Of LinkedIn's $300-plus million in revenue each quarter, only a quarter comes from advertising. Now the ever-evolving business network wants to give that revenue line a boost with the addition of Sponsored Updates.
The new ad service will allow business that have Company Pages to display their advertisements to all 225 million LinkedIn users, even those who do not follow their page.
"With more than 3 million Company Pages on LinkedIn, companies, organizations and institutions have emerged as highly valued sources of relevant content on LinkedIn. Sponsored Updates enable these entities to build relationships by delivering their content into the homepage feed of members beyond those who are following their company," David Hahn, Vice President of Product Management at LinkedIn, wrote in a blog post.
"In developing Sponsored Updates, we’ve taken a measured and methodical approach to create an experience that strikes the right balance for our members and companies."
Here is an example of what one such advertisement might look like:
Companies that use the service will be able to pay by either CPC, or the number of clicks the ads gets, or by CPM, the number of impressions they get.
This is a smart move for LinkedIn, and will surely give a nice boost to its ad revenue sector, which has kind of been lagging so far.
In its latest earnings report, LinkedIn posted revenue of $324.7 million, of which only 23%, or $74.8 million, came from Marketing Solutions. That was still up 56% from 2012, when it accounted for 25% of total revenue.
But compare that to Facebook, which saw an astounding 85% of its total revenue, or $1.25 billion, come from advertising.
Clearly LinkedIn has a more balanced approach, it seems, than Facebook, and is making money in other ways. For example, it took in $65.6 million from Premium Subscriptions, and $184.3 from Talent Solutions, last quarter as well.
And there is no doubt that it is smarter to have multiple revenue streams, rather than having all of a company's money come from one aspect of the business, but Facebook does demonstrate one thing: that there is a lot of money to be made from advertising alone.
And LinkedIn is certainly hoping to grab a big piece of that pie with this update.
The ads can be promoted in 20 languages in 200 countries and territories where LinkedIn has members. Additionally, companies will be provided with analytics that give them insights to help them fine-tune their strategy in real time.
Right now, Sponsored Updates are only available to those companies that have an account representative, but they will be available to all companies by the end of July.
For users, Sponsored Updates will be available on desktop, smartphone and tablet devices and will clearly be marked “sponsored,” appearing in the member’s homepage feed along with the organic posts from their network and the companies they follow.
Members will have the option to “Follow” the sponsoring company as well as “Like,” “Comment” and “Share” posts with their network.
LinkedIn also announced the first batch of companies that will partaking in the service: Allstate Insurance, Box Inc., Domo, Inc., Charles Schwab & Co., General Electric, Mercedes-Benz, Nissan Motor Company, The Weinstein Company, Wall Street Journal, Xero, Adobe, Telsra and HubSpot.
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