LinkedIn, the online network resource for professionals, is looking to grow its business in Europe through more local language versions of its platform. It will be introducing a German platform this week, after similar successful initiatives in France and Spain last year.
On an equally buoyant note, the company says it is experiencing growth despite the economic crisis, with 35 million members worldwide and CEO Reid Hoffman claiming the network adds around 17 million users every 17 days.
Targets key markets with local language versions
LinkedIn is a rarity in social networking in that it is one of the few big players to show sustained, profitable growth. Facebook may be much bigger, with 160 million members, but it is not making money. One of the reasons LinkedIn is successful is its mixed business model and highly targeted audience of business professionals.
In terms of international growth, about half of LinkedIn's 35 million members are outside the US. It has benefited from English being a widely spoken business language, but knows that this will only take it so far. The site is now pushing for stronger international growth through localisation, which it is approaching it in a very pragmatic way. It is focusing on local language platforms in markets where homegrown players are strong and fluency in English within the business community cannot be taken for granted.
In particular, LinkedIn's localisation push is concentrating on Europe, where it has 9 million members. It has so far focused on local language versions of the service in France, Spain and, from this week, Germany. This makes sense as it faces strong local competition in these markets, particularly Germany.
In France the main rival is Viadeo, which also has an operation in Spain. According to Comscore, Viadeo France had 375,000 unique visitors in April 2008 - a 66% increase from the previous year.
Reports accompanying Viadeo's acquisition of Spanish rival IctNet in July 2008 put its total Spanish membership at 300,000.
In Germany, homegrown Xing is the top business social network, with 2.26 million members.
LinkedIn's next target for a local language version is Italy.
Localisation helps market share
LinkedIn's investment in local language platforms appears to be paying off. It launched the French version in November 2008 and says it has seen a 200% increase in sign-ups, bringing the total number of French members to 700,000.
The Spanish platform, launched in July 2008, helped LinkedIn move into top position within one month of the launch and saw nearly 200,000 members join by the end of the August (it has not provided current membership).
LinkedIn has around 0.5 million members in Germany, where displacing Xing's 2.26 million members could be more of a challenge. Xing is a public company, with an EBITDA of 9.47 million and revenues of €25.09 million for the nine months ending September. This is a company in good shape, and like LinkedIn it has a diversified business model with a mix of advertising and subscriptions. However, LinkedIn notes that during 2008 it grew its German base by 62% - and this is without a local language platform.
LinkedIn finds opportunities in recession
LinkedIn is one of the few companies seeing growth potential in the current economic crisis. It says it is towards the top end of its target revenues of $75-100 million for 2008 and profitable for the year, with 4Q08 one of its best performing quarters.
According to LinkedIn, one of the contributing factors has been advertisers seeking a more targeted, qualified base, particularly in recruitment. It thinks its corporate solution could prove appealing as companies put the screws on costs. The corporate solution is geared towards in-house recruitment and is priced on a per-seat basis, which LinkedIn says could offer a more competitive deal than using third parties, which often charge high commissions - and often use LinkedIn as the first port of call anyway.
The flipside of the economic downturn is high growth in members from sectors that have been the worst hit. For example, the number of users from the UK financial services sector has increased 35%, while membership among the banking community is up 42%.
Eden Zoller, Principal Analyst, Consumer Practice