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Microsoft Bought LinkedIn: The Impact on Advertising

Meliah Cranmer

Microsoft’s purchase of LinkedIn last week may not have been a shock to the investment world, but it certainly was to those in media. Microsoft is acquiring LinkedIn for $26.2 billion, which values LinkedIn at a 50% upside compared to its closing price last Friday.

“Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet,” says CEO Satya Nadella in a press release.

This is the third largest acquisition in the history of the tech industry. As to be expected, in the same sentiment, Jeffrey Weiner, LinkedIn CEO said in a statement, “Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn’s network, now gives us a chance to also change the way the world works.”

Weiner will stay on as CEO after Microsoft completes the deal. The price and cash deal has given rise to several mixed responses, with some calling it “a match made in uncool heaven”, while others are calling it “a bad move”.

Setting aside those opinions of investors, this may have a much larger impact on how LinkedIn engineers new advertising products and the available technology resources to enhance those products for advertisers. Although LinkedIn makes majority of its money by selling subscriptions to corporate recruiters, the most potential revenue growth is through advertising products. Once the deal is closed, which is rumored for as early as Q4 this year, LinkedIn will then have access to a slew of engineering teams that could possibly impact the way the media world buys ad products as early as Q1 2017.

Coming from the point of view of a media planner, below is a mix of real possible advertising product enhancements as well as a few pipe dreams:

Most Probable:

  • Microsoft Email: Similar to Gmail ad products, Microsoft could start introducing these types of opportunities within their corporate accounts, thus furthering the possible scale and reach of an invaluable LinkedIn audience. Imagine if a hotel company could target those with meeting planner titles, not just on LinkedIn, but also while they are in Microsoft email while they are making decisions.
     
  • Skype: Although the use of Skype is not as straightforward as Microsoft email, the integration of the two companies (and the sharing audience data) is most likely going to happen. This will be most helpful for those B2B companies that have a large international focus.

Down the Road

  • LinkedIn Extended Network: Yes, this product is sunsetting in less than 2 weeks, however, with additional engineering availability and Microsoft’s own programmatic product, LinkedIn now has the resources to not just bring back the extended network, but optimize its algorithms.

A Media Planner’s Pipe Dream

  • Native Offsite: One of the best-performing ad products for B2B marketers is native/content opportunities. LinkedIn’s Sponsored Updates product is a native ad product that allows marketers to target their audience through a member’s newsfeed with a piece of content that looks native to the newsfeed. This product is very similar to those offered by Facebook. If marketers have the ability to not only target their invaluable audience with native ads on LinkedIn, but also do the same offsite (such as on CNN.com or Forbes.com), the scale and reach would increase dramatically. According to INC.com, 70% of individuals want to learn about products through content rather than through traditional advertising. Marketers could now reach their target audience across the web by using LinkedIn’s invaluable audience data, combined with the power of native advertising.

While some in the investment world believe that Microsoft's purchase was a “bad move”, those of us in media should be absolutely thrilled. LinkedIn currently performs very well for B2B marketers -- and it's only going to get stronger.

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