Microsoft Buys LinkedIn in 2016

Microsoft Buys LinkedIn for $26 Billion USD

With LinkedIn, Microsoft Will Know Us All Too Well

I’m sure you can agree that knowledge of your customer is one the most valuable commodities for your business.

Most likely this is the true reasoning behind Microsoft’s agreement to buy LinkedIn for $26 billion USD. (by the way, that’s 150% of what LinkedIn stock was worth)

LinkedIn’s Value is its Knowledge of You

LinkedIn’s web interface and revenue is certainly no FacebookIt’s a money-losing social network. It’s 2016 forecast earning looked bleak.

The true value of LinkedIn for Microsoft is that it allows Microsoft to improve its products (Office 365 and Dynamics) through increased customer knowledge.

John Battelle once explained that Google owns your “database of intentions”, because your search reveals what you are seeking. Similarly, Facebook owns your “database of affinity”, because it has your catalogue of likes. With LinkedIn, Microsoft will now know your work.

Microsoft Buys LinkedIn in 2016

The Race to Know You Better

The value of LinkedIn is that increasingly, a skilled workforce is on it. So too are their connections.

After the acquisition, if you are active on LinkedIn then Microsoft will know everything about you at work. It will know your colleagues, your work history, and your unique skill set.

With Office 365, Microsoft will know what you are creating in PowerPoint, Word, and Excel. If you use Outlook, it will know who you are emailing and what you are talking about with them.

With a little bit of A.I., it is well within Microsoft’s grasp to understand your complete working life. So what will Microsoft do with this knowledge?

Perhaps noble, they will do nothing with that knowledge. However, following industry trends Microsoft CEO Satya Nadella suggests that is not the case.

Microsoft CEO Satya Nadella’s Email to Employees on the Acquisition of LinkedIn

In her email to employees, Nadella, states:

This combination [LinkedIn and Microsoft] will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete. As these experiences get more intelligent and delightful, the LinkedIn and Office 365 engagement will grow. And in turn, new opportunities will be created for monetisation through individual and organisation subscriptions and targeted advertising.”

Nadella later goes on to talk of an appealing CRM system that could compete with Salesforce. However, as the above shows, she explicitly mentions making experts available inside Word. Hmmm. Does anyone remember the previous Microsoft Office assistant Clippy?

And of course, a social networking platform would not be complete without eerily targeted advertising based on what you are working on in your own time and ‘privacy’.

Will Your Privacy Be Effected?

Probably.

With what Nadella proposes above, things look interesting to say the least.

Perhaps Microsoft will slowly roll out change. Privacy policies are increasingly fluid to change, as Facebook and Snapchat have clearly shown. Do you read the T&C’s every time you update your Facebook app?

Nothing is ‘Free

Remember, instead of handing over money we pay for services such as LinkedIn via our privacy. Inherently, this is linked to targeted ads. This trend will only increase.

There is a process to grieving the loss of your privacy. First there is denial. Then you get angry about it. Then you try to make a deal about it. Then you get sad. Finally, you just accept it because it is what it is.

Of course, there is always an option. You do not have to use a service if you do not want to.

Internet Advertising Revenue and Spending Statistics 2016

A Look at Online Advertising Trends from 2005 – 2016

People like online advertising, a lot.

There’s long been a standing statement that, “people hate advertising.” I (and many others in this industry) don’t believe that this is true. In actuality, “people hate bad advertising.”

Nobody loves being annoyed and interrupted. Everybody loves to be entertained and informed. It’s when advertising follows the latter, that the campaign is successful.

Digital advertising brings with it many sets of bigger and scarier issues: tracking, fraud, re-targeting, and more. It’s perhaps because of this, that we now have ad blocking.

When it comes to key topics in the advertising space, 2016 has been the year of ad blocking. What happens when consumers use technology to block ads? How big is the ad blocking market? If the browsers and platforms build ad blocking into their operating systems, what chance do brands, agencies and publishers have to make money in a world, where interruptive advertising is the main revenue source?

Just how healthy is digital advertising?

If you’re wondering just how healthy the state of digital advertising is, the Interactive Advertising Bureau (IAB) released their 2015 Internet Advertising Revenue Report.  The numbers are impressive.

Annual Revenue 2005-2015 (USD$ billions).

Internet Advertising Revenue and Spending Statistics 2016

U.S. digital advertising revenue hit $60 billion USD ($82 billion AUD) last year. As expected, mobile was king. It grew 66%, from $13 billion USD ($18 billion AUD) in 2014 to $21 billion USD ($29 billion AUD) in 2015. So, as people and companies alike protest about the state of digital advertising, the industry just continues to soar.

Who’s getting what out of this $82+ billion?

When it comes to the $11 billion USD ($15 billion AUD) spent on mobile last year, the vast amount of the spend was on display-related mobile formats such as video. This is a massive swing away from tradition search-related spend, for example, Google AdWords.

Still, if you dig into the report a little deeper you’ll finds that with all of this money spent, mobile mostly gets its spend from other media, digital media and through experimental budgets. What does this mean? Mobile-first media is still not mainstream and being funded the same way that media agencies work with TV, print, etc…

Online Advertising Spending Stats for 2015

Video is King.

In what was a Google Search digital advertising world, the emerging ad format online is now video. Google still wins here because of YouTube. Video ads are the fastest growing (and most important) segment in digital advertising.

According to the IAB Report, non-mobile digital video advertising reached $4 billion USD ($5.5 billion AUD) last year (30% increase). To put that into perspective, social ads reached $11 billion USD ($15 billion AUD) last year (55% increase), while non-mobile search advertising reached $21 billion USD ($29 billion AUD) (8% increase).

There is no doubt that the landscape is dominated by Google and Facebook. For digital advertising dollars spent, it is the digital marketing world.

Who spends the most in digital advertising?

Retail advertisers spend the most, and they are responsible for 22% of dollars spent. After the retailers, auto and financial services come in. Each accounts for 13% of total advertising revenue. Overall, the IAB’s Internet ad revenue report revealed ad spending grew by 20%, up from 16% in 2014. An additional $10 billion USD ($14 billion AUD) in revenue.

The Takeaway:

Online Advertising is a $60 billion USD ($82 billion AUD) digital advertising industry, in the US alone, with no sign of slowing down!

What are you doing to compete in this growing market? How will you stand out from your competitors?

You can read the full IAB report here: IAB Internet Advertising Revenue Report Conducted by PricewaterhouseCoopers (PWC).

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