LinkedIn Shutters Ad Network, Focusing Resources On Sponsored Content
Sponsored Content accounted for more than half of the company's ad revenue in Q4.
LinkedIn is shuttering its nascent ad network just under a year after launching it. Resources will instead focus on growing the Sponsored Content business.
Last Feburary, following a path now well worn by the likes of Google, Facebook and Twitter, LinkedIn started an ad network to target ads using its data to users outside its own walls. The ad network and a standalone product called Lead Accelerator grew out of the company’s acquisition of B2B marketing technology firm Bizo in July 2014.
Steve Sordello, LinkedIn’s CFO, wrote in LinkedIn’s quarterly earnings statement on Thursday that growing the ad network and Lead Accelerator would take more resources to scale than anticipated.
“As a result, we will phase out selling Lead Accelerator in the first half and incorporate the key technology into Sponsored Content throughout 2016. We will also deprecate Network Display through this process. In the short-term, the trade-off is roughly $50 million in potential revenue, but we believe this is the best long-term decision.”
Sordello added that Sponsored Content is the company’s fastest-growing and most profitable ad product. For the quarter, Sponsored Updates grew roughly 85 percent, accounting for more than 50 percent of LinkedIn’s Marketing Solutions revenue for the first time.
The company did note, however, that it will continue to offer its own inventory via programmatic exchanges, an effort it began last quarter.
LinkedIn said marketing solutions (i.e., advertising) accounted for just 21 percent of revenues, compared to 24 percent a year ago. In Q4, ad revenues grew 20 percent, to $183 million. Display advertising revenue fell by more than 30 percent year over year.