Sep 6, 2017 - Economy

LinkedIn goes after tech giants with major advertising update

Microsoft-owned LinkedIn is launching LinkedIn Audience Network, an advertising feature that will let marketers promote native ads to certain audiences on sites and apps other than LinkedIn. Previously, advertisers could only reach LinkedIn's audience of professionals on Linkedin's platform — mainly within its version of a news feed. Now, they can reach them by targeting ads to certain demographics or behavioral groups with data from Linkedin, wherever they may be on the web.

Why it matters: Some of Microsoft's biggest advertising competitors, like Google, Facebook and Twitter, rely on this type of marketing solution to generate large chunks of advertising revenue, particularly on mobile.

Data: eMarketer, Note: 2017 values projected; Chart: Andrew Witherspoon / Axios
Data: eMarketer, Note: 2017 values projected; Chart: Andrew Witherspoon / Axios

While LinkedIn isn't as big as Google or Facebook (it has over 500 million members, 25% of which reportedly engage monthly as of last year), the quality of its audience makes for a lucrative advertising business. Per Pew, half of online adults with college degrees are on LinkedIn, as well as 45% of online adults with a household income of at least $75,000.

Our thought bubble: As a business unit, LinkedIn continues to cost Microsoft more than it brings in and its data and functionality have yet to be fully integrated into Microsoft's products. Its benefit to Microsoft is in its ability to reach a high-level audience through its publishing platform and its ability to monetize that audience through ramped up advertising solutions, like a custom Audience Network.

By the numbers: LinkedIn says its seen positive results from beta program tests. More than 6,000 advertisers have used LinkedIn's beta program Audience Network. Of those, they've averaged a 3-13% increase in unique impressions served to an incremental audience (people who hadn't engaged in LinkedIn's platform yet) and an 80% increase in unique clicks.

Getting competitive: LinkedIn has been ramping up its mobile platform to give way for an update like this, particularly by creating more opportunities for video advertising. Most recently, the company has just begun rolling out direct native video uploads to the site, which would increase the company's ad inventory without making the site too crowded. It's continued to beef up its mobile functionality to successfully increase user engagement. Microsoft announced on its earnings call earlier this year that user sessions were up more than 20% in the third fiscal quarter.

One big advantage: The platform is also considered one of the most trustworthy, having been able to generally avoid a fake news problem and spam with more strict user verification than some of its competitors.

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