How to Build a LinkedIn Video Ad Funnel That Converts

AJ Wilcox, founder of B2Linked and one of the world’s top LinkedIn advertising specialists, joins Daniel to break down why most LinkedIn ad budgets fail before they even get a fair shot, and how a three-stage video funnel can dramatically change the math.

In this episode, you’ll learn:

• How a well-known webinar platform stopped running bottom-of-funnel demo ads entirely, and why their demo requests didn’t slow down.
• The two default LinkedIn ad settings that silently waste your budget: one sends 80–90% of your spend to bot traffic, and the other inflates your cost per click by 3–5x.
• AJ’s three-stage LinkedIn video ad funnel framework, backed by $140,000 in real ad spend, showing how each additional touch increases conversion rates by 5x.
• Why video is most powerful at the top and middle of the funnel, and why it actually competes against your own CTA at the bottom.
• How thought leader ads from a personal profile outperform company page ads by 5x on engagement, and how that higher engagement earns you lower costs.
• A step-by-step playbook for getting executive buy-in on video: start with a static text post, show the performance lift, then use that data to make the case for video.

Introduction: Meet AJ Wilcox

Daniel: Hi, guys. Today I have AJ Wilcox with me. Hi, AJ.

AJ: What’s up, Daniel? Good to see you again.

Daniel: You too. I’m very glad we’re doing this. There’s a lot of information you can share that’s important for our clients and for our audience. Your insights on LinkedIn ads have always been helpful to our business. We’ve also relayed a lot of this information to our clients, and they’ve always appreciated it. So welcome, and thank you for being here.

AJ: I’ve been really excited for this conversation, because you and I have spent a lot of time together. We’ve traveled together, and we’re constantly talking about LinkedIn ads. I love how, when I share stuff with you, you go and implement. So I think this is gonna be a really productive conversation, not just because you’re gonna be grilling me, but because you have a lot to add to the conversation too. So thank you.

Daniel: Thanks, I appreciate that. I wanna understand a little bit better your background and where you are today.

AJ: Sure. It’s been almost 20 years ago when I graduated from college. I had a degree in marketing. I got into search engine optimization because I love technology, and eventually I got tired of SEO taking so long to show results. So I got into Google Ads. I got brought into a pre-IPO SaaS company shortly thereafter, and ended up having a ton of success using LinkedIn ads.

It became the most important lead-generating platform, the highest ROI of any channel they had been using. And so I ended up growing that to become LinkedIn’s largest-spending account worldwide. After running the biggest account for two and a half years, I went, “Alright, there have to be more companies than just this one that LinkedIn ads would kill it for.”

Just over 11 years ago, I started B2Linked. We’re an ad agency. LinkedIn ads is all we do. Mostly account management, but also audits, training, and consulting, helping you run it internally yourselves. We work with pretty much every kind of company that would have success on LinkedIn ads. Usually that’s business-to-business, usually higher-LTV types of businesses. Lots of SaaS. Also recruiting and higher ed. There’s some B2C financial stuff that tends to work, but we’re all over the board.

Why Most Demo Ads Fail

Daniel: That’s awesome. So, you and I were talking, and you told me a little story. I was like, “Yes, I need you to share that story with my clients.” So what’s the story you wanted to share here today?

AJ: Yeah. So when a new client comes to us (we talk to a lot of companies, we’ve worked with a lot), they all have the same goal. They want meetings set up with their sales team. We call ’em demos, we call ’em consults, we call ’em sales calls. Whatever you call ’em, that’s what we want.

So, of course, for the last 11 years and longer, that’s how we start. We’ll start with a “right-to-demo” ad. We take a cold audience and we say, “Do you want a demo?” 99% of the time, that approach is going to fail, because those audiences, before they’re actually willing to take a 35-minute call, or a 30- or 45-minute call, they need to already know, like, and trust you so they feel like it’s not a waste of their time. If they don’t already know, like, and trust you, they’re gonna need some kind of nurture and education first.

For lots of years, we tried: “Hey, let’s try gated content. Once you fill out a form saying ‘I want this content,’ that’s when a BDR or an SDR, someone in sales, is gonna follow up with you.” Over many years, we started to realize that strategy was working less and less. People are happy to fill out a form to get content, but when you reach out to ’em, they just don’t respond.

