A Fresh Look at LinkedIn

When I wrote about LinkedIn last April, I said it was quietly staying in the mix, even as Facebook was garnering all the media attention. You undoubtedly know Mark Zuckerberg founded Facebook, but who founded LinkedIn? (Answer at the end of this article.)

As the most prominent business social network, LinkedIn is significant but has always bee somewhat invisible. That is about to change.

LinkedIn is making a big splash right now. The company issued a prospectus last week and confirmed a planned IPO. The filing indicated that LinkedIn had more than 90 million registered users at the close of last year with $161.4 million in net revenue and $31.6 million in “adjusted earnings” for the first nine months of 2010. That’s double the amount for the same time period in 2009. The company is thought to have an estimated value in excess of $2.5 billion.

While this is small beans compared to Facebook, the numbers look promising for future growth. LinkedIn gets around 65 million unique visitors each month. Its membership has grown about 76 percent per year for the last three years. Over half of the LinkedIn members come from outside the United States, suggesting that it has a considerable international presence.

Of course, the same looming question is asked about LinkedIn that’s asked about the likes of Facebook and Twitter: Can it generate revenue?

In similar fashion to Facebook, revenue for LinkedIn is slow going. Unlike Facebook, which has pursued free, unrestricted access, LinkedIn uses a model some in the industry call the “freemium” approach. Members can partake of LinkedIn’s basic services without charge, but they must subscribe to be power users. Increasingly, LinkedIn is offering attractive add-ons, such as filters, profile preferences, use of its internal email system, and access to special services for paid subscribers. At this point, however, paid subscribers make up less than 30 percent of the membership base.

Advertising accounts for about 32 percent of revenue. Clearly, LinkedIn is paying attention to ad revenue, because just last week, it took its “LinkedIn Ads” out of beta. LinkedIn Ads is the network’s self-service pay-per-click text advertising service that now offers ad targeting by exact job title, company name, or LinkedIn Group, in addition to the previously available options of geography, job function, industry, company size, seniority, age and gender. LinkedIn Ads allow companies to show ads only to the members most likely to purchase their products or services.

This latest offering enhances LinkedIn’s advertising and marketing services, which include Company Pages, Custom Groups, and a Jobs Network. As the economy strengthens, it may be the Jobs Network that becomes the network’s distinct differentiator from Facebook. LinkedIn says it can point a recruitment advertiser’s job ad to the most appropriate candidates through a matching algorithm that generates a list of up to 50 strong candidates, most likely passive, for each position. The company also offers referral hiring and viral distribution. Jobs posted on LinkedIn automatically get indexed by search engines and jobs aggregators. LinkedIn says that each job post is forwarded an average of at least 11 times.

In his new book, The Power Formula for LinkedIn Success, Wayne Breitbarth makes the point that LinkedIn is “the world’s largest Internet-based resume database.” He says that college students beginning to look for jobs would do well to join LinkedIn in addition to Facebook, because:

“LinkedIn is perhaps the only social networking site a young person’s future employer is actually active on. If business executives choose only one social networking site, they typically choose LinkedIn – so young job seekers definitely want to make sure they have a profile there.”

Sure, Facebook has taken the social media world by storm. But if you’re trying to market a product or service to business professionals, or you need to find a qualified candidate for a job opening, take a fresh look at LinkedIn.

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The founder of LinkedIn is Reid Hoffman.

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

Website: http://www.barrysilverstein.com