Unlike others in the social media space, specifically Twitter and Facebook, LinkedIn is less reliant on advertising dollars to stay afloat, instead opting for a more diverse revenue stream.
That is not to say that advertising isn't important at all, though. In its last quarterly earnings report, advertising revenue was the company's second biggest revenue source. And now, perhaps, LinkedIn is looking to increase that number, because it announced on Tuesday that it has purchased B2B marketing platform Bizo.
The full price of the deal was $175 million, which broke down to 90% cash and 10% stock. The deal is expected to close during the third quarter of this year.
Founded in 2008, Bizo provides B2B marketers with tools to help them better target for display and direct response ads. Its technology and products enable measurable programs specifically focused on professional audience segments.
The company offers precise ad targeting that is based on a prospect's industry, functional area, seniority, size of company, education, gender, location and more. This understanding allows Bizo to anonymously deliver powerful ad targeting based on these attributes and behaviors.
For LinkedIn, getting Bizo's technology has an obvious benefit: it will allow them to better target their advertising.
“It’s exciting for us to bring Bizo’s expertise and technology into our ecosystem,” Deep Nishar, LinkedIn’s SVP of Product and User Experience, said in a statement. “Our ability to integrate their B2B solutions with our content marketing products will enable us to become the most effective platform for B2B marketers to engage professionals.”
For Bizo, it gets LinkedIn's resources and access to their 300 million members.
"LinkedIn’s mission is to connect the world’s professionals to make them more productive and successful, while Bizo’s is to help B2B marketers get to the right people. We realized that our respective missions are incredibly well aligned, and we believe that combining forces will accelerate our ability to execute against the huge opportunities ahead," Russell Glass, CEO of Bizo, wrote in a blog post.
:The combination of LinkedIn and Bizo greatly increases our ability to be the most effective platform for B2B marketers to reach their audiences, nurture prospects and acquire customers."
When the deal closes, it is expected that numerous members of the Bizo team will be joining LinkedIn, though it was not revealed how many, or in what capacity.
Spun off from ZoomInfo, Bizo had raised $28.5 million in total funding from Venrock, Crosslink Capital, Bessemer Venture Partners, Vulcan Capital and Ascent Venture Partners.
Revenue from advertising, or Marketing Solutions, as LinkedIn calls it, was $101.8 million during the first quarter of this year, an increase of 36% year to year. It accounted for 22% of total revenue, compared to 23% in Q1 2013.
The majority of LinkedIn's revenue actually comes from what it calls Talent Solutions, a.k.a. where recruiters, and corporations that are looking for potential employees, have the ability to pay LinkedIn to connect with members of the network.
This is LinkedIn's third acquisition so far this year. In February it bought data insight company Bright for $120 million, and last week it purchased Newsle, a web application that allows users to follow real news about their Facebook friends.