Linkedin Analysis

LinkedIn is the world’s largest professional network, and through the lens of this case, we believe the industry is ‘professional focused Social Media platform”.

LinkedIn’s strategy to date can be succinctly described within the following distinctive elements.

REVENUE LINKEDIN STRATEGY TO DATE

1. 3-Sided Platform: LinkedIn is first and foremost a 3-sided platform that acts as a bridge between its users, the organizations looking to hire skilled personnel, and the advertisers. The first priority for LinkedIn is its 350 million users who hail from all over the globe. These users form the subsidized portion of this platform. The other side served by the LinkedIn platform are the various companies looking to hire talented professionals, and advertisers looking for potential customers. Users can also pay to get better services, through purchasing premium profiles.
   
   
   
   
   
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Fig. 1: LinkedIn as a 3-sided platform

1. Differentiation: As the case indicated, LinkedIn focused exclusively on connections within the professional market. LinkedIn created a platform where people manage their profiles and identities; search for businesses and contacts, identify job opportunities, and join industry oriented groups. Shortly after its inception, LinkedIn also made its application program interface (API) open to third party developers who could create tools and applications that benefited LinkedIn’s users and improved the utilities of the platform itself.
2. Ecosystem Creation: LinkedIn built an entire professional networking ecosystem with the platform as the keystone; an ecosystem which continues to expand and evolve. In addition to being a social network, LinkedIn provides its users with the utility to pursue their professional interests while collaborating with colleagues from within and outside of their field. In order to improve the utility of its platform, LinkedIn acquired various applications like ChoiceVendor, CardMunch, mSpoke, etc., that enhanced LinkedIn User experience.
   LinkedIn’s subscription service, LinkedIn Premium, offers its subscribers improved branding and promotional opportunities with company specific pages, where they can continuously update job listing and acquire highly qualified talent.

This ecosystem enabled LinkedIn to differentiate its revenue streams. While a weak economy helped drive LinkedIn’s Premium subscription products, an improving outlook for employment spurred growth in the talent and acquisition market.

1. Disruption: One of its major revenue generating solutions – the Hiring Solution –served as a huge disruptive element in the social media industry. It made the idea of a static solution like a Rolodex completely obsolete, while perpetually updating itself and maintaining its relevancy. LinkedIn became a critical part of many businesses by using its intellectual disruption strategy to continuously improve its interface by adding new utilities.
2. Going Global and entering Emerging Markets: By 2012, 60% of all the users on LinkedIn were international. This caused leadership to pursue major initiatives overseas, even without certainty of immediate monetization. Overtime 14 sales offices were opened and efforts were put into translation services. LinkedIn saw a major value in the future of international markets based on the emerging class of skilled labor and the inexpensive nature of conducting business in certain countries overseas.

LinkedIn’s business model is one that’s comprised of two core elements – Free Services for its users, and Revenue Generating Services aimed at the premium side of the platform.

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Figure 2: How LinkedIn’s Business Model Works

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Figure 3: Evolution of LinkedIn’s Business Model through the years

LinkedIn began as an online professional profile creation platform and served its users by establishing local professional networks in cities around the United States. It eventually evolved into a platform for connecting workforces to relevant jobs in organizations and vice-versa, while simultaneously serving as a marketing and advertising platform. The business model then iterated itself into a revenue generating platform when it added the premium subscription option for the users, and advertisements and paid job listings option for the organizations and advertisers. The business model then turned towards acquiring third party online applications aimed at improving the user experience by providing intelligent and real time utilities to build the effectiveness of the platform. The decision to go mobile built the ecosystem further, while always maintaining the core elements of the business model – Free Services for the users and Revenue Generating Services for Premium users, organizations, and advertisers.