How Does LinkedIn Make Money | LinkedIn Revenue Model

How does LinkedIn Make money | LinkedIn revenue model

“LinkedIn” which is the world’s largest professional network where people find jobs or internships, share their experiences and build a business relationship to grab the opportunities that come up.

But if you are not aware of what I am talking about and do not know what LinkedIn is, This Article is for you. Also, if you already know about it, you can still consider it because in this article, we will discuss how does LinkedIn make money? What is the business model of LinkedIn. And finally, SWOT analysis will be done to understand it deeply.

“LinkedIn” What exactly it is?

LinkedIn is world’s largest “professional network” with more than 750 million active users across 200 countries. People create LinkedIn profiles to get a professional identity and enlarge their network for business and career growth.

Anyone can create their specialized professional profile here, And access to data such as past positions, current jobs, education experiences and skills certificates etc.

One more use of linkedin is to market available jobs. Means, it creates one more opportunity for not only job seekers but for recruiters also. It is quite similar with other social networks like anyone can connect with other people by simply sending a friend request.

How it started

Visionary Investor “Reid Hoffman” launched LinkedIn on the 5th of May 2003 along with Allen Blue, Konstantin Guericke, Eric Ly, and Jean-Luc Vaillant. His idea was to create a social network, especially for Professionals. Also, Hoffman had been on the board of huge companies such as Google, eBay, and PayPal.

Within a year of launching LinkedIn, it had crossed 1.2 Million members. It was a great success for the Founders, but after launching subscriptions paid options and jobs postings in 2005 number of users take off to more than 4 Million.

Now Linkedin seems to be a profitable business for Investors. In 2008 it began its expansion to other countries and by the end of the year, it had clocked over 33 million users. In 2010 company had offices across the world with approx. 1000 employees. Finally, it was listed on the “New York Stock Exchange”(NYSE) in 2011.

In the year 2015, it completed its first decade with 225 Million users and more than 5400 employees. Microsoft acquired LinkedIn in 2016 with a purchase of over 26.2 Billion Dollars. Today it has tripled the number of its users as of 2015.

How does LinkedIn make money?

LinkedIn’s annual revenue was 8 Billion Dollars in the year 2020, almost 18% up from the previous year. It makes money in a number of ways. But the great chunk of revenue comes from four sources which are Premium Accounts, Talent Solutions, Marketing Solutions, and Sales Solutions.

Let’s have a closer look at each of them.

  • Premium Accounts

This is the simplest method by which it makes money. Premium Professional accounts stand for 17% of LinkedIn’s total revenue. These are the paid subscription plans ranging from $30 to $100, which allow users to enhance their searches and get in touch with people out of their personal network.

Also, these premium accounts have access to information such as people who have viewed their profiles, their video courses and private messages, etc.

  • Talent Solutions

Talent solutions collect all the necessary resources offered to both recruiters & employers – that search for qualified candidates for their available positions and help them getting a job of their preference.

LinkedIn offers a number of benefits to its Recruiter Accounts, which includes:

  • profile management
  • unlimited access to the whole network
  • collaboration and productivity resources
  • available jobs management

Talent Solutions is one of the major ways they make money, it accounts for more than 65% of the total revenue.

  • Marketing Solutions

Third service LinkedIn offer to clients is marketing solutions by driving advertising campaigns on LinkedIn. Using their marketing solutions businesses can deliver content to their targeted audience and generate leads and finally measure the Return on investment (ROI).

In fact, in some researches, it is found that Linkedin Ads have better engagement and click percentages than Facebook Ads.

  • Sales Solutions

The objective of LinkedIn sales solutions is to get data of sales insights which includes changes or updates in the company or job. These solutions are focused on creating a Brand through the network.

Also, they provide a sales navigator tool which is very powerful according to LinkedIn, one can find prospects, by using specific filters.

SWOT Analysis of LinkedIn

Strengths

Automation: it helps the company to scale their business quantitatively based on the current demands of the market.

Customer relationship: It is found that Linkedin’s customers are fully satisfied with their services.

New markets: LinkedIn is an expert at entering new markets and its expansion keeps offering new revenue streams in diverse markets.

Dealers: Along with promoting the products, its dealers also invest in sales training to show advantages to customers of the products.

Weaknesses

Rate of Attrition: compared to other companies, LinkedIn has to spend a lot on employee development due to its inner attrition rate.

Bad Forecasting: According to history the company does not have a good name in forecasting demands.

Other products: It is a leader in its own field, but not very successful at moving to other industries and product segments.

Financial planning: LinkedIn is unable to utilize its total capital. They can be more efficient.

Opportunities

Emerging Markets: LinkedIn still have a lot of potential to grow in the emerging markets with new government agreements.

Stable Cash Flow: They have a sufficient amount of stable cash flow, enabling them to reinvest in new product segments.

New policies: new environmental and taxation policies come up with new great opportunity for LinkedIn to gain market share and increase profitability ratios.

Threats

Shortage of workforce: Shortage in the skilled workforce can lead their daily operations at risk.

Imitation: low-quality & cheap products are always create problems for new companies. Especially in emerging markets.

Increased Competition: Since its launch, the numbers of players in this field have increased significantly in the last few years.

Also Read: What Is ESOPs How Does It Work?

FAQ- How does LinkedIn make money?

Q. What is the business model for LinkedIn?

LinkedIn makes money in the following ways

Premium Accounts: Charge fees from premium accounts

Talent Solutions: Exchange of data resources between recruiters and job seekers.

Marketing Solutions: Running marketing campaigns

Sales Solutions: Help businesses in marketing their Brand

Q. Can you put your small business on LinkedIn?

Instead of putting your small business on LinkedIn, you should create your profile on this platform and then describe about your business. In this way, you not only can market your business but also yourself as an individual and owner of the business.

Q. What are the disadvantages of LinkedIn?

Investment of Initial Time

Spam Connections

The Premium Can be Costly

Privacy Concerns

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He is pursuing BBA, a Passionate trader and his hobby is to write content on business and finance.

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