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.
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?