LinkedIn looks to data analytics to achieve digital vision

Profile picture for user slauchlan By Stuart Lauchlan February 6, 2014
Summary:
“We aspire to build the world’s first economic graph; in other words, a digital mapping of the global economy, including a profile for every one of the 3 billion members of the global workforce, including all of their skills and expertise." A bold vision from CEO Jeff Weiner.

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Jeff Weiner

LinkedIn took a pounding on Wall Street this week after beating earnings estimates for the year, but striking a downbeat note with lower than hoped for guidance looking forward.

And yet, the firm’s major revenue streams are all in growth mode. The talent solutions group grew to $245.6 million, the marketing group to $113.5 million, and paid subscriptions to $88.1 million.

The reason for the firm’s caution is its stated need to bank for what it calls “significant long-term investments”.

One such investment is a data analytics gambit via the acquisition of two year old start-up Bright Media for $120 million. Bright specialises in data analytics for the jobs market and the plan is for LinkedIn to use its technology to improve its own algorithms for connecting prospects and employers.

Linkedin also announced the acquisition of two year old start up Bright Media for $120m. Bright is a data analytics company which focuses on the jobs market. Linkedin will use the company to ‘improve its algorithms to connect prospects and employers”.

In the words of Bright’s founder and CEO Eduardo Vivas, the firm’s mission statement has been:

“to use data science to enable the labor market to operate more efficiently.

“We assembled an incredible team. In their previous lives, they had been nuclear physicists, astrophysicists, geophysicists, neuroscientists, organisational psychologists, teachers (for America), and even a five-time Jeopardy champion. They were brought together by a belief that finding a job should be easier than splitting an atom.

“We then commissioned the first large scale, controlled clinical trial of talent matching. We recruited hundreds of talent acquisition professionals and asked them to tell us if they would advance specific candidates in the hiring process for specific jobs. Based on these judgments, we were able to identify the relevant features that lead to successful hiring and build them into our matching algorithms.”

Data science

For Bright, the reason for agreeing to being acquired by LinkedIn is scale - the ability to apply its technology across a wider economy. For LinkedIn’s part, it gets a bunch of data scientists specialising in an area that represents 55% of its revenue.

Jeff Weiner, LinkedIn CEO, explains:

“We’re going to be investing as a core area of focus on increasing the volume of jobs available on LinkedIn. And as we increase the comprehensiveness of jobs available, we also need to maintain our investment in the relevance of those jobs and making sure we can get the right job in front of the right member at the right time.

“On the monetization front, it’s really about improving the return on investment for our customers, companies who are posting jobs, and this enables them to connect with the right prospect at the right time.

“And the same holds for the individual job seeker, who are customers of our job seeker subscription package and the way in which we’re going to be able to integrate these algorithms and matching capabilities into that value proposition.”

The acquisition also has implications for improving member engagement, he adds:

“We had a big year last year in terms of the number of new members that were added, and a good deal of that activity came from international markets and developing economies. And within those developing countries, we saw a healthy number of students coming onto the platform, and their core use case, their biggest need, is finding their first job.

“And so to the extent we can become more comprehensive in those markets, with regard to the jobs we have to offer, and again leverage these matching capabilities to get the right job in front of the right member at the right time, we can also deepen engagement. And so the deal from where we sit really makes sense on multiple dimensions for us.”

The big vision 

Weiner argues that 2014 is an inflection point for LinkedIn.

“Our mission is to connect the world’s professionals to make them more productive and successful. Five years ago, this was largely aspirational. In 2008, we had just over 30 million members. We closed 2013 with nearly ten times that figure, roughly half of the world’s knowledge workers.

“We’ve grown similarly across other pillars of the network. We are approaching 3.5 million active company profiles, 300,000 jobs, more than 3 billion endorsements, more than 24,000 university pages, and billions of weekly updates flowing through the network.

“These assets serve as the foundation upon which we will realize our much larger vision, to create economic opportunity for every member of the global workforce, all 3 billion of them.”

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What that means in practice is that:

“We aspire to build the world’s first economic graph; in other words, a digital mapping of the global economy, including a profile for every one of the 3 billion members of the global workforce, including all of their skills and expertise; a profile for every company in the world and who you know at those companies so you can get your foot in the door; every job opportunity offered by those companies, full time and temporary, for profit and nonprofit; every skill required to obtain those opportunities; a digital presence for every higher educational organization in the world offering those skills; and an overlay of all of the professionally relevant knowledge shared by each of those individuals, companies, and universities.

On a slightly less visionary front, another area of growth for the firm is in the mobile space, with a 40% increase in smart phone engagement over the past 3 months while an iPad app launched in October last year has seen a ten-fold increase in social activity.

Weiner predicts:

“In 2014, we expect to reach the point where most LinkedIn members access the site via mobile devices. Mobile will continue to be a major area of investment in 2014.

“We’re very pleased with the shift and our investment in mobile applications, the usage of those applications. We’re north of 40% of our engagement is now comprised of mobile usage, and that’s up quite substantially over the last several years.”

 Verdict

A bump in the road and an overexcited Wall Street 'let down' by Twitter in the same week, not a long term set of problems.

The emphasis on mobile and analytics is clearly the right direction.