LinkedIn: Winning with Professional Data

LinkedIn has built up an invaluable user base and professional category of data that unlock a number of different and robust revenue streams.

LinkedIn is well-positioned to be a winner among the many different social networks out there. As the primary hub for online professional data, LinkedIn has set itself up to grow multiple lines of business against its enormous and growing set of data. Even as more niche professional networks spring up, such as Doximity which tailors itself to healthcare professionals, its ability to capture a diverse professional audience will allow Linkedin to remain a strong market leader.

I believe LinkedIn is a winner because it has built up an invaluable user base and professional category of data that unlock a number of different and robust revenue streams. It has created value by providing a single online space where users can capture and market their business identities. While paper resumes still without a doubt have a role to play in business, LinkedIn has built the infrastructure for the resumes of the future. This online resume experience allows users to not only self-report their past experiences and accomplishments, but it also allows for social validation, endorsements, and connections to past examples of work. This provides users opportunities to paint more complete images of their past experiences and skills and also provides potential employers with more data when looking to hire.

Through this infrastructure, LinkedIn has captured the attention of working professionals in a number of ways. While it’s not necessarily daily, users return to LinkedIn consistently before, during, and after major career switches to update their profiles. This behavior protects LinkedIn from user churn since it remains consistently useful for individuals throughout their careers. LinkedIn has also built up a major network of content to engage users more frequently. Not only does this provide a daily feed of content for users to read, but LinkedIn has also created a stage for professionals to develop as thought leaders. Users can contribute their own content to fuel information sharing and opinion building within different professional spaces. Younger individuals earlier in their careers also benefit by gaining access to industry-specific reading to help them stay ahead of industry trends. No matter how busy, it seems that business professionals are making time in their schedules to visit LinkedIn’s web real estate.

As a result, LinkedIn has been able to grow multiple lines of business that I believe will continue to grow and be successful in the future. The attention of working professionals who have volunteered their professional identities has provided LinkedIn a unique and rare set of targeting criteria for ads. This data is typically hard to find, and particularly for B2B companies, the ability to reach certain types of professionals is incredibly valuable. In addition to Linkedin’s Ads business, it has also brought together job seekers and recruiters. Aside from updating their profiles, users can now search for jobs directly on LinkedIn’s platform. Recruiters also have access to these users, and the scope of data available on candidates far exceeds what’s available on a normal one-page resume. By building a powerful platform and collecting a rare set of data against a hard-to-reach audience, LinkedIn is a winner in my eyes and setup for further future success.

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Student comments on LinkedIn: Winning with Professional Data

  1. Very interesting post. I’m curious to see what else they can make of the valuable asset they have. I can imagine things like career consulting (e.g., “People who chose this company on average get promoted within Y amount of time”), resume validation (“Pay $X and we’ll confirm that you studied where you said you did”), pay-per-hire (charging the job seekers) and many more.

    One thing I feel that they still haven’t cracked is what your network has to say about you. Yes, you can get endorsed, but I personally don’t find it a reliable mechanism (as someone who’s been endorsed for coding in languages I’ve barely heard of).

  2. I agree with you that LinkedIn has a huge potential for further growth in the future. Looking at recent acquisitions (http://www.inc.com/jeremy-quittner/linkedin-buys-online-courses-company-lynda-and-could-purchase-more.html), it seems that LinkedIn tries to build an extensive platform for professional services. Since more and more companies outsource their services (e.g. software development), the potential to become a major contract- or freelance-jobs marketplace sounds very promising to me. In this case LinkedIn can build on a tremendous network effect, so it will probably be a “Winner” for the next years, too.

  3. LinkedIn has been an interesting story over the last couple of years. In addition to the points you made above, the company has been making a big push in building its platform for B2B sales and marketing with the tool Sales Navigator. Sales and marketing professionals can now use tools on LinkedIn to find the right leads at companies that they are trying to do business with and even get warm leads. This targeted marketing approach has proven to be more effective than the traditional cold call. I believe that LinkedIn will increasingly focus on building out this B2B sales and marketing platform over the coming years given the huge market potential.

  4. I also agree that LinkedIn is a true winner in this space… so much so that I also wrote my blog post about LinkedIn. However, it seems like we both see different value creation within this company: whereas you’ve emphasized more of the value creation for professionals, I’d assert that value creation for recruiters/employers is equally if not more valuable. It is with this constituency that LinkedIn has been able to capture the most value (>60% of revenue last quarter from “Talent Solutions” not user subscriptions). Both sides are obviously important in a platform with reinforcing value loops, but it seems that we’ve brought two different perspectives to the table. Really interesting to see your thoughts!

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