Today, LinkedIn will make it official: it’s in the advertising business. The business-centric social network still reaps the majority of its revenue from recruitment-related products, but that majority should dwindle as LinkedIn blows open its ad platform. That’s because the company is rolling out a program for marketing firms to build out tools to manage LinkedIn ad campaigns for brands.
An ads API sounds pretty wonky, so let’s break down what this news means. Until now, advertisers had to log in to LinkedIn’s self-serve platform to run campaigns on the platform, which gives marketers control over their campaigns but doesn’t exactly promote ease of use or scale. It’s like making pancakes from scratch as opposed to having Aunt Jemima do the dirty work and just adding water. Through the API, companies like Adobe, Bizo and Unified—three marketing firms with access at launch—can build and add LinkedIn advertising capabilities to their own platforms so that brands can essentially plug and play.
“What if you could automatically generate dozens of campaigns and test hundreds of creative elements across LinkedIn’s b-to-b targeting facets? What if you could reallocate marketing spend across channels including LinkedIn in real time to optimize your goals? Now you can,” writes Jennifer Weedn, business development and marketing solutions lead at LinkedIn, in a post that will be published to LinkedIn's Marketing Solutions blog later today announcing the ads API.
Bizo has been running ads via the API “for a couple months now,” said the b-to-b marketing firm’s CEO and founder, Russell Glass, adding that the API lets Bizo’s platform tie a marketer’s LinkedIn campaign with other display ad campaigns, including Facebook, in order to get reporting and attribution in a single place. Bizo currently has dozen clients using it and seeing “great” results, he said. Typical budgets range between $5,000 and $10,000 a month, with cost-per-leads in the $50 to $150 (though Glass pointed out that varies by industry, target market and offer). In one case a large franchise client reduced their cost per lead by 60 percent after using Bizo’s API-enabled platform to modify a campaign by cutting underperforming ads and putting more spend behind the better performing ones.
“By all accounts it works. It adds a mid-funnel casket to the overall mix … where you’re trying to get a more engaged audience that’s more likely to spend time with a brand and its content,” said Glass. Right now the API only opens up browser-based inventory, but Glass said he’s hopeful that LinkedIn will add inventory from its mobile apps.
LinkedIn has ramped up the rollout of marketing products over the past year, redesigning company pages as well as how firms can message specific groups of followers. But releasing an ads API takes things up to 11.
“Fundamentally in today’s world if you don’t have programmatic access and API access [to ad inventory], it’s just very difficult to scale,” Glass said. The ability to buy ads, optimize campaigns and update creative through programmatic platforms “is almost like table stakes,” he said. “LinkedIn was in some respects behind, and this catches them up.”
An ads API is like steroids for an ad platform. Consider Facebook. The social network in 2009 began letting a few companies access its ads API and brought even more on board in 2010, when advertising revenue grew 145 percent to $1.87 billion. The following year Facebook officially released the ads API, which would open it up to more developers who would be able to manage and run more ads for marketers. Facebook closed 2011 with $3.15 billion in ad revenue; it already has $2.95 billion in ad revenue over the first three quarters of 2012. Obviously the ads API isn’t the only reason Facebook has seen such a steep rise in ad revenue—hitting a billion users and increasing ad rates certainly helped—but the API definitely catalyzed that growth.
On the flip side, there’s Twitter, which has yet to officially release an ads API of its own. That’s likely part of Twitter’s strategy to slowly build out its ad platform so as to not inundate users with ads. But if the company goes public or simply needs a bottom-line boost, expect an ads API to soon follow. And expect LinkedIn CEO Jeff Weiner to talk a lot more about the company’s burgeoning advertising business during its next earnings call.