Nine reasons why LinkedIn is becoming Linked-out!

I love LinkedIn. It’s the best tool for professional networking by far. As an owner of a recruitment agency and an entrepreneur, my time and spend has shifted towards LinkedIn.

I add people, research people and connect with people every day. I’m a paid up customer of the ‘LinkedIn Recruiter’ product which costs thousands per licence which enables me and my team to connect like never before. Before a meeting with someone new, I already know a lot about the other person i.e. work histories, interests, people in common and much more. That helps me build relationships quicker than ever.

I receive many more connection requests than I send out and I am particular about accepting random requests, although welcome the opportunity to connect with new people as long as they are open about their reason for connecting. I’ve got nothing to hide, and I love sharing my professional and personal information, career and personal achievements and I am proud to let others know that I’ve looked at their profile without hesitation.

Business cards are being replaced by LinkedIn. People can add each other instantly on the fly while in the middle of conversation. In fact, typically by the time I arrive back at my desk after meeting new people that day or after a function, there’s always a bunch of invite requests that have been sent and received.

It’s been around longer than you might think

For those that didn’t realise, LinkedIn has been around since 2003. My mentor back in 2007 told me about it and told me never to accept an invitation from a competitor and to keep LinkedIn a ‘secret’. Well that faded fast as everyone is basically connected via a 2^nd or 3^rd connection although I still won’t go out of my way to share my network with a direct competitor.

Statistics speak louder than words. The uptake in members in Australia is huge, surpassing three million members with more than 200 million members worldwide now.

From a revenue and profitability perspective, LinkedIn has clearly surpassed critical mass and the significant number of users and data available has created enormous opportunity for monetisation. LinkedIn is cashing in cleverly at what I believe is a fair price for its various users and as a result, revenues and profits are climbing fast. The business is solid. The average user now has to pay for additional features of LinkedIn. Companies are signing up to more sophisticated accounts and the level of adoption of these corporate accounts has enormous growth potential. I believe that less than 15% of recruiters have signed up to the LinkedIn Recruiter account, which means that there is plenty of money still left on the table for LinkedIn to swoop up and collect.

That’s no surprise to me. Recruiters are slow to adopt anything slightly new or innovative (based on my experience in meeting and having tried to sell to hundreds of CEOs, owners and consultants in the recruitment industry).

LinkedIn’s value continues to grow

LinkedIn is a professional networking product that makes money from every angle covering B2B and B2C. It earns money from users who I call professional consumers i.e. those who have LinkedIn profiles and upgrade, as well as earning money from businesses who pay for corporate accounts e.g Linked Recruiter.

Advertising revenue also attracts both B2B and B2C spending, with LinkedIn’s highly targeted capability which is very subtle and non-intrusive. I believe that advertising messages on LinkedIn are far more widely accepted than Facebook and there will be more creative methods of monetisation to come based on the ability to target users so closely.

Unlike Facebook and Groupon which have declined between 50-80% of their share value within 12 months post IPO, the share price of LinkedIn (LNKD) has tripled since its IPO in January 2011, which is a phenomenal return for a shareholder. When the sales rep came to sell me the LinkedIn Recruiter product, I said ‘buy shares now’. If I’m spending thousands a year, the rest of the industry will follow and they haven’t even scraped the surface of potential revenues in Australia. In my opinion, the share price will continue to grow for another couple of years.

So what’s the problem?

Okay. So if I’m so madly in love with LinkedIn as an active user, customer and share buying advocate, why would I propose that LinkedIn is becoming Linked-out? By Linked-out (my own made up phrase) I am referring to the fact that I believe that LinkedIn is starting to dwindle in terms of a user’s experience and lose some of its relevance and effectiveness.

When a user experience diminishes, user activity will slow and decline and so will revenue and pricing. Facebook refines itself regularly to keep the data in front of each user as relevant as possible and I feel that many Facebook users are spending the same if not more time on Facebook than ever before. I am sure that LinkedIn will continue to refine itself over time, although here are some of my observations where LinkedIn is becoming Linked-out.

1. The dinosaurs have arrived in droves!

Yes, those late adopters are those people who have just joined and are now adding you on LinkedIn to bulk up on connections. They are late to the party and you can visibly see them playing catch up.

These are the folk that may not have a Facebook profile yet, have never tweeted, and probably still have a fax in their office. It looks like someone appeared in their office and said ‘you guys need to get on board’. They’ve had an internal seminar from one of their Gen Y or Gen X staff and finally they’ve been convinced (or forced). Now they are trying to understand it all and drum up business.

Most of these baby boomers still have PAs that probably do simple tasks that could be outsourced or achieved through the use of technology. These users won’t last. It’s too hard, takes up too much time and they won’t ‘get it’. Ask them in 12 months if they are still active.

2. Information overload

There’s too much going on: profiles, news updates, groups, articles and more. Where to look, what have I missed out on? I never feel as though I’ve done enough.

3. Quality of information in many areas is poor and incorrect

I’m now spending time sifting through trash to find something useful, meaningful and relevant. User generated content is LinkedIn’s best friend and enemy – it’s what has driven growth although it also poses a huge problem.

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