Commentary

What Does Microsoft's Pricey Acquisition Of LinkedIn Mean?

Microsoft Corp.’s rather surprising $26.2 billion acquisition of LinkedIn is interesting on a number of levels.

Is it a data play? Is it an ad play? Is it a play for the identities and data of millions of global professionals and influencers who use the network?

The acquisition does offer Microsoft a consumer-facing social app. In the coverage of the acquisition, Jeff Weiner, LinkedIn’s CEO, cited LinkedIn’s native ad offerings and commented that the acquisition will help Microsoft access as-yet untapped ad inventory.

But remember, for all intents and purposes, Microsoft has mostly outsourced its ad business to other parties including AOL. AppNexus handles Microsoft’s ad-tech platform. Perhaps the new deal will resurrect Microsoft’s ad business via LinkedIn’s rich data set.

Weiner said the deal might redefine “social selling” through a combination of LinkedIn Sales Navigator and Microsoft Dynamics. Sales Navigator, LinkedIn’s prospecting tool, was thought to be the company’s Salesforce competitor.

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Beyond LinkedIn’s Marketing Solutions business, which represents only 18% of LinkedIn’s total $861 million revenue to date, some say Microsoft acquired LinkedIn for its deterministic identity graph, which reaches 433 million members, 60% of whom log in via the mobile app. 

LinkedIn’s rich cache of identity data could help Microsoft expand the reach of products like email (Outlook), workplace productivity (Office), CRM (Dynamics), communications (Skype), and search (Bing). The deal could also help enhance the potential of social selling via a combination of LinkedIn Sales Navigator and Microsoft Dynamics. Sales Navigator, LinkedIn’s prospecting tool, was rumored to be the company’s Salesforce competitor.

In announcing the acquisition, Microsoft CEO Satya Nadella said he plans to augment LinkedIn’s business audience data set with the “Microsoft graph,” the data layer that sits beneath Microsoft Office 365 apps and its CRM platform Microsoft Dynamics. So clearly, he sees this as an opportunity to sync and mine data.

“LinkedIn becomes the social fabric across all of Microsoft,” Nadella told investors during an analyst call last Monday. “The news feed is the fastest-growing part of LinkedIn’s [marketing solutions] offering. Imagine your feed now being informed by your work projects, calendar and all the people you’re meeting over the next month to make it more relevant.”

LinkedIn has focused on connecting email and list-based data to an individual’s professional social graph to date. Those connections give Microsoft a super-charged dataset. Weiner noted how Microsoft-owned assets like Skype, Windows or even Xbox could help inform LinkedIn's news-feed content by offering greater personalization.

Commenting on the deal, a former Microsoft marketing executive told Real-Time Daily via email: “This appears to be a match made in heaven.  Microsoft's core audience is business professionals, as is LinkedIn's core audience.  I look forward to seeing what synergies come out of the deal, particularly for marketers.”

“It’s not directly about data. It’s about the identify graph,” said Mike Driscoll, CEO, Metamarkets, weighing in on the deal. “Collaboration is at the heart of B2B activity—business contracts, money transfers, collaborative document editing—these all require solid foundations of identity. The value to Microsoft is that LinkedIn is a professional version of Facebook.”

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