Then we started thinking, “What is the fastest path to get someone actually ready to take that action?” And this is why you and I are having this conversation, because video is a huge, crucial part of this.

But all of that background here to say: what really opened my eyes and shattered my worldview is, I ended up having a marketer from GoToWebinar on my podcast. He said they actually stopped running demo ads entirely. What they realized is, if they look at their demo ads, they have high cost per click because it’s a small audience, so you have to bid high for it. They have low conversion rates, and the cost per conversion looks ridiculous because they’re still not great. I didn’t audit his funnel. I didn’t know quite what was going on there, but the principle made sense.

He said, as soon as they stopped running those demo ads, they stopped looking poor-performing in the account. Obviously, because you’re not spending money on it. But the demos didn’t slow down. If you can stay in front of someone, staying top of mind and showing them that you’re the best option, they’re gonna find their way to your website anyway. He said there was less trackability with it, but they would look at these organic referrals and organic search going right to their website and filling out the demo form there. And they were cool with that.

So I started recommending the same thing to our clients. If we run demo ads and they’re looking too expensive, we might as well just stop. Let’s just keep giving ’em awesome educational content that reminds them of the problem you solve and keeps you top of mind, so as soon as they’re ready, they know where to find you.

Managing the Risk of a Strategy Shift

Daniel: I love that story, because it proves that if you adapt, there’s an opportunity here for you. Can you explain a little bit about what that experience was like, helping your clients make this shift, this new approach?

AJ: Yeah. There’s a big risk when you’re doing something that’s working: when you change the strategy at all, there’s gonna be a gap time. What if the new thing you’re trying doesn’t work? What if conversion rate goes down, or costs go up? What do you do? So we always try to lessen the impact of that.

Anytime we do a radical shift in strategy, we’ll try to leave some vestige of what was running before, and get it ready to taper off while you ramp up the new strategy. In this case, we recommend stopping your demo ads only when they haven’t been working. If it hasn’t been working already, no big deal. You just say, “Okay, we’re gonna stop that,” and worst case, you just see a little bit less traffic going to that demo or contact page. But if they weren’t filling out forms anyway, then no harm done.

Another pain point you’ll face trying to sell this to your boss is just the costs on LinkedIn being higher. To counter that, at bottom of funnel, we call this our stage three, when we’re in a three-stage funnel. When we’re running these ads, we might have to be paying $13 to $16 per click just to get LinkedIn to show it to that audience. So I look at that and say, if you’re gonna replace those expensive clicks that weren’t actually converting anyway, what if we could replace that with more touches with your thought leader ads, more views of your video content, which are very inexpensive? That allows you to show multiple repeat engagements to your ideal retargeting audience at a much cheaper cost. So this actually can reduce your costs overall.

Connected TV Ads on LinkedIn

Daniel: You mentioned LinkedIn TV ads. What are they called?

AJ: CTV, Connected TV.

Daniel: Connected TV. Our clients are always asking us to create videos for that. To get the lowest cost, you need to set up your LinkedIn campaigns properly, and that usually requires a certain level of technical knowledge. We’re gonna share a framework to help with that. But I’m interested to see if you’re seeing the same thing, where a lot of people want to try Connected TV ads, but they haven’t succeeded with LinkedIn ads.

AJ: The biggest question people ask is, “Okay, where are my ads being shown?” You’re pretty much shown on all of the streaming TV services that have ads. And what’s so cool to me is, LinkedIn has this record. They know whenever you log into LinkedIn from your browser at home. They know the IP address you’re reaching ’em from. Whenever you log in from the mobile app on your phone, they know where you’re calling in from, basically.

So what they do is, they match up the IP address that you log in from at home with the IP address that TV services know is your home. About a third of LinkedIn profiles in North America are linked to a home IP address, which is massive. You can run these ads and probably hit a third of your audience with them. It’s amazing.

Daniel: Am I understanding this right? You have LinkedIn video ads on the regular self-serve platform, but then you have to go a different way to launch a campaign on Connected TV ads?

AJ: You actually can run Connected TV now right through self-serve. So it works the same way. The difference is, when you set up a Connected TV campaign, you’ll say, “I want this to be video views as an objective.” Actually, I think the objective has to be brand awareness, which I don’t usually love, but it’s the only option available.

