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Elaborative Business Model Of LinkedIn – Detail Explanation

Updated on: Sep 23, 2021
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Looking to finally understand how the Business Model of LinkedIn works?

LinkedIn is a very popular social network commonly used for professional networking. Although much of the world may use Facebook to keep track of and interact with friends, LinkedIn had created a different type of revolutionary platform. Partially due at least in part to its phenomenal success has gotten it recognized as the world’s largest professional network approximately doubling both MySpace and Facebook.

With more than 600 million users from all over the globe using it daily it has become an incredibly powerful tool for business-topping ranking companies around the world according to Forbes magazine as number six on their list of ‘Most Influential Social Networks’. In this blog, you will get to know about its huge profitable business model in detail.

 

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Business Model of LinkedIn

LinkedIn has become the only platform for professional networking, every working professional is aware of this platform and also likes this platform. LinkedIn also has many revenue streams like other huge companies comprised of four main areas i.e.: 

  • Hiring (59.2%)
  • Learning & Development (3.6%)
  • Marketing Solutions (19.5%)
  • Premium Subscriptions (17.8%)

Business Model of LinkedIn – Talent Solutions

Before its acquisition in 2016, 65 per cent of third-quarter revenue came from recruitment services. These services are sold to professional recruiters and employers, who use the products to attract potential employees, make offers to select candidates, and retain top performers. 

The division is divided into two parts: Hiring and Learning & Development. The Hiring segment helps recruiters to attract new talent by providing tools such as job ads and candidate sourcing options; it also allows them to manage the recruiting process until employees are hired, all of which can be done through an online platform. 

Learning & Development provides individuals with access to learning content including online courses designed for career growth or simply increasing their marketability in the workplace. 

This part of the business also offers programs and modules that address company-specific requirements, such as leadership skills training or advanced IT certifications.

The Talent Solutions platform can be divided into:

  1. LinkedIn Recruiter is the one who simplifies the process and allows the organizations and professional enterprises to find the right candidate, contact, and hire highly qualified passive and active candidates based on the certain features mentioned below:
  2. Advanced searches LinkedIn through its search engine algorithm make it possible for everyone to find any professional profile by applying required filters to find the most appropriate candidate for the right job.
  3. InMail service It is a service that allows connecting with anyone on the platform even if the person is not in your network.
  4. Talent Pipeline Management  It is a dashboard that helps the recruiters so that they can keep all their leads in one place.

The hiring process also includes other features and products, such as referrals, job slots, job postings, and many more. The primary business model of it here is subscription-based.

Business Model of LinkedIn – Learning and Development

Learning about new things can be quite useful in all aspects of life. Lynda is a fantastic learning platform for those looking to continue their education in online courses specifically tailored to professionals. 

The main purpose of this learning centre is to broaden one’s understanding of certain specific topics that will better assist them with both their work and personal life. Through the use of Lynda videos, tutorials, and assessments allows users to pick up new skills they may not be as familiar with such as learning how to code or master Excel, etc. 

In 2015, LinkedIn took over an online learning company called Lynda for $1.5 billion. Lynda became the learning and development platform of LinkedIn for professionals. Subscription members get access to thousands of professional courses which non subscribed don’t get. So, this segment of LinkedIn is subscription-based as well.

Business Model of LinkedIn – Marketing solutions

LinkedIn offers more than 300 million members a platform where professionals can connect with other professionals to discuss business and employment opportunities. Also, companies can create their company pages as well as boost their marketing efforts by creating sponsored content that they can advertise to targeted audiences. 

LinkedIn contributes about $1.2 billion in revenue each year to the company and this contribution forms 18% of the total net sales for LinkedIn Corp.

LinkedIn is a marketplace for recruitment agencies that are always looking to connect the best candidate with their clients. Here’s a video that will help recruitment agencies with their digital marketing strategies – 

 

Business Model of LinkedIn – Premium subscriptions

The way that marketing and business customers pay for services is not always as simple as it seems. For instance, you can sometimes add value within premium subscriptions by offering a mix of subscription and advertising options (like InMail Messages).

There’s no doubt that businesses are mostly paying into subscription packages on LinkedIn because the professional network has realized just how much leverage they can get from member’s profiles.

 Every member wants to rank well in search results so businesses know they can take advantage of this situation. 

There are six products in this area of LinkedIn:

  • Sponsored Updates
  • LinkedIn Ads
  • Sponsored InMails
  • Display Ads
  • Ads API
  • Elevate
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Conclusion

LinkedIn is currently sitting at over 575 million members worldwide and recently had a chance to partner with news giant Microsoft. 

According to LinkedIn’s financial statements reporting, it brings in revenue from two main streams: Subscription-based services (Marketing Solutions and Learning & Development) that cater to the 600k+ employers as well as other paid services like recruiting tools and premium accounts, and Advertising which mainly consists of Sponsored Updates through MSCRM (Microsoft Social Engagement Ad Suite). 

At the end of the day, LinkedIn is a platform for professionals to network with their peers while also offering companies a way to reach out and speak directly with potential hires.

Thank you! Share your valuable thoughts on this case study in the comments. Also, try IIDE’s free Digital Marketing masterclass to enhance your digital marketing skills.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]

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