LinkedIn‘s (NASDAQ:LNKD) ‘average monthly unique visitors’ have increased from around 16 million in 2008 to 123 million in 2012. This is an important metric as it not only determines the company’s advertisement related revenues, but is also indicative of its overall success as well as growth in other business segments such as premium account subscriptions.
We believe that the company will continue to see healthy growth in this figure as it expands in international markets including Europe, South America, Asia and the Middle East. LinkedIn recently crossed 20 million members in India. The milestone showcases LinkedIn’s growing popularity in the country as well as Asia-Pacific, which holds large potential for its future growth. Let’s take a look at some of the factors that will drive growth in LinkedIn’s site traffic.
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LinkedIn has made several product enhancements in recent quarters including endorsements, redesigned company pages, launching the website in local languages such as Danish and Norwegian, new profile features, notifications, and the ability to follow thought leaders, and sponsored jobs to help companies promote key positions to right people. The company has also been experimenting with a new feature, Sales Navigator, and the initial results have been promising. Sales Navigator can be a useful product for LinkedIn as it helps sales professionals in better targeting customers, building relationships and marketing their products. The search includes some advanced features that are not available to others and professionals can establish alerts based on these. The essence is that it will help companies in selling their products to the right individuals based on their preferences, age, location, etc. Sales Navigator can also be integrated with customer relationship management (CRM) software that companies already use, and that gives it a great advantage and appeal.
LinkedIn is not restricted to just recruiting anymore; it is becoming a great platform for marketers to find potential customers for their products through LinkedIn’s tools. The company is launching the ability to add rich media (presentations, photos and videos) for its members, which can help them market themselves more effectively. It also made some changes to its search tool that are aimed at making search more convenient and intelligent for the users. With this change, LinkedIn users don’t need to search for people and companies independently, instead they’ll see the relevant lists from different categories as they type in the search query.
The bigger picture is that as LinkedIn’s user base grows, the company will need to better organize the data resulting from this growth. There is a great value in targeted and relevant searches. They not only improve the user experience, but also help marketers, recruiters and sales professionals in efficiently reaching out to potential customers and candidates.
Focus On Mobile & Integration With Third-Party Sites
Like everyone else, LinkedIn is making efforts to capture the growth in the mobile market. In the first quarter of 2013, mobile platform accounted for 30% of the total unique visitors versus 19% a year ago. The number of page views including mobile grew by approximately 63%, compared to just 31% growth for desktop. To bolster its mobile offering, LinkedIn has also acquired the newsreader app Pulse, for $90 million in a transaction that included 90% stock and remaining cash. With Pulse’s more than 30 million users, LinkedIn can boost content offering on its app and website to increase user engagement and improve its targeted search.
Facebook took the opportunity of increasing its inbound traffic through third-party sites through its feature called Facebook Connect. Through this feature, users of a third-party site can share links with their friends on Facebook. This is a win-win situation for both Facebook and third-party site as it helps increase the traffic for both parties. LinkedIn is also leveraging this opportunity by providing integration APIs for third-party sites. We expect this trend to see increasing adoption, which will help LinkedIn further increase the traffic on its site.
LinkedIn continues to demonstrate strong growth in international markets. At the end of Q1 2013, about 64% of the company’s total user base was international. Although LinkedIn is seeing immense success in developed markets, the emerging markets offer good growth potential from long term perspective and the absence of strong direct competitors will help the company continue its expansion. LinkedIn recently crossed 20 million members in India, which now constitutes roughly 9% of the company’s global membership base.
Our price estimate for LinkedIn stands at $88, implying a 50% discount to the current market price.