OUTSELL-CMYKBIIA so-founder member Outsell Inc. has published a report on LinkedIn Three Years Later: Consequences at the Fork in the Road.

LinkedIn’s 100%+ growth years are over, but it’s still a fast-growing B2B talent solutions and marketing services company that is winning advertising and marketing spending from other media and marketing services companies. It is also expanding its content platform to further ignite its talent and marketing businesses, taking some share of reading time and engagement from media companies’ audiences. By growing its advertising and marketing revenue 4x in just three years – now No. 3 globally in B2B advertising and marketing revenue – LinkedIn has become an essential competitor, or potential partner, for other B2B companies.

In its 12 years, LinkedIn has grown to 2013 revenue of $1.5 billion, and it’s on a path to pass $2 billion in 2014. It built its initial core, a professional networking business, on user-supplied personal profiles. Originally, LinkedIn monetized just the resulting recruiting business (which it calls Talent Solutions), and that is still the largest share of the business, at 61%.

The Marketing Solutions business that was added is on track to pass $450 million, but at a slower growth rate than Talent Solutions, resulting in it falling from 33% to 19% of total revenue. Some of the key Marketing Solutions offerings include sponsored content, e-mail marketing (InMail), banner ads, and the Sales Navigator leads management service.

LinkedIn’s other business model is premium subscriptions. While one-off access to member profiles is free, access to tools and services for contacting members and researching the network at scale and in depth requires a premium subscription, priced from $8 to $48 per month. Premium subscriptions are leveling out at 20% of total revenue, indicating that future growth will most likely match, not exceed, the growth of total company revenue. Clearly, Talent Solutions is the company’s dominant revenue engine, and actions LinkedIn takes to grow its marketing business must align with that business and not be detrimental to it.

Linkedin Stock Chart sept 2014Growth is still significant, but it’s slowing. The stock market originally valued LinkedIn’s future based on expectations of continuing high growth rates. Analysts expected LinkedIn to grow rapidly by adding members and by increasingly monetizing the on-site activity of the growing member community with marketing, similar to many investors’ views of the future value of social networking sites Facebook and Twitter. But Figure 2 shows how the market has lowered its expectations for LinkedIn’s ability to maintain the 100%+ levels of future growth the market had once expected.

The Outsell analysis shows that three years after our initial study of the firm (see LinkedIn’s Lessons for the Decade, published March 3, 2011), LinkedIn is at a fork in the road, shaping its future rate of growth and determining the future composition of its mix of business models across talent solutions and marketing services. We identify what’s likely to spur, and what is likely to stymie, LinkedIn’s growth at this juncture. The outcomes will determine whether LinkedIn becomes an even more dangerous competitor or a valuable partner for media and marketing services companies.

To read the full report contact Outsell Store