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?