LinkedIn CEO Says Sponsored Content Is Company's Fastest Growing Business Ever

Updated from Monday, Nov. 10

HALF MOON BAY, CALIF. (TheStreet) -- With 47% of traffic to LinkedIn (LNKD)  now coming by way of mobile devices, the professional social network finds itself in the precarious position of needing to rely on a fledgling business to make up for lost revenue from eyeballs moving away from the company's website and, by association, its tried-and-true desktop advertising business.

The business in question is Sponsored Updates, and though only a little more than a year old, the mobile-friendly, in-stream ad type is already the fastest growing business in LinkedIn's history, CEO Jeff Weiner said Monday at the Techonomy conference at the Ritz Carlton in Half Moon Bay.

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Weiner, who was interviewed by Techonomy founder David Kirkpatrick, focused his remarks on how LinkedIn, with more than half of its addressable market using its service, is finally in a position to "operationalize" the company's vision of creating economic opportunity for every member of the work force. Part of that vision includes constructing an "economic graph" -- now a favorite talking point of the chief executive -- to map all the world's jobs, professionals, universities and skills.

Released in late July last year, Sponsored Updates is similar to Twitter's (TWTR) Promoted Tweets and Facebook's (FB) Sponsored Stories, meaning advertisers can pay to promote their regular LinkedIn content to members beyond those who follow the company. A broader audience is reached via the professional network's stream. The release of the platform-agnostic ad type marked the company's first attempt to profit from mobile audiences who were, and still are, migrating away from the desktop app at the expense of display advertising revenue. 


During his presentation, Weiner also discussed LinkedIn's largest business, Talent Solutions.

"There's a lot of focus externally on our Talent Solutions business and we've had good success there, and it's really transformed the recruiting industry," he said, "so it's interesting to note that Sponsored Content has been the fastest growing business that we've launched to date."

Talent Solutions, or tools LinkedIn sells to recruiters, is the company's largest business, representing 61% of sales in the third quarter. Weiner's point seems to be that Marketing Solutions, with the help of in-stream ads from brands, could balloon to be a more lucrative business for the company than its primary money-maker in the years to come.

On that front, Weiner said he's excited about the opportunity from the intersection of Sponsored Updates and Bizo, which LinkedIn acquired in July for around $175 million. Bizo, said Weiner, helps companies "nurture leads," and should help the professional social network capitalize on business-to-business marketing.

LinkedIn is coming off a strong third quarter having beat estimates with earnings of an adjusted 52 cents per share on $568 million in revenue, an increase of 45% over the year ago quarter. Shares are up nearly 15% since the Oct. 30 report, thanks in no small part to the quick maturation of the Sponsored Updates business. In the quarter, Sponsored Updates comprised 31% of the Marketing Solutions business -- its overall ad business -- which translates to roughly $33.8 million in revenue for the 3-month period.

The social network has 332 million registered users, and, on average, 90 million members visit the service each month.

--Written by Jennifer Van Grove in Half Moon Bay, Calif.

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