While Twitter gets ready to embark on an experiment that will finally monetize its 140-character messages and Facebook feels international pressure for its privacy gaffes, LinkedIn is quietly cashing cheques relatively free of criticism.
The Mountain View, Calif.-based social network for business professionals has been steadily growing since its launch just over seven years ago on May 5, 2003. It’s turned a profit annually since 2007 and raised close to $100 million from investors.
Competitor social networks don’t seem to be cruising along as comfortably by comparison. Twitter is only now preparing its “Promoted Tweets” project to start generating cash from its 100 million users and sightings of the “fail whale” remain a common occurrence.
Facebook is currently under investigation for the second time in Canada for removing privacy protections from its users a little bit at a time. It doesn’t help that a recent instant message transcript supposedly sees founder Mark Zuckerberg call early adopters “dumb f$$ks” fcor trusting him.
LinkedIn’s success has come from targeting a lucrative niche audience and diversifying its money-making approaches, says Arvind Rajan, the business social network’s vice-president international.
“Getting members as quickly as possible is not always the best way to grow short term revenue,” he says. “But you do need a certain number of members to really deliver value.”
Now at more than 65 million users worldwide, LinkedIn is looking to turn its attention more to its 2 million Canadian account holders. Rajan is visiting Toronto this week to attend a conference, and plans to scope out some office space for an increased Canadian presence.
“We see some of our most engaged users on a global basis in Canada,” he says. “We’re excited about having a team in Canada.”
The social network will be a good fit for Toronto’s business culture, says Joseph Thornley, CEO of Thornley Fallis Communications.
The Ottawa-based marketing and communications firm also has a Toronto office. The city, says Thornley, is known among entrepreneurs for its self-organizing, start-up communities. Outside of government programs and university incubators, events such as CaseCamp and DemoCamp bring entrepreneurs together and open the door to collaboration.
LinkedIn feeds into that, he said, because it accelerates forging of relationships online. “If they want to bring that to Canada, it can only be good for us.”
While not growing as fast as other social networks (Facebook has surpassed 400 million users) LinkedIn has been able to monetize its membership. That might be because the average member makes more than $100,000 a year and the site offers a portal to conduct business-to-business transactions. That’s a good proposition for many advertisers.
If you’re on LinkedIn, you’re there for professional reasons and thinking about work, Rajan says. “That works well for advertisers looking to hit you with a professional message.”
Advertisers can also trust their ads will appear next to appropriate content, he adds. There’s no safe bet about what sort of seedy content your ad could appear next to on other social networks.
LinkedIn has also gone beyond advertising. It sells a recruiting service that caters to half the Fortune 100 companies in the U.S. and recognized brands in Canada, such as Royal Bank and Research In Motion. The site simply uses its pool of talented users to fill vacancies of its employer clients.
LinkedIn also sells subscriptions to higher-end features on its site. Users in the Business, Business Plus, and Pro membership programs can send messages directly to other users and organize profiles into folders.
“It’s created a revenue model for us that others don’t have,” Rajan says.
LinkedIn simply understands the value of catering to a niche, Thornley says.
“I always looked at LinkedIn as the network that people who want something from me as a business person are going to use,” he says. “That’s the way of the future, there won’t be one social network to rule them all.”
LinkedIn’s lack of trouble in the privacy realm is partly because it hasn’t changed the way it uses members information, and party because users want to be visible on the site. Users are able to maintain two different profiles – one for members to see, and one for the general public. Privacy settings give a granular level of control over each piece of information on a profile.
Many users are willing to share professional information openly, Rajan says.
“They want to see the fact that if someone does a search for them, what pops up is not something that’s outdated, but something they’ve chosen to put up there,” he says. “It’s the professional brand you want to show the world.”
LinkedIn still offers basically the same proposition to its users as when it started, Thornley says. Facebook has attracted much criticism in its attempt to become the registration point for everything on the Web.
“You share your information with others who want to connect for the purpose of a business transaction,” he says. “That’s the expectation on LinkedIn.”
The social networking site can take those sort of expectations to the bank.