Can LinkedIn’s New Salary Benchmark Tool Drive Premium Memberships?

LinkedIn (NASDAQ:LNKD) (which is being acquired by Microsoft) recently launched “Linkedin Salary” a new portal and tracker which will collect and analyse salaries globally, allowing users to compare their numbers with industry benchmarks. While the company has tapped into its network of members to provide deep insights into the compensation landscape, members without a premium subscription need to first input their salary number (anonymously) to get these insights. Premium members however will have access to LinkedIn’s quality salary intelligence throughout their job seeking experience without having to contribute their own salary information. In the future, the company plans to use salary data to add actionable insights which will help users make better career decisions. With salary being a critical factor for a job seeker, we believe this feature should engage users effectively on LinkedIn and make its platform more attractive for new job seekers. Furthermore,  given the benefits to premium members (insights without any inputs), this feature can also drive premium memberships for LinkedIn.

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Increase In Users And User Engagement

Indeed, LinkedIn is not the first company to bring salary information to its users. given websites such as salary.com and glassdoor.com. But it does aim to drive insights for users from salary information. LinkedIn hopes to help professionals on its network to make better career decisions and optimize their earning potential, through this data. Premium members will get access to salary details in the job search results. We believe this feature should improve LinkedIn’s user base and engagement as user’s look at salaries across skill sets and geographies and identify skill enhancements or location changes to improve their prospects.  This feature should also drive Premium memberships on LinkedIn as these members would get access to detailed salary insights without any inputs from their end.

According to our estimates, Premium Account Subscriptions account for nearly 15% of LinkedIn’s valuation. Number of registered members on LinkedIn is a key driver for this segment and we expect this metric to increase from around 455 million in 2016 to nearly 760 million by the end of our forecast period.

Product enhancements and new features are likely to attract new members and contribute to this growth. We believe the salary tool can contribute significantly towards this growth and drive memberships, in addition to increasing the subscription revenue per registered member.

As more members convert into premium members to take compelete advantage of the salary tool, it can increase the average subscription revenue per member for LinkedIn.

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