Daniel: Right. It is the only way you can access the option to run Connected TV ads. So it’s important to understand, from a technical standpoint but also from a strategic standpoint, the cost is such an important aspect of it, so you can make sure your spend goes a long way. Otherwise it’s just gonna fall flat. And it’s so unfortunate, because there’s a lot of people out there who overspend, and then crickets.

The Two Biggest LinkedIn Ad Mistakes

AJ: Number one: when you go in and create a campaign, you need to make sure there’s a box that is unchecked called “LinkedIn Audience Network.” It sounds really cool in theory. “I’m gonna be able to show my ads to people off of LinkedIn when they’re surfing around the web, or when they’re on apps on their phone.” Sounds great. But in all the testing we’ve done, we’ve found that a huge portion of that traffic is actually bot, spam, and fraud traffic. And LinkedIn will enable it by default.

Let’s say your boss gives you some test budget. They give you $5,000 or $10,000 and say, “Go test LinkedIn ads.” If you’ve left that checked, 80 to 90% of your budget went to non-humans, and you can’t even tell if it worked. So then you go back to your boss and say, “Oh, it didn’t work,” and they go, “Okay, you lost your budget.” The biggest sin in LinkedIn ads is leaving that on. So always uncheck it. That way, all of your traffic is actually coming from LinkedIn proper, and that’s where you’re gonna have the highest quality of traffic.

By the way, when I say to remove the LinkedIn Audience Network, I’m not counting CTV in this, because technically CTV is on the Audience Network, and that’s okay. That inventory is measured, it’s real. But if you’re being shown on the websites and apps, that one’s a lot harder. I use a really strong allow list or block list to basically say, “Okay, if I’m gonna run this, I only wanna show up on Business Insider, Forbes, New York Times. I care about the major news sites. I don’t wanna be shown on apps and stuff.”

Pitfall number two is the bidding. If you just take the default bidding option, it’s called “maximum delivery,” and maximum delivery is the most expensive way to pay for your traffic 90% of the time. Most of the accounts I audit are heavily using the maximum delivery option. LinkedIn shows cheaper costs per click, but I have my own custom metrics where I figure out my cost per link click and my link click-through rate. And what I find is, with maximum delivery, most are paying $25 to $50 per click, which is insane, because our clients are paying on average $7 to $9.

So if you know what you’re doing, if you choose the manual bidding option (which is actually hidden), you can get down into that $7-to-$9-per-click range. Just this simple bidding choice means that you might reduce your costs to one-third. That’s enough to say, “Oh, if I dedicated $5,000 to test LinkedIn and it didn’t work, that was the equivalent maybe of testing $1,500.” When I’m bidding more intelligently, my money’s gonna stretch further, and you may be like, “I need to give this another shot.”

Daniel: Do you have more tips, or do you wanna just leave it at those two?

AJ: I think that’s actually really solid. Those are the two biggest LinkedIn ad sins. If you avoid those, anything else you do might sway performance by 10 or 20%. But those are absolute performance killers.

The Three-Stage Funnel Framework

Daniel: Awesome. So let’s move on to the framework. I’ve known this for a while already, but to a lot of marketers it’s kind of news. They didn’t know they can set up an actual funnel on LinkedIn ads. If you can explain a little bit about this framework, then we can go into the details.

AJ: LinkedIn has had this capability for a long, long time. They called it LinkedIn Lead Accelerator. They had it only for the biggest spenders, and you would go right to them. That’s what the whole product was. We’re gonna create two- and three-stage funnels to make sure we stay in front of those audiences and keep nurturing ’em. Like we talked about earlier, if we go to a cold audience and we show them ads that say, “Hey, get a demo,” they’re not ready yet. It’s like proposing marriage on the first date. You might be a great partner, but boy, you scared ’em to death by asking.

We started running tests. We ran about $140,000 of ad spend through a test where we built a full three-stage funnel: cold audiences, audiences with at least one touch with us, and audiences with at least two touches. We ran exactly the same demo-focused content at all three stages, and across multiple accounts, we found exactly the same results: cold audiences were converting at about a fifth of a percent. Warmer audiences with a single touch were converting at about 1%. And then your stage three audience, your bottom of funnel with two touches, they were converting at 5%.

