By: Alan D. Mutter
There’s a publisher whose sales doubled in the first quarter of this year, with display advertising revenues climbing 73 percent, subscription sales rising 90 percent, and recruitment revenues gaining 122 percent.
The publisher’s name is LinkedIn, and the quarter was not unusual. Sales at the digital networking and recruiting site grew by 114.8 percent in 2011 — at the same time interactive revenues at America’s newspapers collectively advanced by 6.8 percent.
Why is LinkedIn doing so much better than newspapers, which dominated the employment vertical not so many years ago?
Because LinkedIn is executing crisply on a state-of-the-art digital-publishing model that contrasts rather sharply with the approach newspapers have taken since they segued into interactive publishing nearly two decades ago.
Newspapers can learn a lot from LinkedIn, which was built from the ground up to exploit a carefully targeted, revenue-rich vertical: the hundreds of millions of business people who want to make valuable connections to advance their careers — and the tens of thousands of recruiters seeking the best possible talent.
LinkedIn encourages people to publish a free, detailed profile of themselves, and then begin building connections among as many friends and strangers as they can. You can link directly to someone you already know, or request intermediaries to help you contact people you would like to meet. Taking a cue from computer games, LinkedIn even keeps score of how many connections you have made.
The depth and breadth of its audience has established LinkedIn as the unchallenged social network for business, making it the place to seek new business contacts or to recruit fresh talent for your company. Perhaps the single greatest appeal of LinkedIn is that your profile acts just like a resume, so you can openly make yourself available to new job opportunities without running afoul of the boss.
LinkedIn’s traffic has quintupled since 2008, rising to 150 million registered worldwide users at the end of 2011, according to the company.
The steady growth has created a deep, rich, and eminently searchable database, thanks to the carefully structured way that LinkedIn gathers information from individuals as they create and update their profile.
With all the pieces in place, LinkedIn’s triple-play revenue model produced a triple-digit sales increase in 2011:
• The company generated 54 percent of its sales from recruiters seeking to identify, evaluate, and contact potential job candidates. The recruiting service includes not only access to LinkedIn’s steadily growing global database, but also a suite of tools that allows an employer to manage the entire hiring process from beginning to end.
• LinkedIn drew 25 percent of its revenue from the sale of display advertising to an audience that it says rivals the high-end demographics of The Wall Street Journal.
• The company got 20 percent of its revenue from selling premium services to individuals and companies that want more and deeper access to data than the free platform permits. The most popular aspect of the premium service is the ability to send an email directly to a contact you don’t know, rather than trying to connect through an intermediary in your extended network.
To be sure, LinkedIn is in a different business than newspapers — but not that different. As recently as 2000, publishers collectively sold $8.7 billion in recruitment advertising. Last year, the vertical tumbled to $743.4 million, the lowest production since 1977.
What went wrong? While newspapers stuck with the classic model of putting job ads in front of thousands of people in hopes of matching employers with job seekers, LinkedIn leverages the full power of digital publishing to find the ideal candidates for employers — even when they’re not looking for jobs.
Publishers planning to venture beyond websites that simply repurpose their print products — and everyone should be — can learn a lot from the factors that fueled LinkedIn’s success:
Be targeted. Rather than try to be all things to all people, LinkedIn serves a large, valuable, carefully selected and carefully cultivated audience.
Be focused. Where print and digital newspaper products pride themselves on carrying something for everyone, LinkedIn only invests in features that will enrich the data it sells.
Be interactive. While newspaper websites for the most part are staff-produced, one-way media designed to serve essentially passive readers, LinkedIn is powered efficiently by users who continuously build — and, therefore, build the value of — its ever-growing database.
Be viral. Because LinkedIn is explicitly about networking, it is by definition viral. By fulfilling the needs of its community, LinkedIn grows organically and inexpensively, reducing the costs of creating content and marketing its brand.
Final factoid: A year after its IPO, LinkedIn’s stock market capitalization of $12 billion was 1½ times greater than the combined value of the shares of A.H. Belo, Gannett, Gate- House Media, Journal Communications, McClatchy, Media General, the New York Times Co., E.W. Scripps, and the Washington Post Co.
Alan D. Mutter is a newspaper editor who became a Silicon Valley CEO and today is a consultant to media and technology companies. He blogs at Reflections of a Newsosaur (newsosaur.blogspot.com).