In the previous part of this series covering LinkedIn, we saw how the professional network took shape, how it has become what it is now, and how it aspires to be the global driver for a changing workforce. LinkedIn has grown from a one-bedroom apartment to a multi-billion dollar company, encompassing the vast global labour force and bringing in newer solutions to embark on its path to improve the operational efficiency of global economies.
As LinkedIn adapts itself, we, as observers of, participants in and contributors to the changing global technological landscape, need to grasp the intricacies of its business with respect to its solutions, users and benefits. LinkedIn is no longer just a technology company; it is one of the core tenets of global organisations in the fields of recruitment, sales and jobs, as it begins its battle against broader global labour challenges.
But in order to understand how it plans to stride up the path to improve operational efficiency of economies, we need to first understand where it stands today in terms of its offerings, revenue models, business users and strengths. This post will cite LinkedIn’s primary revenue drivers and the way it brings in users through its offerings. The next post talks about the users of one of LinkedIn’s solutions, as cited by the original source of this series, the article by The Economist on LinkedIn – Workers of the world, log in.
1. Premium Subscriptions
LinkedIn does not charge for creating an account, retaining the practice of keeping it free for all, but it does charge for upgrading an account for certain privileges. Charging for entry might deter the growth of users, but once users get a whiff of the privileges Premium users get, they can be lured in to spend.
Free users cite their professional details, highlight their CV, endorse connections, read recommended and insightful content and connect with more people, like befriending others on Facebook. But they cannot message others without connecting to them, like the Premium users can. Premium users, on the other hand, can perform advanced searches to find someone specific and send up to 25 InMails, a messaging system devised by LinkedIn to send messages to people who one is not connected to. They can also get more introductions, view full profiles of distant connections (2nd and 3rd degree connections) and proudly display the fancy gold badge on their profile.
One might think this would constitute a significant proportion to LinkedIn’s revenues. Premium account subscribers are not LinkedIn’s largest revenue source, according to their quarterly results of Q2 2014. In their financial results of the quarter ended June 2014, LinkedIn announced that Premium subscriptions account for only 20 percent of LinkedIn’s $534million revenue.
2. Marketing Solutions
Marketing Solutions, LinkedIn’s second solution offering, which also contributes 20 percent of its quarterly revenue, has undergone a strategic shift towards content marketing, as Jeff Weiner stated in his quarterly earnings call. Its acquisition of Bizo and the launch of Direct Sponsored Content will increase the pace at which organisations use LinkedIn for their content marketing efforts. Sponsored Updates and now Direct Sponsored Content aim to facilitate the use of LinkedIn as a platform to connect more marketers with professionals and measure the effectiveness of content campaigns.
With the launch of Sales Navigator in June, LinkedIn also aims to “transform the effectiveness of sales professionals“. Just like the Talent Solutions business has transformed the way recruitment is done across the globe, LinkedIn vies to “better connect sales professionals with the right buyers by leveraging key insights and connections across the LinkedIn network”, as Jeff Weiner quoted in the quarterly earnings call.
3. Talent Solutions
The Talent Solutions business, the primary driver of LinkedIn’s solution lines, has benefited recruiters across the globe, with several key users and promoters of the solution. With 60 percent of LinkedIn’s revenues coming from this business line, it is likely to continue to be their focus for the near future. The area of operations is broad and the magnitude of its information is likely to expand with time. Due to the widespread uses and benefits derived by business users, this business line deserves special mention in the next post.
Talent Solutions and its users and benefits have been discussed in detail here.