When you advertise on LinkedIn, an auction system determines when your ad is served and how much you’ll pay for the ad. Your ad competes in the auction against other ads with the same format and similar target audience.
The auction multiplies bid price and relevancy score to calculate an overall score. The ad with the highest overall score wins the auction. For example, bid price x relevancy score = overall score.
Bid price
As shown in the following table, when you create an ad campaign, you choose a bidding strategy that determines the bid used in the auction.
| Bidding strategy | How the auction bid is determined |
| Maximum delivery | Your bid is automatically set through machine learning, which looks to optimize your entire budget based on the objective you select. |
| Manual bidding | You set a bid amount that's the most you’re willing to bid for a key objective. |
| Cost cap | The maximum cost per key result you provide is an average amount the system tries to stay under by first going after the lowest cost events available in the ad auction. |
If you win the auction, you won’t necessarily be charged the original bid price. LinkedIn uses a second-price auction system, which means that you’ll only pay $0.01 more than the bid offered by the next highest bidder. For example, if your bid is $8 and the next highest bid is $4, you’ll pay $4.01.
Relevancy score
Ads are assigned a relevancy score that measures how likely a member is to take action on the ad. Relevancy scores include factors like expected click-through rate, comments, likes, and shares. Your relevancy score can change over time as members interact with your content.
Example auction
The following table provides an example of three competing ads. The bid and relevancy score are multiplied to determine the combined score. Ad 2 has the highest combined score, so it wins the auction.
| Ad name | Bid | Relevancy score | Combined score | Auction winner |
| Ad 1 | $12 | 4 | 48 | |
| Ad 2 | $8 | 9 | 72 | Winner |
| Ad 3 | $4 | 3 | 12 |
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