How does LinkedIn Make Money

How does LinkedIn Make Money – Unicorn Economy

How does LinkedIn Make Money
How does LinkedIn Make Money

About LinkedIn, Founders, Funders and Facts

LinkedIn is my favorite Social Network.

I mean seriously, no nonsense posts, no chut***pa updates, no check-ins, no blah blah and stupid opinions.

This is a Corporate Social Network meant for increasing ones professional outreach and to enable more connectivity in the corporate world for one self.

And Now, MicroSoft has taken over LinkedIn ($27 Billion) to screw LinkedIn like it screwed over many more good products like Skype, Nokia etc. etc.

LinkedIn Founder : The company was founded by Reid Hoffman and founding team members from PayPal Allen Blue, Konstantin Guericke, Eric Ly, Jean-Luc Vaillant.

LinkedIn Funding :  Sequoia Capital led the Series A investment. Sequoia Capital, Greylock Partners, and other venture capital firms purchased a 5% stake in the company for $53 million, giving the company a post-money valuation of approximately $1 billion.  Tiger Global Management LLC put in money at a valuation of approximately $2 billion.  As of now it is Listed and will be taken over by MicroSoft by 2016 Year End.

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How does LinkedIn Make Money

How does LinkedIn make Money is the question that pops to many while abusing linkedin.

Yes, Abusing!

LinkedIn is the most abused social network in terms of number of very low active members.  But these members are hyperactive and thus the ARPU (avg revenue per user) is high.  The members using the site are primarily professionals focused about their career choices and thus makes them best target for higher end of the curve advertising.

Primary Business model of LinkedIn is NOT “ADVERTISING”.   Look at the below sponsored ad of ICICI Bank, where they have sponsored the post so that it appears in the timeline feed of almost every one they have targeted in their choice of location.

LinkedIn Business Model
LinkedIn Business Model

(Picture courtesy LinkedIn and ICICI Bank)

LinkedIn Business Model

LinkedIn Business Model is primarily sales driven as in sales of solutions and services to potential corporate customers.  They have a large sales team in every location (prime and tier 1 as they classify) for selling solutions to corporates.

Before moving on with the LinkedIn Business Model lets see the various revenue lines LinkedIn has.

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How does LinkedIn Make Money from different Revenue Lines

How LinkedIn Makes Money
How LinkedIn Makes Money

LinkedIn has acquired many companies on the course of its lifetime and many of them power most of the features that LinkedIn website and app have today.  I will not discuss those in detail here but only mention those ones that are actually meaningful and contribute to the bottom line / top line of linkedin.

LinkedIn Revenue Lines

  1. Premium Subscriptions : LinkedIn is free to join but comes with limited features like – No inmail credits, limited “Filtered Search” options, limited “Filtered Search” credits, limited “You may also Know” credits, limited “3rd Level Contact” information views, limited who viewed your profile numbers.  Only Name and Email EXPORT features in Contact Export.   – Prime Target for these features is Direct Users.
  2. Recruiter Solutions : Corporates can use LinkedIn for following things:
    • Posting Jobs
    • Finding Candidates (Similar To Naukri.com)
  3. Corporate Solutions : Corporates can use LinkedIn for Advertising solutions
    • Boost / Sponsored Post (with a Follow Button)
    • Contextual Ads (Right hand side of your profile and landing page)
    • Top Menu Bar Ads (Below the Menu and aboe the fold)
  4. Learning Solutions : SlideShare and Lynda Learning Courses and Content
  5. Publishing Platform : Pulse.

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So How does LinkedIn Make Money?

LinkedIn makes Money in the following ways:

  1. Direct User : Premium Profiles for Users (Monthly)
  2. Direct User : InMail Credits for Users (Number of Credits)
  3. Direct User : Highlight Job Candidature (for Job Seekers – Profile gets highlighted and comes at the top of recruiter search results)
  4. Direct User : Learning related purchases from Lynda.com
  5. Corporate User : Sponsored Content / Posts / Follow Button in Feed
  6. Corporate User : Sponsored Content / Posts in Top bar
  7. Corporate User : Sponsored Content / Posts / Follow Button in side bar
  8. Corporate User : Job Posting
  9. Corporate User : Candidate Sourcing via Resume and Profile database
  10. Corporate User : Learning related purchases from Lynda.com
  11. Corporate User : Publishing revenue from Pulse (advertising)
  12. Corporate User : Slideshare and Pulse advertising
  13. Corporate User : Corporate Sales Teams revenue from providing inmail credits and sales funnel leads management
  14. Corporate User : Employee Referral Management
  15. Corporate User : Work with Us Ads to present the employer as a Brand
  16. General User : Purchases from Lynda.com

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These are their latest revenue stats from their website:

Total revenue increased 31% year-over-year to $933 million.

Talent Solutions revenue increased 35% year-over-year to $597 million.

  • Hiring contributed $535 million in revenue, up 26% year-over-year.
  • Learning & Development contributed $62 million in revenue.

Marketing Solutions revenue increased 29% year-over-year to $181 million.

  • Sponsored Content surpassed 60% of total Marketing Solutions revenue and was the primary driver of growth, driven largely by increase in customer demand.

Premium Subscriptions revenue increased 21% year-over-year to $155 million.

  • Sales Navigator remained the faster growing component of Premium Subscriptions, with growth in the field channel continuing to outpace growth in individual online subscriptions.

Disclaimer : How does LinkedIn Make MoneyLinkedIn Business Model is completely the view of the author.  Use discretion while using the information, unicorn economy not responsible for loss arising out of the use of the information.

Unicorn Economy
Unicorn Economy is your answer to all startup related queries with respect to business strategy, business model analysis and consulting. One stop stop for business plan and financial model development.

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