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Published 14 March 2013 00:01, Updated 18 March 2013 08:24
LinkedIn Australia’s Steve Barham (left) and Cliff Rosenberg aim to disrupt industries from media to recruitment. Photo: Louise Kennerley
By the time you read this, LinkedIn will have passed 4 million members in Australia – accounting for an estimated four out of five professionals in the country.
“It’s an incredible milestone,” says Cliff Rosenberg, managing director for LinkedIn in south-east Asia, Australia and New Zealand. “It means pretty much every professional in Australia is now up and running with a profile.”
LinkedIn executives have lifted the lid on its phenomenal growth in Australia for the first time since it opened a local office in January 2010.
Back then, LinkedIn had 1 million Australian members and no corporate customers, aside from a few global companies with offices here.
Crucially, the social network has managed to convert member growth to commercial success. There are now 1000 corporate customers in Australia alone that are paying to market and advertise to LinkedIn members. The website has 75 of the ASX 200 on its client list, including household names such as Rio Tinto and Westpac.
LinkedIn has only just started to make its presence felt in this market but as its business matures, it could become a major disrupter for several industries from media to recruitment.
Globally, LinkedIn is having a moment. The US-based business passed 200 million members worldwide in January and says it is adding another million every week.
Its stocks are at an all-time high – the company listed on the New York Stock Exchange in May 2011. At its initial public offering its shares were $US45, they’re now more than $US170.
This is not just internet bubble froth – the bottom-line performance is strong as well. LinkedIn reported $US21.6 million in net income for the 2012 calendar year, a rise of 81 per cent from 2011.
The Asia-Pacific region accounted for 7 per cent of the global revenue of $US972.3 million in 2012 and BRW understands Australia is the biggest market within that.
LinkedIn was founded in the US in 2003 but its aggressive global expansion has come mainly in the past three years. The Australian operation was one of the first outside North America and Europe and there are now separate offices in Sydney, Melbourne and Perth, with about 100 employees – in sales, marketing and client services.
“We've put focus on expanding internationally and Australia is an important market for us but . . . we try not to choose between our children,” says Rosenberg.
We've put focus on expanding internationally and Australia is an important market for us but . . . we try not to choose between our children.
The biggest part of the business is the talent services division, accounting for 54 per cent of revenue globally. This includes products such as LinkedIn Recruiter, which lets recruiters and hiring managers search the LinkedIn membership base in a targeted way; and LinkedIn Jobs, which allows companies to post a job ad and ensure it is targeted to the right audience.
Talent services is also the division that lets companies develop their own LinkedIn Careers page – which can be tailored so that, for example, engineers see different content to marketing professionals. There’s also “Work With Us”, which lets companies advertise on their employees’ profile pages – using space that would otherwise carry a generic advertisement.
The next main way LinkedIn makes money is through its marketing solutions division – general advertising rather than job postings – accounting for 27 per cent of global revenue. For example, Cathay Pacific has advertised on the site to reach business travellers.
Finally, while basic membership of LinkedIn is free, many professionals upgrade their accounts for perks such as being able to send messages to other members. Premium membership subscriptions accounted for the remaining global revenue in 2012.
The company has also recently introduced a new product called “Sales Navigator” to help sales staff to find out whether anyone in their organisation is already connected to a prospective lead. “The idea is to turn cold leads into warm leads,” Rosenberg says.
The business strategy relies on LinkedIn members actually spending time on the site. To this end the company has been positioning itself as a content platform. The days are gone when LinkedIn was just a place to post your resume and serve as a digital Rolodex of contacts.
There are LinkedIn groups to allow professionals to network with their peers and the ability to share status updates with connections but the linchpin of the content strategy is “LinkedIn Today”. This turns the home page into a mini news site and also includes regular email updates. The stories are mostly drawn from the publication pages of content partners (such as BRW ) and algorithms determine their prominence.
LinkedIn strengthened its content offering with the purchase of presentation software SlideShare in May 2012 and the launch of its Influencer program later in the year. There are 150 international “thought leaders” who are writing original content for the site as part of the Influencer program, including Australian entrepreneurs Naomi Simson and Matt Barrie. Rosenberg says the Influencer program is set to be expanded in the next few months.
LinkedIn has invested heavily in mobile platforms and not only has apps for both iOS and Android but has taken the step of developing native apps for Windows 8 and BlackBerry as well.
So what sort of effect is LinkedIn having on the market?
The director for LinkedIn Talent Solutions Asia Pacific, Steve Barham, says LinkedIn Jobs and LinkedIn Recruiter are “transformational”.
“A hundred years ago you hung out a shingle, a sign that said ‘help wanted’, and it went from that to newspaper classifieds,” Barham says.
“That went on 60-70 years and then it changed to online job boards, which are really just the digital format of newspaper classifieds. With LinkedIn Jobs it’s the first transformational thing to happen to employment listings in a century because it’s allowing passive candidates . . . to almost serendipitously see ‘oh here are three jobs that are perfect for me’.
“This is a much better way. What companies are finding is that the calibre and the quality of applicants from LinkedIn is far better than from any other source and [so] you don’t have to weed through the ones that aren’t relevant.”
The price for a single listing on LinkedIn Jobs is about $100 a month, though Barham says the return on investment is better if a client uses all the talent products together.
Meanwhile, LinkedIn Recruiter, which costs around $10,000 for a licence, allows recruiters and managers to search the database of professionals filtering by criteria such as skills and location.
This is most useful in industries with skills shortages, such as information technology, engineering, resources and financial services. Recently engineering company Aurecon Group filled a rail engineer role within four weeks using LinkedIn, after previously trying ads and agencies for 12 months. Aurecon has been using the full suite of LinkedIn talent solutions and estimates it has saved $750,000 in agency fees.
Aurecon’s human capital leader for Asia, Liam Hayes, says the company has focused its recruitment strategy on LinkedIn because it believes the best candidates are already working and not actively looking for work.
“Naturally we have [decreased usage of other hiring forms] because LinkedIn has presented another channel but we haven’t stopped using any other channel,” Hayes says, adding that Aurecon has also used LinkedIn to help rebrand after a merger a few years ago.
Barham says the critical mass of professionals on LinkedIn means executive recruitment firms and staffing agencies have had to change their business models.
“Traditionally they’ve provided value by having a black book – or proprietary database – of names,” Barham says. “What’s happening now is that agencies that are thriving have expanded their offerings – they’re helping companies with selection and assessment.”
He adds that LinkedIn customers include many recruitment firms, as well as companies hiring directly.
It remains to be seen how LinkedIn will impact competitors for the advertising dollar, including media companies and recruitment boards such as ASX-listed SEEK.
Citigroup research media and telecoms analyst Justin Diddims says SEEK remains the number-one destination for jobseekers and could withstand the competition. “LinkedIn could grow the size of the [online] recruitment market and the net loser out of this might be print advertising.”
Morningstar senior equity analyst Tim Montague-Jones says LinkedIn targets white-collar roles whereas SEEK makes money in general recruitment. He notes SEEK has increased prices despite the competition but has added other products such databases of professionals.
“It’s another income stream and it’s largely being driven by the threats of LinkedIn and social media,” Montague-Jones says. “The company has articulated that it continues to monitor LinkedIn. SEEK sees it as a threat and they’re responding to it – they’d be mad just to not do anything.”