We looked at this and went, “Wow, every touch we have with someone increases their conversion rate by 5x.” Literally. Every time you invest in another touch, you’re saying, “The next time I show ’em something, they’re five times more likely to convert.” As soon as this became solidified in our minds, we went, “Okay, this is great. We are going to use LinkedIn as a three-stage funnel, because we want those 5% conversion rates.”

Stage One: Cold Audience and Thought Leader Video

AJ: The way you do this on LinkedIn is, you create a retargeting audience around the ad format you’re running. So we target a cold audience. Let’s say it’s IT decision makers. We target them, we show ’em something with video, and then we create a retargeting audience of anyone who watches at least a certain percentage of that video. If I wanna graduate someone to the next stage, I want to know they’ve watched at least 15 to 20 seconds of video. So if it’s a 30- to 40-second clip, I’m gonna say once you get to 50%, we graduate you into the next stage. If it’s a longer video, I might say watch at least 25% to graduate ’em. And if it’s a really short clip, like a 10-second clip, you can do to completion. That’s now your first stage: you run ads to a cold audience that are interesting, engaging, awesome.

Daniel: Which is probably the most expensive stage, correct?

AJ: It depends on how you define it. Because we know that audience is not ready to convert, and we know the point of these videos isn’t to convert people. So if you’re looking at cost per conversion, they look really expensive. But the goal is to show cold audiences content that’s really engaging and interesting. Those ads perform really well, and so LinkedIn ends up charging you less and less. We find we can actually get retargetable audiences for less than a dollar.

Daniel: And these are amazing audiences, very targeted, ideal ICP. These are the people you want to know about you.

AJ: I don’t care whether your audience is 20,000 people worldwide or 200 million. This strategy works. If you’re on the 20,000 side, super targeted, it just means you won’t be able to spend as much budget on it. You won’t see as much action from it, but it doesn’t mean it doesn’t work. It just means you need a bigger pool of audience and more data before you can tell that it’s working.

Daniel: A lot of people don’t initially understand this. People don’t log into LinkedIn as often as other social platforms. That creates a little bit of a challenge, because if you have a very small audience, you’re not gonna be able to show up. Even if you’re guaranteed to show up every time they log in, for some of those people, you’re just gonna show up twice a month because they only log in twice a month.

But let’s continue with the funnel. So they’re at the top. We have the video going out in the first stage, then you graduate them to the second stage. What are your recommendations after that?

AJ: Yeah. Also to clarify: at stage one, I love using thought leader video ads, because these come from an individual. What you need to make this work is, you have to have an individual, either at your company, or maybe an influencer. They create the video, they post it on their own LinkedIn profile, and then the company requests to be able to sponsor that. Once they agree, you can turn that into an ad.

What we find is just the fact that it’s coming from an individual versus a company. If you A/B test it and do company video versus personal, the personal is going to get five times the level of engagement on average. And as we know with ad platforms, the higher the engagement, the less they charge you. So you’re actually giving yourself a huge discount by running these thought leader ads.

Daniel: It’s one of those things that’s a tactical, minimal change, but it has such a big impact on the results of that campaign.

AJ: And if you’re listening and you’re saying to yourself, “Oh, I can’t get my CEO to do this. I can’t get my head of sales or whoever to do this.” That doesn’t disqualify you from building this three-stage video funnel strategy. It just means you’re not gonna do it with thought leader ads. You’re gonna do it with a company ad, and it probably won’t perform quite as well. Your costs are probably gonna be a little bit elevated, but you can still participate. This funnel works regardless of what kind of video ad it is.

Daniel: We’ve seen it work, and definitely agree with that.

Stage Two: Middle of Funnel

AJ: Once we’ve done that, you’re running cold-audience thought leader video or normal video ads, and you’re retargeting those who watch at least a certain percentage of it. That becomes the audience you target in stage two, or middle of funnel.

Here you’ve got a lot of options for what kind of content you wanna show them. You can show another video and maybe say, “Alright, now that we’ve earned their attention a little bit, we’re gonna start showing them longer video. Maybe we could only expect them to stick around for 15 to 20 seconds the first time, but now they know who we are. Will they watch something that’s a minute long, a minute-ten?” You can decide that.

