The professional social network LinkedIn has seen strong financial results and their share price has risen dramatically over the past month. The shares have rallied from about $175 a month ago to just over $200 as of morning trading on 8/4/14. In the second quarter earnings release that came out on 7/31/14 CEO Jeff Weiner attributed part of the increase in earnings to the further development of sponsored posts on LinkedIn. These posts known as Sponsored Updates are becoming an important revenue source for LinkedIn. They are part of the Marketing Solutions segment which accounts for 20% of LinkedIn's revenues and has experienced 44% year-over-year growth from 2Q13 to 2Q14.
LinkedIn describes these Sponsored Updates on their website as being able to shape perception, drive leads, and build relationships. It is interesting to see how LinkedIn is developing their content marketing platform and beginning to leverage and monetize their user base. Within sponsored content their are three products offered which are Sponsored Updates, Directed Sponsored Updates, and Certified Sponsored Updates Partners. The Directed Sponsored Updates have the added functionality of being able to target different customers and to run tests with different content. The Certified Sponsored Updates Partners product allows companies to team up with experts to develop and manage their campaigns.
As the sponsored content trend is still in the early growth stages it will be interesting to see how the product offerings change as the market becomes more developed. It will also be interesting to see how price structures are adjusted and whether LinkedIn will move beyond the current structure of CPC and CPM.
http://www.thestreet.com/story/12829988/1/linkedin-surges-what-wall-street-is-saying.html
http://investors.linkedin.com/
http://business.linkedin.com/marketing-solutions/content-marketing/sponsored-updates.html
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