How does LinkedIn make money?
With most users (estimated 90%) not paying for LinkedIn I am often asked how LinkedIn makes money, as whilst we can all enjoy a free to use social network or social media site there has to be an underlying successful commercial business to provide the longevity and foundation for future success.
LinkedIn is not like a lot of the social media platforms, it doesn’t scream and shout, it just quietly gets on with the “day job” a bit like us. It is always evolving and continues to do so, removing functionality that isn’t used enough like Answers, whilst looking to expand, even now, with more acquisitions like Cardmunch and SlideShare.
Commercially LinkedIn has done really well and has bucked the trend of a lot of the social site listings to start at $45 per share, and sits around the $120 mark at present. But how does it make its income?
Having just published the quarter four earnings it is an ideal time to tell you how it currently breaks down.
Its largest income stream by far is recruitment solutions where recruiters and corporations pay for enhanced brand, search or talent acquisition offerings from LinkedIn. This was originally the foundation of the commercial model and currently stands at 53% of income in Q4 and continues to grow over time, interestingly it doesn’t make it into the top 10 industries in the UK.
The addition of marketing solutions such as advertising has added significantly to the income with 27% of Q4 earnings coming from this growing area. This has been embraced by the marketing and advertising industry as it is a world that they understand well, has phenomenal targeting for end users and they can lead their clients into comfortably, but they often struggle with wider LinkedIn in my experience.
The smallest segment of income at 20% was subscription and this figure grows annually with the user expansion but still equates to around 20% year on year. This does surprise me in some ways as the subscriptions are worth having, but only once you have made the free “stuff” work for you and get some great results.
So what can we take away from this? LinkedIn continues to grow at a phenomenal pace both in user terms (2 per second) but also in fiscal turnover ($1,400+ million projected 2013) which means that it is commercially secure as a business, which is great news for all of us as users as it will be there for our current and future use and success.
If you’re not getting the successes you deserve perhaps it is time to get in touch?
Very interesting. Good to hear In is financially secure. – certainly one of the “stickers” who continue to be relevant. Use it more and more.
It is really important that they are sound businesses as well as being a sound platform, thanks for the kind comment, James
Knowing how strong the work-site industry is LinkedIn has become a great giant to be friends with. Most people don’t understand how many websites are free and at the same time make very impressive incomes. Great article. Fill free to come and check my website and give me your thoughts James P. goworkinfo.com
But, are any of the companies or person paying Linkedin for these services, getting any returns from this?
Most likely there is no way to know.
That is a great question Ken, my personal perception is that a lot of people pay for LinkedIn because they “think” it makes a difference or they have bought into LinkedIn marketing but still don’t make it work. The reality is LinkedIn does an awful lot for free but most don’t see or fully exploit that partly as we all think we know how or what LinkedIn does and it often isn’t the case but it changes the way we look at it and act and hence our results. I can give you a long list of successful users in a sales frame, as that is where I spend my time, and if you want a chat just drop me a line through the contact us or have a look at my profile and recommendations as there are a few in there too. Good luck and best wishes, James – The Linked In Man
I asked this, because in all the years I had my own business, I found about 98%, non return, for any thing I paid money for. Linkedin seemed to be about the same as Facebook. Lots of people trying to seem important.
The best was, well there was no best to do with any thing, I paid for other then my own web site, which I did my own daily up grades. Saved tens of thousands of dollars. Made lots of money, until those with mega corporate bucks, got into the game. We lived the good life for many years. Then I decided to retire and live the good life.
Sadly not everyone is like you Ken, many think that paying for “stuff” makes a difference and (like you) my experience has been that actually doing “stuff” for yourself makes the most difference. Thanks for the kind response and glad to hear you are stil enjoying the good life. Best wishes, James – The Linked In Man