LinkedIn goes wide with media content, native ads

• The recruiting and job-seeking site is adding lots of content
• It is working hard to attract more sponsored content%2C a hot%2C new form of advertising
• But the lion%27s share of its revenue still comes from recruiting

SAN FRANCISCO — LinkedIn CEO Jeff Weiner wants a piece of the media action.

The professional network, generally regarded as a venue for job-seeking and recruiting, has morphed into a daily destination to read, share and comment on news. If it sounds a little like Facebook and Twitter, it is. And so is the advertising approach.

"There is a lot of content. Our job is to package up the most relevant content we can find for members," Weiner said on stage earlier this month at a tech conference in San Francisco.

And people are checking it out. Pageviews have shot up 69% from a year ago. But LinkedIn executives won't call the company a media business. That's because only about a quarter of its revenue comes from ads. Recruiting is still the major revenue source.

But like many other media and tech companies, it is trying to make its mark with native advertising, the hottest trend of the moment for marketers — and publishers. LinkedIn joins an advertising craze embraced by Facebook, Twitter, Google, BuzzFeed and even The New York Times.

What's at stake is social network ad-spending dollars, expected to rocket from $7.3 billion in 2012 to $14.5 billion by 2015, according to eMarketer.

"People are really going to talk about this with Twitter going public, because Twitter's main ad product is native advertising — sponsored tweets," says Altimeter Group analyst Rebecca Lieb. That will be especially so during Ad Week in New York City this week as thousands gather to discuss all things digital advertising.

Native advertising generally runs right in the midst of the content stream and resembles it, generally with a reminder that it is sponsored content — advertising — to differentiate it. Sometimes the demarcation is clearer than others. Advertisers see this as a much better way to showcase their digital messages than traditional banner ads.

"It's the new darling of online advertising," says Rich LeFurgy, a consultant to online advertising start-ups and former chairman of the Interactive Advertising Bureau.

And don't expect these natives to vanish anytime soon. In the increasingly important mobile sphere, native ads are practically a necessity, given the limited amount of advertising space. Native ads are "a fast-growing sector — huge," says eMarketer spokesman Clark Fredricksen.

But native ads have their critics. Some worry that readers will be duped into believing they are reading actual content, not sponsored material. The FTC last week announced plans to hold public discussions in December over the issue.

"The industry is going to step up its efforts on disclosure," Lieb says.

It's easy to understand why. Native ads on Facebook's mobile app say, "Suggested App" in light gray on advertisements to download apps. The smallest, lightest gray text says, "sponsored." It's difficult to read the text.

LinkedIn has been steadily adding media content to accompany those native ads. LinkedIn Today includes stories from 1.5 million publishers. The networking site has launched Influencer business blogs. It snapped up Silicon Valley's hottest mobile news-reading app, Pulse, in April with ambitions to mesh the businesses.

With 238 million members, LinkedIn is the second-largest social network behind Facebook, just ahead of Twitter, according to ComScore. "To me, this represents the next step in building on this business," says ComScore analyst Andrew Lipsman of its ad move.

Ad revenue at LinkedIn is expected to more than double, from $376 million this year to $763 million in 2015, according to eMarketer.

When Mercedes saw LinkedIn's new in-news advertising opportunity and the chance to get in front of the high-net-worth audience, the company jumped, says Mark Aikman, social media chief at Mercedes.

"They may be the closest to the current Mercedes-Benz buyer, and they represent the best opportunity," he says.

Computer maker Lenovo bit at the chance to get in front of such executives as chief technology officers. LinkedIn allowed precision targeting to that audience, says Lenovo's social media chief, Roderick Strother.

"What we really wanted to get in front of was the decision makers, executive decision makers with specific responsibility for making those decisions for buying IT products," he says.

Strother says his campaign on LinkedIn performed four times better than display ads. And he's hardly the only fan. "The ability for a marketer to tell a story is resonating extremely well with our members," says Jonathan Lister, vice president in LinkedIn's Marketing Solutions advertising unit.

But while it's important, advertising makes up just 24% of the company's revenue. The network's biggest moneymaker is the unit whose recruiting tool helps drive 56% of total revenue. Using LinkedIn Recruiter for finding talent, which runs nearly $9,000 a year per seat, means you're a somebody in the corporate headhunter world.

Recruiter's success helps explain why company executives don't overplay its identity as a media business. Instead, LinkedIn's media push is positioned as a complementary effort to attract people to its other services.

LinkedIn's core mission — to connect the world's professionals — hasn't diminished. At the same time, its members' biggest request has been content, says LinkedIn's Lister. And the site has obliged.