Why Videos Can Increase User Engagement on LinkedIn?

Facebook and Twitter have been going all out in the digital video space acquiring streaming rights and looking to create interesting video content.  On the other hand, LinkedIn (NASDAQ:LNKD) finally seems to be trying to catch up with this new trend. The company recently added new features to its platform where viewers can watch 30 second videos posted by “influencers”.  These videos are expected to be crisp and to the point, while addressing a specific question or issue. The company has reached out to a small group of “influencers” who will post these videos. Consumption of videos online has increased significantly in the past few years, with YouTube reporting 50% year on year increase in videos watched on its platform. As LinkedIn finally jumps onto this bandwagon, the new feature should help the company to increase user engagement on its platform. Marketers are shifting their ad spending towards digital videos and LinkedIn should be able to grab a share in this growing video advertising market, driving revenues in the long term.

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 Growth In Digital Content Revenues To Be Driven By Video Services

According to a new study from Juniper Research, consumer spending on digital content will reach $180 million by 2017, 30% higher than last year’s figure of $130 million. This growth will primarily be driven by migration into streamed video services, as broadcasters look at original content to build a competitive edge. LinkedIn is working towards positioning itself as the “go to” place for professional networking and updates.  As such, video streaming on its platform that contains expert views on trending issues can drive higher user engagement. According to a 2015 eMarketer study, digital video viewing (outside of television) among U.S. adults grew at a CAGR (compounded annual growth rate) of nearly 40% between 2011 and 2015, from 21 minutes in 2011 to nearly 1 hr and 16 minutes in 2015. This indicates the high level of engagement of users while watching videos online.  For the last three years, growth in watch time on YouTube has increased 50% year on year and the number of people watching YouTube per day is up 40% since March 2014. These numbers clearly indicate that videos are engaging users on the internet much more than textual posts.  LinkedIn can tap into this trend through this new feature.

Ads and Marketing is a significant segment for Linked (according to our estimates), accounting for nearly 20% of its current valuation. Two key drivers of this segment are LinkedIn’s average monthly unique visitors and monthly page views per LinkedIn visitor.  We expect both these drivers to increase steadily over our forecast period as the company adds new features on its platform.

As LinkedIn moves towards becoming a Microsoft company, an enhanced platform with new features is being expected by its users with the combined expertise of both companies. While the professional networking platform is behind its competitors in introducing video content, this beginning will help the company retain users and increase the time they spend on its platform.

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