Or maybe this is now a good audience to say, “Hey, I want to invite you to attend our webinar,” because if you listen to a webinar, you’re hearing someone’s thought leadership for 30 or 40 minutes. You’re gonna be a lot warmer. We love people who’ve shown up to webinars. You can also do things like blog posts, articles, eBooks, guides. Especially, I love ungated content here, and I love subscribable content, so you pay for them once and then they subscribe, and now they’re self-nurturing as long as content’s coming out. These are all great things for stage two.

Daniel: I wanna expand on that a little bit, because you’re already paying to show up to them. This is yet another instance where you can learn what’s resonating with your audience. In the second stage, if you’re running a subscribe-to-something or a download, it’s another way that your audience is showing you, “Hey, I like what you just did. Keep doing that.”

If they’re not part of your audience yet, you can also pull them into your ecosystem. If that’s as far as they got, you got their contact info already, and that’s a great second stage. You’re already paying for it. If that’s as far as they got, at least you got to keep their information, or some other way to retarget them.

AJ: And we can retarget most actions they take on any of these ads. Let’s say it’s gated content, and they popped open the lead gen form but didn’t end up filling it out. We can still retarget them, the lead form openers, and target them with something else they’ll be more willing to complete. If it’s video, you can say “watched a certain percentage.” They engaged with an ad that took them to the webinar signup page. All of these activities are things you can then retarget, and LinkedIn has a perfect memory of who they are, because it’s not based on them having a cookie in their browser like it would be if they went to your website. These are all actions happening on LinkedIn when they’re logged in, and LinkedIn knows exactly who they are and what they’re doing. So, all great ways of building your audience up.

Your Audience Is a Long-Term Investment

Daniel: Quick follow-up. Let’s say I run stage one, stage two, and stage three, but then for some reason we stop. I can go up to a year or two later and pull that audience, correct?

AJ: Yeah. It’s one year for most of the audiences. Some are limited to 180 days.

Daniel: That’s good to know, because if you’re running second stage and you already have a list of a thousand people or 2,000, even if you stopped it for whatever reason, you can still retarget them maybe next quarter or something with a new campaign. So it gives you more opportunities to come back to those audiences.

AJ: It makes your spend an investment.

Daniel: You already refined them. You’re already paying for the top layer to funnel them to the next, so they already raised their hand. Why not retarget them with other types of ads if you want? Specifically in software companies, they’re always changing course, because software changes so often that sometimes campaigns have to be stopped and readjusted. This is important to know, because now you know, “Hey, this campaign that was running, you can pull the first stage and the second stage people and redirect ’em to this other thing.”

AJ: Yeah, none of it is ever wasted. Even if you have to pause and start something a month later, you still got all of those audiences. They’re still warmer.

Stage Three: Bottom of Funnel

Daniel: And then stage three. At that point, do we go for more of a commitment? Do you have any recommendations for what ads to run?

AJ: Once someone gets to your stage three, that means you’re aware they took at least two interactions with your company. This is our warmest audience that we’re going to reach. We’re gonna keep them in that audience for 30, 60, or 90 days, however long you want. And we’re going to show them ads where we’re saying, “We want you to take this action.” It’s usually “hop on the phone for a demo,” take some kind of meeting.

What we’ve found is, single-image ads are the easiest to create, and you can have a very simple ad that just says, “You’re obviously experiencing this problem. Hop on a quick personalized demo.” I can create that in less than five minutes with a Google Doc and Canva open. You can be ready to go.

We also find you can use one of the sponsored messaging ad formats, and what they’re really good at is giving a personal invitation. So we like Message Ads. They seem to perform the very best. There’s also one called Conversation Ads. It comes from an individual and it’s delivered to their LinkedIn inbox, their LinkedIn messages, only when they’re logged in, so you know they’re active before you ever send them something. You get to choose who the sender is.

With both of these ad formats together, what you get is: they get a personalized message from someone in their inbox inviting them to take the demo. And every time they’re in the newsfeed, they’re seeing your single-image ads reminding them and staying top of mind. So this is the best one-two punch combo to get people to actually fill out your demo forms.

Why Single-Image Ads Outperform Video at the Bottom

Daniel: Can you expand on this? Towards the bottom of the funnel, you wanna start running not so many videos, correct? Because they’re a little bit more expensive. So you wanna use other, more direct ads.

