How the LinkedIn Ads Auction Works — and How You Can Benefit

You understand advertising and generally get how auctions work. But marrying the two in the digital realm — advertising and auctions — can be a little confusing. You might ask: What are you bidding on? How do you win a digital auction? What does any of this have to do with advertising?

LinkedIn advertising is a powerful ads platform that enables organizations to reach, engage and convert their professional audiences at scale, on your terms and your budget. Having a good understanding of how the LinkedIn ad auction works and what factors affect your ad delivery can help you understand your ad performance, especially when first starting out with LinkedIn Ads. 

LinkedIn ads deliver value to members and advertisers

Like in traditional advertising, there are three stakeholders with LinkedIn Advertising Auctions — the advertiser (you), the professionals you’re trying to reach (certain LinkedIn members) and the platform you’re using to reach them (LinkedIn). Our goal is making the auctions fair and efficient for all stakeholders. 

LinkedIn ads auctions provide value for both members and businesses. For LinkedIn Members, ad auctions provide relevant experiences by serving interesting ads when they visit the LinkedIn feed. For advertisers, LinkedIn creates value by helping them reach and get results from members in their target audiences. 

How LinkedIn determines which ads are shown where

There are two main factors in the ad auction that determine which ads appear, and in what order:

Your bid. The amount you bid expresses how much you value the desired goal. Once you’ve selected a campaign objective and ad format, you’ll be able to choose a bidding strategy. These bidding strategies determine how your bid is set in the auction, and they can be changed at any time. .

Relevancy. Auctions aren’t just about how much you’re willing to pay. As a members-first organization, we want to show content LinkedIn members are interested in seeing and engaging with. That’s why each ad is assigned a relevance score that reflects the likelihood that a given member will engage with or convert from that particular ad. Relevancy scores are based on factors such as member activity, page context, ad content, and targeting which are used to determine the likelihood that the member will click through and engage with your ads via comments, likes, and shares. The relevancy score can change over time based on how members are interacting with your content. 

The ads that win auctions on LinkedIn are the ads that drive the most value to both members and advertisers. To win auctions and maximize your campaign’s success, your ads must have both a good relevancy score and an appropriate bid — and this combination determines when and if your ads will appear. Our auction system is continuously refined to ensure fairness, quality, and alignment with platform standards. 

Bidding on LinkedIn Ads

Your selected bid strategy tells us how to bid for you in ad auctions and how much you value a specific result. The ideal bidding strategy depends on your business needs. Our ads platform offers a number of bid strategies that are designed to maximize your particular cost strategy. 

Maximum delivery leverages machine learning to automatically bid for you  to optimize your campaign objectives as efficiently as possible. If you care more about spending your whole budget, we recommend the maximum delivery strategy.

When to use: want to spend full budget and maximize results.

Manual bidding enables you to specify the maximum bid amount they are willing to pay for a defined key result, and the bid will not exceed that value. You’ll get real-time guidance and suggestions on competitive bids during our campaign set up.

When to use: want to set a max bid across auctions to control bid amount.

Cost cap bidding has advertisers set a maximum cost per key result, which Campaign Manager uses as a benchmark to automatically adjust bids in the ad auction. The system prioritizes lower-cost opportunities first, aiming to keep the average cost per result below the set cap while maximizing campaign performance.

When to use: want to get the most results possible while controlling costs

In summary: Maximum delivery is best for automated efficiency, cost cap balances control and optimization, and manual bidding offers precise bid control but may limit performance.

How LinkedIn auctions help advertisers succeed

LinkedIn’s ad auction system is designed to help advertisers reach their target audience efficiently and cost-effectively while maintaining a high-quality experience for LinkedIn members. Instead of paying a fixed rate, advertisers compete in real-time auctions where both bid price and ad relevancy determine which ads are shown. Here are some benefits of this system:

Fair competition: Winning isn’t just about who bids the most – ads with higher relevance scores (based on engagement potential) can outperform higher bids, ensuring the best experience for both advertisers and LinkedIn members.

Flexibility and control: With multiple bidding strategies (maximum delivery, manual bidding and cost cap), you can choose how you want to bid based on your budget and campaign goals.

Optimization around your goals: LinkedIn’s machine learning-driven bidding strategies help maximize results, whether your focus is website visits, lead generation, video views or engagement.

Real-time adjustments: Advertisers can adjust bids at any time, and automated strategies continuously refine bids to improve efficiency and maximize ROI.

With LinkedIn’s auction system, you stay in control of your budget, only pay what’s needed to win, and optimize for meaningful business outcomes. Meanwhile, you’ll be confidently targeting and reaching a highly relevant audience that is unique to LinkedIn.

Log into LinkedIn Campaign Manager to start your  advertising success story.