from LinkedIn referrals, and perhaps even SEO from these content marketing efforts.
Before beginning LinkedIn’s Sponsored Updates, our unsponsored updates would receive an average of 5.2 reads (clicks) per posted article. Since launching Sponsored Updates, our average unsponsored article posted on LinkedIn gets 22 reads. Our unsponsored posts now receive 4.2x more views, indicating that we’re extending our brand’s reach and influence and establishing NewsCred as a resource for marketers. This boost may be attributed to the 288 new followers gained from the 20 Sponsored Update campaigns, a more engaged audience base built over time from continuous, well-targeted content distribution, and improved content as our content strategy adapts to analytics findings from both LinkedIn and Google Analytics.
Furthermore, referral traffic to NewsCred’s blog from LinkedIn is steadily increasing 10% each month since beginning our campaigns, with a 21% increase in pages per visit. Visitors referred from LinkedIn read 20% more pages per visit than the average visitor to the site, implying that traffic referred from LinkedIn is more engaged, and possibly, higher quality.

Key Takeaways

  • Content marketing yields higher quality and value leads than Google Adwords
  • Of the two content marketing tactics studied, LinkedIn Sponsored Updates and native ads, LinkedIn Sponsored Updates has a 20% lower cost per name generated
  • Every dollar invested in LinkedIn Sponsored Updates yields more than $17 in revenue, almost 6x the ROI of Adwords
  • Cost per lead for content marketing, unlike Adwords, decreases over time, resulting in an increasing ROI over time.

By Rachel Bassini, Director of Strategy & Operations at NewsCred.

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