After growing revenue by an average of 100% over the last two years, LinkedIn Corp (NYSE:LNKD) has designs on continuing its fantastic growth rate. But with 97.3% of staffing professionals already using LinkedIn to find candidates, some investors might have their doubts that LinkedIn can pull off such a feat. However, LinkedIn has plans to capitalize on that very fact to continue growing its top line when it released its revamped Recruiter homepage on Wednesday by improving user engagement.
Engaging Talent Solutions
LinkedIn Corp (NYSE:LNKD)’s Talent Solutions service is the largest part of its business representing 53% of the company’s revenue in fiscal year 2012. More importantly, it’s the fastest growing segment of the business, improving 90% year-over-year in the fourth quarter to $161 million in sales.
Perhaps a direct response to Facebook Inc (NASDAQ:FB)’s Graph Search, the new search features boast improved auto-complete and suggested searches that may provide recruiters with better results. Better results ought to lead to a decreased churn rate from subscribers, and improved signup rates as the product becomes increasingly useful at filtering through LinkedIn Corp (NYSE:LNKD)’s quickly expanding user base.
This is akin to the reason Facebook Inc (NASDAQ:FB) made Graph Search – so users can find the information they’re looking for more easily. And while Graph Search could potentially pose a threat as a recruiting tool as it improves in functionality, LinkedIn is staying ahead of the curve with its newest search functionality.
The second focus of the new recruitment page is improving user engagement. LinkedIn Corp (NYSE:LNKD) made numerous improvements last year in engaging its consumers with improvements to its homepage and user notifications. Engagement is just as important on the enterprise side. A new section for “People You May Want to Hire” gives recruiters a few new faces to click on. A focus on messaging keeps them on the site longer.
The benefits of increased engagement are two-fold. First, the longer LinkedIn Corp (NYSE:LNKD) can keep a customer on its page, the more invested she becomes with the service. She’s unlikely to unsubscribe after investing so much time building connections and learning the value of Talent Solutions. Second, LinkedIn sells ads by impressions and not by clicks, which means an increased number of page views, or increased time spent on the site, will directly translate into higher ad revenues.
Engaging job seekers
The new Recruiter homepage is only the most recent improvement to LinkedIn’s website. Last year, the company focused on shedding its image as a place to store your resume by focusing on content that would keep users engaged and coming back every day. One of the bigger developments was the launch of the Influencers program, which provides celebrity generated content.
Last month, LinkedIn acquired Pulse, a news-reading and content recommendation app. While there are many ways the company could use the technology, the most straightforward approach would be to integrate the content recommendation engine with the LinkedIn homepage.
LinkedIn Corp (NYSE:LNKD) already has tons of data on its users interests based on their work history and their network. It can use that data and Pulse to make LinkedIn a popular news source that people come back to every day.
Pulse also has the advantage of being a mobile first company, providing LinkedIn with an added mobile presence. Peter Kafka at All Things Digital points out that LinkedIn could create an app that integrates its network with the news about new projects, job openings, and other business opportunities at specific companies. This would certainly increase mobile engagement, another focus of the company recently.
Becoming Facebook before Facebook becomes LinkedIn
Facebook Inc (NASDAQ:FB) has evolved from a place where people plan events and make social connections, to a site people flock to find out what’s going on. Essentially, it’s become a personal news aggregator to find out what your friends are reading or watching, and share what you’re up to as well. Now, with the beginnings of Graph Search it’s taking on other social networks, LinkedIn Corp (NYSE:LNKD) included.
While LinkedIn doesn’t rely as heavily on ad revenues as Facebook Inc (NASDAQ:FB), it’s still striving to improve engagement to the level of Facebook’s. With the new Talent Solutions features and the acquisition of Pulse, it appears to be taking steps in the right direction. If LinkedIn can increase engagement across both consumer-facing and enterprise-facing products ought to increase revenue across all three of its revenue streams – Talent Solutions, Marketing Solutions, and premium subscriptions.
Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook and LinkedIn. The Motley Fool owns shares of Facebook and LinkedIn.