AJ: Exactly. What we find is, even if it’s the same traffic, both stage three traffic, if you show a video ad where someone’s telling them, “Here’s what you’re gonna get out of the demo,” and asking ’em to sign up, and then a single-image ad that’s just inviting ’em to sign up, usually the single-image ad has the lower cost per conversion or cost per lead.

It doesn’t make a whole lot of sense until I started thinking about it. If you have a video ad of any kind, there are two calls to action immediately. There’s the implicit call to action of “this video started playing, so please pay attention to it,” and then you have your call to action of “click the link” or “schedule your demo.” And we know, the more options you give someone, the less likely they are to choose one of them.

That’s why I love video for top and middle. If we have video in stage one and stage two, to get them to be willing to take a demo call or a sales call, they have to know and trust you. What’s the fastest way to get someone to know and trust you? A personal connection over video with a human, making your life better, sharing tips, tricks, strategies, industry updates, that kind of thing.

Daniel: LinkedIn is also doubling down on authenticity. We don’t wanna stand out as a super-polished ad. We want it to be native to the experience the person is having. That’s why Connected TV ads work well. Because people are watching, it fits into the experience. They’re watching TV, they know they’re gonna get an ad, they’re sitting down. But on the feed, if it’s a video that’s authentic, it makes sense, because people wanna see other people when they’re on the feed.

Getting Executive Buy-In for Video

Daniel: Can you share some tips on how to really have these internal conversations? We’re talking to a marketing manager who’s all in on this, but is having a hard time helping their boss understand why this is important.

AJ: Oh, so many. If it’s specifically the boss, I want you to create content on LinkedIn that we can turn into thought leader ads. The best thing we’ve found is: start by asking them to post something that’s static. You can give them the text and say, “Put this in your own voice, but if you just post this and let us turn it into a thought leader ad, we just wanna see how your post compares to other ones we’ve run.” And what we find, more often than not, the executive’s post is going to perform a lot better.

Now I get to say, “Because you were involved, because you put some effort into this content, we just got a 30% discount on our ad traffic. We can now do 30% more.” And then you can say, “We want you to do something with video, because we know video is one of the highest-performing ads on LinkedIn.”

If the executive is comfortable on video already, and they record, great. You just tell ’em, “Record something like this, a little 40-second clip,” or whatever. But most of the time, they’re not comfortable with video yet. So what you can do is hop on an interview with them. Schedule 30 minutes on Zoom or Riverside or SquadCast, and say, “I’m just gonna ask you questions. I want you to respond, answer the questions. I’m gonna take the recording and give it to SparkPortal. They’re gonna do a great job editing.” Or of course, you can edit it yourself.

Now you give them the same thing. You say, “Okay, post this video with this kind of text. Let’s show how it compares to what we’re doing.” And again, now you have the highest-performing ads on LinkedIn, and it wasn’t a heavy lift to get them bought in, because they already saw how much strength their effort was bringing to your marketing efforts.

Daniel: That’s awesome. Another workaround we’ve shared with clients is: if you cannot get an executive to help you, see if somebody from product, or something like that, can help. You could still interview them. The challenge with product people is they’re gonna just talk about features and functionalities. But as a marketer, you can also ask ’em those strategic questions, and you’ll get these little nuggets throughout the recording. That’s your golden ticket right there. It’s the hardest part.

AJ: Absolutely.

Where to Find AJ

Daniel: Alright, this is great. I know you have your podcast. I know you have your website. If some of our clients or audience wants to learn more about you and what you’re doing, where can they find you?

AJ: Thanks, Daniel. If you’re a podcast listener, come subscribe to the LinkedIn Ads Show podcast. I go into a lot of geeky depth on every area of LinkedIn ads, and I share everything I know for free. So check that out. Also, really easy. Find me on LinkedIn. Come to b2linked.com. Fill out the form on any of those pages. I’m really easy to get ahold of.

I’ll also say, if you’re listening and this has been really interesting to you, and you want us to go in more depth, let Daniel know that you want us to do a webinar together or something. We could totally put on a webinar where I could actually show you. We could create all three stages of the funnel, show you exactly how to do it. So if that’s of interest, let Daniel know.

Daniel: For sure. Alright, AJ, thank you so much. I appreciate you being here. Thank you.

AJ: Anytime, brother.