Tuesday, April 12, 2011


LinkedIn must define how it wants to grow and what customers it intends serve.  Today, the company has over 100 million users and serves three distinct sides of the network, individual professionals, corporations, and advertisers.  A multi-sided network can exist when the needs and actions of one side are not a detriment to another.  Individual users generally accept well placed ads are as a cost of doing business.  However, a few overwhelming ads or pop-ups significantly reduce the amount of times a user will visit a site.  LinkedIn is treading down a path that is likely to pit one side of its network, the professionals, against another, corporations.  While some professionals pay a subscription for premium access to LinkedIn’s services, most are casual users who use the service to keep in contact with others they think may help them find a new job.  They may make an introduction or two and may click the occasional ad but LinkedIn generally does not see much revenue from individual professionals.  On another side, LinkedIn offers businesses of all sizes tools to help recruit and retain talent.  Corporate accounts are more profitable for LinkedIn and the company has a sales force to service them.  LinkedIn collects a fee for job placements and enables recruiters to reach passive job seekers through its premium InMail service.  The last side of the network is advertising.  LinkedIn has established approval processes for ads and widgets placed on its in order to protect and maintain LinkedIn’s professional image. 
Moving forward, the biggest threat to LinkedIn is LinkedIn.  Professionals use LinkedIn because they want to keep their professional and personal lives separate and there is not another uniquely professional social network large enough to compete with LinkedIn.   Businesses, recruiters, and advertisers will all follow the crowd of individual professionals so LinkedIn must remain as attractive as possible to the individual professional user group.  As such, LinkedIn must focus its efforts on ways to increase the amount of time that the individual professional spends on LinkedIn.  The company should develop and offer value-added features such as webinars or industry training courses to increase the amount of time professionals spend on LinkedIn.  LinkedIn could then mine through user activity to identify trends and potentially professionals contemplating looking for a new job or career change.  This information could then be sold to businesses anxious to speak with talent before they begin the job search.  This service and others like it that increase the usefulness of LinkedIn to professionals and increase the amount of time they spend on the site should be a top priority for management in the years to come.

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