LinkedIn’s Ad Bidding Options
https://www.socialmediatoday.com/news/linkedin-shares-insights-into-ad-bidding-best-practices-infographic/625249/
https://business.linkedin.com/marketing-solutions/success/best-practices/ad-bidding-tips
LinkedIn has recently published a guideline on the optimal bidding strategy for marketers looking to advertise on LinkedIn. In this new update, LinkedIn describes their second-price auction system, in which bids from advertisers compete over an ad slot and pay the second highest price. LinkedIn has four bidding options for advertisers. The first bidding option is maximum delivery, in which LinkedIn’s system automatically sets the bid for the advertiser based on historical data and uses the advertiser’s full budget. The second bidding option is cost cap bidding, in which LinkedIn sets the advertiser’s bid based on maximizing cost per result. The third bidding option is target cost bidding, which is another automated bidding process in which LinkedIn sets biddings based on the advertiser’s cost range. The fourth and last bidding option is manual bidding, which, unlike the previous three options, allows the advertiser to choose their own bids.
While the four bidding options are different in their business purposes, it is interesting to distinguish between the automated versus manual bidding options. In class, we learned about the general second price auction, in which it isn’t always the best strategy for an advertiser to bid their true value. In this case, LinkedIn’s manual bidding option allows advertisers to better control their bids. This seems like the best choice in optimizing each advertiser’s payoff, since advertisers can analyze ad slot auctions and determine whether they can change their bid to increase their payoff. However, one issue that LinkedIn’s infographic highlights is that manual bidding is extremely resource intensive. Manual bidding requires constant monitoring to oversee the bidding process and ensure that the bid is appropriate for the value that they receive from the LinkedIn ad. Furthermore, manual bidding is also time consuming in comparison to the other bidding options, which utilize LinkedIn’s automated system. Thus, from a holistic standpoint, an advertiser’s choice of bidding option should be determined by a wide range of factors, including payoff maximization and resource availability.