Even though the success of this company was initially anticipated, LinkedIn has surprised everyone with its sustained growth since its inception. How it actually works and how it makes money remain the two most common questions people ask. In this BusinessZeal article, we’ll not only tell you how it makes profits, but also the exact numbers.
In September 2010, LinkedIn was ranked No. 10 in The Digital 100: The World’s Most Valuable Startups list by the Business Insider.
Now, we’ll see why LinkedIn holds so much financial value. The first shares were traded under NYSE, with the symbol ‘LNKD, the price of each share standing at USD 45. In its first day of trade, LinkedIn’s shares rose 171% and closed at USD 94.25, 109% more than the IPO price. With such news coming out quickly and consistently, people wanted to invest immediately in what they saw as an opportunity. It is here that they wondered how LinkedIn makes money.
*All the figures mentioned in this article from here onwards are as per the Third Quarter 2013 Financial Results announced by LinkedIn
Director, Talent Acquisition at Mozilla
Under the Talent Solutions header, recruiters and corporations pay for a range of services that help them to establish a profile, advertise, and explore the database of LinkedIn users and resumes. Basically, if a company pays for Talent Solutions, it can:
- Establish its corporate page on LinkedIn.
- Publish advertisements (pay per click) targeted to LinkedIn users who match required job profiles.
- Get immediate access to LinkedIn’s database of users and their resumes/portfolios.
Marketing Solutions are basically advertising platforms offered to clients on the website. In this section, advertisers pay LinkedIn to host their advertisements in order to promote their goods/services. The payment depends on the pay per click-through rate. All advertisements target a specific client/user base.
Revenue: USD 79.8 million
Increase from Q3, 2012: 61%
**InMails enable you to directly communicate with prospective clients and managers who handle recruitment.
So basically, LinkedIn makes money from these three primary avenues. Depending on how many people pay and how much they pay for these services, we can determine how much money LinkedIn makes every year. As of now, it’s making a lot. We’ll leave you with a small note from the CFO and Senior Vice President of LinkedIn, Mr. Steve J. Sordello: