Yesterday, LinkedIn launched an ad network that will allow select sites to target its users when they visit those partner sites. Why, when most social networks are having trouble attracting advertisers, is LinkedIn doing so well? And what possible threats lie ahead for the professional network?
Let me qualify what I mean by doing well… Last week, LinkedIn ranked 375 among All Categories of websites, 8th among Employment and Training websites and 27 among Social Networking and Forums. Visits to LinkedIn are up 3 fold year on year and up 80% since the first week in May. The following chart illustrates the growth nicely.
Success Factors
A growing and large audience isn’t enough for advertisers anymore. One clue as to why the site is attracting advertisers lies in clickstream. US Internet users continue from LinkedIn to a mix of social networks, news and media and employment websites. We’ve seen an increase in traffic from LinkedIn to Employment and Training websites as consumers use the site for job hunting.
Also, existing partnerships seem to be working well. The partnership deal between LinkedIn and The New York Times to offer customized headlines has led to The New York Times being the #2 downstream website from LinkedIn last week.
The composition of the website’s audience has also contributed to its success, as it overindexes with those more likely than average to earn a household income of over $100K per year.
Possible Threats
I mentioned earlier that we’ve seen an increase in visits from LinkedIn to employment websites. With unemployment reaching a three year high and the markets in further turmoil, we can probably expect that we soon will have more job seekers than those trying to fill jobs. (You could even argue that the launch of the ad network is a clever hedge by LinkedIn against the value of advertising on its own site.)
Another threat is the dilution of a valuable audience. As mentioned above, LinkedIn attracts an audience of high earners. As more job seekers join the network that profile may be diluted. Hitwise clickstream data suggests that most of the visitors to the site are new visitors. These new visitors may not fit with the high net worth profile of existing members.
Finally, LinkedIn visitors spend far less time on the site than visitors to other social networks and employment websites. For example, last week, US Internet users spent an average of 7 minutes on LinkedIn compared to nearly 19 minutes on Facebook and 13 minutes on Career Builder. This gives them less time to interact with ads and promotions.