May 19, 2010
Growth Seen In Professional Social Network Market
Professional social networking companies are doing well as the recession slows, boosted by a surge in members, and growth in advertising and recruiting fees.
LinkedIn and Viadeo are two professional social networks that have flourished since late 2008 as tens of millions of customers from around the globe have sought to widen their "safety networks" fearing another economic downturn.The recession has seen people spending "less time on Facebook and more time on Viadeo ," said Dan Serfaty, chief executive of the world's second largest professional social networking site Viadeo, at the Reuters Global Technology Summit.
Professional social networks seek to put space between social networks like Facebook and MySpace, taking a more somber approach and giving members more control over profiles.
As the economy improves, advertisers and recruiters are beginning to return to use the services, while continuing reservations over sustainability of the recovery and European economic problems are still boosting the take-up of services.
"It is almost a perfect mix, you have this underlying fear, but at the same time the economy is still growing, so business with recruiters, advertisers is exploding," Serfaty said.
Janel Landon, who runs a small public relations consulting firm in Chicago, joined LinkedIn in late 2008 when the recession started to bite. She spends an hour each morning on LinkedIn and other social networking sites and sees high value in them, she said.
"It's a learning tool as much as it is a place to make new acquaintances," she told Reuters.
Serfaty said when the professional social networking market matures he expects key players to sign agreements which would enable access to other networks from within their own service. "My bet is there will be a kind of roaming agreement at some point, like in the telecoms world," he said, but expressed this would not happen any time soon.
"It's too early, everybody is fighting for market share. You do it when market share has been established," he added.
LinkedIn sees the potential for as many as 500 million professionals that could become its members. This compares with some 100 million members in professional social networks today. 65 million members belong to LinkedIn, and another 30 million or so belong to Viadeo.
LinkedIn is one of the fastest growing social networking sites along with Twitter and Facebook, fueling speculation that it is positioning itself for an initial public offering.
But, an IPO is not what LinkedIn CEO Jeff Weiner sees as fit right now, as he addressed the Reuters Global Technology Summit in San Francisco.
Currently, LinkedIn is primarily searching for smaller deals that could provide important technology or a talented staff. Weiner said LinkedIn was growing its number of users fast enough that acquiring another social network was not necessary.
"The larger the network, in theory the more valuable the network. But we're in a very strong organic trajectory right now," Weiner said.
LinkedIn said it will have 900 employees by the end of the year, up from about 500 at the start of the year, while Viadeo aims to almost double its staff to 350 by the end of the year.
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