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LinkedIn(s Lnkd) is introducing sponsored content in its feeds on desktop and mobile, officially launching the program that’s been in the works for several months now. The opportunity to buy sponsored content on LinkedIn will be available by the end of the month to any company with an official LinkedIn page.
Even as LinkedIn moves toward becoming a new kind of publisher for business and professional news, advertising is hardly the core of its business. But the announcement speaks to both LinkedIn’s ambition to become a destination for business news as a way to drive engagement on the site, as well as how how social media companies see the future of advertising and making money.
For LinkedIn, the majority of its revenue comes from the corporate recruiting arm of the company. This business hinges on consumers updating their profiles with their resumes, so that companies can use LinkedIn’s paid set of tools to identify potential candidates for jobs on the site.
But to get people to update their profiles and check LinkedIn regularly, it needs a hook — which is where the media business part comes in. The idea is that if LinkedIn is your destination for reading the news each morning, which is what the company told me they’re aiming for, you might be more likely to update your resume and consider a job suggestion on the site.
So why is LinkedIn pursuing ad dollars on its business news feed, when ads only make up about a quarter of its revenue, and corporate recruiting makes up more than half and is growing? For an answer, look at Twitter and Facebook, two companies that lack LinkedIn’s recruiting money-maker, but that are figuring out how to monetize a news feed without driving consumers away. Twitter especially is thriving on these new types of ad dollars — e-Marketer estimates the company will make more than $800 million in ad revenue in 2014.
While LinkedIn likely doesn’t have the same reach as Twitter — it recently reported just 225 million registered users, compared to Twitter’s 200 million monthly active ones — if it could grab even a small share of the ad dollars headed toward sponsored content, it surely couldn’t hurt. And as it builds its reputation as a business news site, that number of LinkedIn users could grow.