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The MySpace/Fox deal of 2005 took some users by surprise, but MySpace’s 580 billion dollar payday was instrumental in quantifying your identity and setting a price tag on your virtual identity. Three years later, LinkedIn has taken that valuation to heart.

Although you may have missed the news amidst the excitement of the last two weeks, the social network boasting over 30 million professionals and a user base that represents every company on the Fortune 500 list unveiled its new and presumably fruitful business model: social surveys.

How social networks make money (for now)

Ever since sites like Facebook and MySpace became the relative norm, social networks have been trying to make money in a variety of ways – from market research to advertising, the longterm value of which has been hotly debated, due to the thinking that people don’t login to Facebook to shop. While recent reports show that mentality may be changing, the value of advertising on one social media site alone is predicted to decline as the web continues moving towards an open platform.

Illustration by David Simonds

Illustration by David Simonds

LinkedIn’s social survey model

Capitalizing on its influential user base of professionals and building upon its already successful advertising model, LinkedIn recently launched “social surveys” as a new B2B product selling user opinions to companies looking for demographic samples. The value of LinkedIn’s user base is the granular level at which they can be targeted – based on affiliations, age, hobbies, income, industry, skills, and more. Hopes are high, and the reason behind the excitement is two-fold.

First, LinkedIn’s ability to target users in a highly relevant way likely outshines that of sites like Facebook and MySpace. The latter collect data, sure, but this data is mainly comprised of a series of frivolous “facts” that don’t necessarily profile users to the degree required by market research firms. The former, however, can easily identify a sample of CEO’s in Iowa earning 250k or more. Which company is in a better position to sell its data? It seems obvious.

The second reason behind the excitement is tied to the model itself. As a reward for taking partner surveys, LinkedIn will pay its users in cash (50 cents to $2.50 a minute), merchandise, or access to survey results – which may be the bigger draw for professionals already making more than enough dough.

Why didn’t this happen earlier?

Brick-and-mortar businesses like the youth marketing agency StreetWise (who also does online promotions) made a name for itself as the go-to youth marketing partner for movies, films, clothes, video games, and more. This was because StreetWise leveraged its extensive youth network of early-adopters and tastemakers as influencers, and charged major companies for the chance to give their team free products in return for opinions.

What took so long for Linked-In to catch on? And what will happen once closed social networks become passé?

Good question. Any takers?


3 thoughts on “Why you should join LinkedIn today
  1. kmoth says:

    I join Linkedin over a year ago now and I’m stunned by how fast it has caught on among people I know. Although I still prefer facebook, i think that Linkedin has found a unique niche by targeting professionals and people in the 20-30 age range who want to begin to network more with people in their particular industry.

  2. Jesse says:

    I like that LinkedIn targeted a niche market in the social networking world, rather than just build another site and hope it could compete with Facebook and MySpace. However, despite their reported 30 million plus users, it doesn’t feel like they’ve caught on to the point where non-users recognize the name LinkedIn. With all the rumors swirling around it on the internet, I’m interested to see what steps the site takes to make themselves more relevant in the social networking realm.

  3. Larry says:

    LinkedIn has a good thing going. There will always be the affluent professional class and people who want to take Professional Social Networking seriously. If you want to socialize stay with MySpace or Facebook. If you want to Network while socializing and growing professionally, with people who can actually make a difference, (True Professionals)… go to LinkedIn.

    What do you want out of life??

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