LinkedIn, the goose that lays the golden eggs of Microsoft

In twenty years of existence, LinkedIn has established itself as an essential platform for professionals and recruiters alike. Created in 2002, the social network has grown continuously, reaching 930 million users this year.

Unlike other social networks, including Facebook, Instagram and Snapchat, advertising represents only a part of its turnover. He prefers to sell tools to an audience of professionals, including recruiters and salespeople, who are often forced to pay for access to data controlled almost entirely by the platform.

A paying bet

When it was bought by Microsoft in 2016, the acquisition could seem expensive: 27 billion dollars, the highest price ever paid by the Redmond giant which had to repel the advances of Salesforce. But a few years later, the bet pays off. Its revenues, which were stagnating below $3 billion a year at the time of the acquisition, have soared since then.

In 2022, the platform, which is owned by Microsoft, generated $13.8 billion in revenue. Its growth, which had surged during the pandemic, has slowed in recent months. However, LinkedIn is far from having suffered as much as other social networks, including Snapchat, Facebook and Instagram.

“Our business has slowed down from a growth rate of around 35% during the pandemic to 8%”, acknowledges Dan Shapero, director of operations of the social network. “This is mainly due to a change in the economic cycle. Companies are reviewing their recruitment plans and investments. »

Three pillars

The social network is resisting the turmoil thanks to a solid business model, which is based on three pillars. First, LinkedIn” [aide] companies and recruitment agencies to find and contact candidates,” explains Dan Shapero. The sale of these products brought in $6 billion last year.

The platform also sells adver, mainly for B to B marketing ($5 billion last year). Finally, “more than 1.3 million salespeople use our Sales Navigator product, which allows them to build relationships with people who are interested in their products and services,” continues the manager.

Lack of choice for recruiters

Recruiters, whether they belong to large groups or recruitment firms, have very little choice: finding a qualified candidate for a position (almost) always involves searching on LinkedIn. Many of them complain about constantly rising prices, which they believe are out of step with the innovations on the social network.

“We receive roughly the same thing for always more money,” one of them complains. He complains that some useful features — search through his contacts’ contacts, for example — are gone. “Now, you can search by skills but there is no verification in place, nothing prevents lying on your profile,” he continues.

However, there is no question of stopping paying. “Not having LinkedIn is a real handicap for a recruiter,” admits this same source. However, he ures that he would be able to do his job without the social network, but only because he started his career before the rise of the Internet. “Many recruiters have less than twenty years of experience, they would be lost without LinkedIn,” he explains.

Generative AI

The social network is now embarking on a new transformation, by deploying generative artificial intelligence tools through its products. “It’s still very early days, but we’re starting to see opportunities, for example in recruiting, to help people write better posts on LinkedIn, thanks to generative AI,” he said.

These tools can also be used by professionals who want to improve their profiles. “People find it hard to talk about themselves,” continues Dan Shapero. “It can be awkward or uncomfortable. So what we can do is look at what someone has already put on their profile and help them write a better summary or headline. »

AI Risks

This strategy is not without risk for LinkedIn. A high level of spam on the platform could harm the experience of users, some of whom receive many messages from recruiters. “It’s a risk because it’s already something that happens on LinkedIn today,” notes Jeremy Goldman, analyst at Insider Intelligence.

“There are recruiters who buy the possibility of contacting people on the platform, which constitutes a form of spam”, continues the analyst. By facilitating the writing of these messages, artificial intelligence tools could lead to a proliferation of unwanted content.

Dan Shapero is more optimistic. “We think AI is going to help craft tailored messages, because it understands the context for the person being contacted and it understands the role. Good recruiters will take this as a starting point and turn it into an even more skilful message, which will allow them to obtain optimal responses,” hopes the manager.