On Monday Microsoft confirmed that it will be purchasing the professional social network, LinkedIn. Microsoft will be paying about $26.2 billion in an all cash deal, making it one of the biggest tech acquisitions of all time. This translates out to $196 per share, which is about a 50% premium over the stock trading price as of Friday.
LinkedIn generated $3 Billion in revenue last year, which is an increase of 35% from the prior year. While the growth is impressive, it is clear that Microsoft didn’t just buy this social network for the income potential.
Once completed, Microsoft will be able to use LinkedIn as a database of professional information that they can use to help with distribution of software and much more. LinkedIn will also benefit from the purchase since they will have access to Microsoft’s deep pockets to fund expansion, plus the added publicity of joining the Microsoft team, which could help grow the social network by millions of members quite quickly.
For marketers, this may mean that Microsoft will be able to provide much more targeted advertising opportunities, especially in the B2B vertical. Microsoft will undoubtedly link their ad network into the LinkedIn data to provide marketers and brands with higher quality results than was previously possible.
This was seen as a very surprising move by Microsoft, with commentators at Morningstar saying, “I don’t think anyone was expecting this particular news.”
While nobody was predicting this purchase, it really does make sense once you start to look at it. First, this will push Microsoft into social networking in a big way, even if it is a business niche social network. Second, it will help push Microsoft up significantly when it comes to mobile since LinkedIn performs quite well in that area. It will also give Microsoft greater ability to capitalize on their otherwise unused database of user information.
While marketers always put Facebook and Google alone at the top of the advertising game, this move from Microsoft rockets Bing up as well. LinkedIn’s ad revenue was growing rapidly, and Bings was also making some great strides over the last year. This new combined company will really help Microsoft to be seen as a competitor where it really wasn’t before.
It will take a while to see how everything shakes out from this acquisition, but it seems like it will provide some great opportunities for marketers to benefit from the added value they can get from Microsoft.
