Have you wondered whether LinkedIn or Facebook ads are right for your IFA business? What potential does each channel hold, and what sort of costs/returns can you expect? Is one inevitably better than the other?
Most IFAs are looking to maximise the returns on their financial marketing investment. It’s only sensible. You need leads to grow your client base, and leads can come from a range of potential marketing channels. That might be word of mouth, south media, SEO, social advertising, and a range of other possibilities.
However, there’s no doubt that LinkedIn and Facebook – two giants in the social media world – have increasingly come to the fore of many IFAs’ minds when reviewing their financial marketing strategy and budget.
In this post, we’re going to look at some the costs, work and lead generation potential for IFAs in both Facebook advertising and LinkedIn advertising.
Starting With Basics: What Are Facebook Ads & LinkedIn Ads?
If you are already familiar with the main types of social media ads, then feel free to skip to the next section. Otherwise, let’s start with Facebook.
Facebook ads can appear in the main body of your newsfeed, or in the sidebar to the right:
The above screenshot is taken from my personal newsfeed. You can see that most of my screen here is taken up by Food Envy’s ad in the newsfeed, whilst three groups have been advertised to me on the right.
Facebook holds an incredible amount of information on its users, allowing advertisers to be highly targeted when it comes to who they show their ads to. For instance, as an IFA you could target your financial marketing so your ads only show to over 50s within 20 miles of your office location. You might also want to target specific job titles, income levels, or even employers.
Each time a user clicks your ad, Facebook charges you for the click. The users can be sent to your website, or to your Facebook page. From there, they can review your business, comment on your posts, Like and Share your content, and make an online enquiry.
LinkedIn ads work in a similar way, but there are some important differences:
Once again, LinkedIn ads can feature in your main newsfeed (as Canon has done in my newsfeed above), or they can appear in the sidebar (where PeoplePerHour have placed their ad).
Again, LinkedIn advertisers pay each time their ad is clicked by a user. You can target users by geography, job title, industry and skills. However, the targeting isn’t as laser-sharp as Facebook, who can also target people by net worth, income, marital status, interest & hobbies, office size (e.g. home office or large office) and home ownership.
There are also currently a wider range of ad types for your financial marketing to choose from for Facebook ads, such as image carousels and Facebook Lead Ads.
Case Study: Is LinkedIn Superior For Financial Marketing?
The best way to answer this question probably lies in fleshing out an example.
Suppose an IFA specialises in providing financial advice to lawyers. Which would be a better social advertising channel for them to reach these prospects – Facebook or LinkedIn?
An analysis is in order, so first she looks at LinkedIn. Wanting to know how many people in the UK are listed as “Lawyer,” “Solicitor” or “Barrister” on LinkedIn, she conducts a search and finds the following data:
Adding these figures up, there is a potential target audience of 146,656 people for her LinkedIn ad campaign. Sounds promising!
However, this is where most people begin making mistakes. You need to take an honest, hard look at the numbers. First of all, even if all of these people saw your ads, how many of them are likely to click on them?
LinkedIn click through rates (CTRs) are notoriously low compared to other social advertising channels. For example, whilst Google AdWords can generate CTRs such as 3%, 5%, 10% or even more, LinkedIn ads typically get a CTR of between 0.01% – 0.03%. There are exceptions of course, but these sorts of figures are the norm.
So in the best case scenario, where all of these people see your ads, you’ll probably be generating 146 clicks. The real figure, however, is more likely to be lower.
To be fair, that’s a pretty decent number. However, your financial marketing now needs to examine two further questions. How much will you pay for each click, and how many of these clicks can you reasonably expect to convert into clients?
In answer to the first question, LinkedIn ads are quite expensive. In Google AdWords, it’s often possible to find keywords which cost as little as 10p or 20p per click. For LinkedIn, however, you’re usually looking at £5, £7 or even more per click. So, if you got 146 clicks each month, that would be £730 in advertising costs (leaving aside agency fees).
Turning now to the second question. How many of these can you expect to convert? People on LinkedIn are on there for many reasons. However, most likely your adverts are catching people who are looking to socialise online within a professional digital network.
This means your landing page needs to have something really valuable, which your users can’t resist but download in exchange for their contact details. This might be a valuable report on investing or retirement planning, for instance.
If you can nail this “lead magnet”, then conversion rates on your landing page (e.g. downloads, contact form submissions) might be as high as 10%. However, a more reasonable expectation is a conversion rate of 1% – 2%. So, assuming you get 146 clicks on your LinkedIn ads, that means you might generate between 1 and 15 leads.
That would mean your cost-per-acquisition (CPA) is between £730 and £52.
So, let’s say you get the 15 leads and you then turn about 30% of these into clients. That’s about 5 new clients. However, if you only got one lead you might well get nothing.
Assuming you get one client on board for £730, or 5 for £52, would the lifetime value outweigh the LinkedIn Ad investment?
Case Study (Continued): Turning To Facebook
The IFA now turns to consider Facebook. Are the audience volumes, cost-per-click, lead volume potential and cost-per-acquisition any different?
Using Facebook’s Advert Manager, she defines a target audience of about 14,000 people in the UK who meet her lawyer “buyer persona“.
According to Facebook’s algorithm, a daily budget of £20 for this campaign would generate between 10 – 55 clicks per day.
If correct, that would produce between 300 and 1650 clicks per month at a cost of about £600.
Taking the conversion rate figures about (1-2%), you could reasonably expect your financial marketing to produce between 3 and 33 leads per month. That would mean a cost-per-acquisition (CPA) of between £200 and £18.
Again, assuming you turn about 33% of these leads into clients, that would produce between 1 and 11 new clients per month.
So, Is Facebook The Best Option For IFAs?
In the example above, you might be tempted to write off LinkedIn ads entirely. Facebook ads are more targeted, appear to cost less and produce more clients, and all at a lower cost per acquisition.
However, rarely are things that simple in financial marketing. First of all, this case study looked at an IFA which wanted to target lawyers. The volumes and lead potential might look very different for IFAs looking to target a different industry(s).
In addition, in the case study above there’s also another metric to take into account. Lifetime value.
For instance, let’s say you ran both campaigns side by side for 6 months. Your Facebook ads bring in twice as many clients as your LinkedIn ads do.
Yet, let’s say at the end of 6 months you review these new clients. You then discover that the lifetime value (LV) of your LinkedIn-generated clients vastly exceeds that of the clients you generated from Facebook ads.
Unfortunately, there’s no definitive way of knowing for sure whether this will happen if you were to run the two campaigns side by side. This is probably one of the biggest frustrations in financial marketing. At the beginning of the process, it appears that one marketing channel will be vastly superior to another in terms of delivering revenue. All the figures appear stacked in its favour. Yet the actual results demonstrate the opposite to be the case.
If you are looking to start social advertising, then you may not have the budget for both campaigns. That’s fine. In a sense your situation is easier, because you probably just need to pick a channel and focus on that. If you could have gotten more from the other channel, you’ll probably never know!
If, however, you have the means and intent to run both types of campaigns, the only way to fully know which is more successful is to get started, optimise and review your campaigns along the way. The good news is, as the data comes in you can adjust and re-focus your strategy and resources accordingly.
Phil Teale is the Sales & Marketing Manager at MarketingAdviser, an agency specialising in marketing for financial services – and especially for financial advisers. Along with our sister company, CreativeAdviser, we also provide bespoke website design, branding, graphic design and video production services to financial clients.
Contact us on 01923 232840 or email me: firstname.lastname@example.org