Will vertical networks overpower LinkedIn?

Our lives are irreversibly entwined to Social Media. Billions of people spend a huge chunk of their time on Facebook, Twitter, Instagram, Pinterest, Snapchat and many other social media platforms. Yet until recently, most of us have resisted the temptation of exchanging professional details on these networks. It is also interesting that most of us also refrain from adding people from our professional network on social networks. Also, we have sometimes bumped up security settings to avoid embarrassing situations. LinkedIn was the first to capitalize on this and build a network that was purely focused on the professional side of things. Interestingly, professional networks have gained momentum since then and now various professionals have their own networks. These niche networks are called vertical networks.

Vertical networks are attracting highly skilled professionals on them. They are catering to software engineers (GitHub and StackOverflow), doctors (Curofy and Doximity), mechanical engineers (GrabCad), IT professionals (Spiceworks), academicians (Academia.edu and ResearchGate), data scientists (Kaggle), teachers (Edmodo), militarymen (RallyPoint), lawyers (Avvo), atheletes (Strava), chefs (Chef's roll), designers (Behance), marketers (Inbound.org) and almost all other top professionals.

Ask any of these professionals and they will swear by their own networks name. These vertical networks are now posing a serious threat to LinkedIn as highly skilled professionals are flocking to their own niche networks along with recruiters.

Why are vertical networks effective?

There are a lot of inherent advantages of vertical networks. These advantages come from both consumers and marketer’s perspective.

Trusted Peers

Users can reach out to right type of people who have similar mindset and understand each other and most importantly will be comfortable sharing their ideas, views and other intellectual property without any security concerns.

Relevant Content

 The consumers will get relevant content, these vertical networks act as virtual network for niche consumers and give them a chance to interact with like-minded people via technology without losing the experience they have in an offline interaction with their peers.

More engaging

Vertical networks add value in professionals’ lives on a daily basis. For example, StackOverflow helps software engineers to find solutions to their problems whenever they are stuck and GitHub provides the capability to commit code together. ResearchGate gives researchers ability to search and share research papers. Curofy helps them coordinate to solve patient cases. All these things can’t be done on Linkedin properly.

Targeted audience for marketers

 From marketing side too, the vertical networks provide targeted audience that is already segmented and can be leveraged from commercial side. Also, these audiences can be used for any new market research that is to be done. The effectiveness of social media marketing on such vertical networks increases manifold as right product or service is being shown to right set of people. Even users don’t feel so spammed.

These can be easily understood by a simple example. A vertical network of health professionals will be helpful to bring an important and otherwise inactive fraternity on social media – doctors. One of the key reason here is that doctors will find value for their time being spent as the niche network will give them relevant content and people. Since doctors are going to be actively using the platform, it will attract hospitals, pharmaceuticals, medical equipment or any other branch of a medical industry as it will give them their niche audience to approach, saving precious dollars which get spent communicating with irrelevant audience on generic social networks.

Why vertical networks may overpower LinkedIn?

Couple of months back, LinkedIn share price fell 43.6% in a single day, wiping out nearly $11 billion of market value, after its revenue forecast fell far short of market expectations. The share price has stagnated around the same range since that day.

LinkedIn is world's largest professional network with over 414 million members. It had 37 billion page views in the last quarter of 2015 itself. Then where is LinkedIn losing out? 

LinkedIn’s major problem is low user addiction. LinkedIn’s Monthly Active Users (MAUs) today stands at 24% of its registered users, which has fallen from 27% one year back. Even its MAU growth has been very low over last three quarters. Compare this to Facebook, whose 1.6bn MAUs equals 50% of internet population of the world. Facebook’s 65% MAUs are active daily. LinkedIn doesn’t report Daily Active User data.

Most people aren’t looking to change jobs all the time. Instead, they want to communicate and build relationships. However, because LinkedIn’s revenue streams and design restrict typical business forms of communication and facilitate paid ones, most interactions on the platform are low-frequency and one-directional in nature, such as recruitment offers and sales pitches. The following chart shows the dip in the revenue growth of Linkedin over last 4 years:

Spotting the best talent is actually far easier with tools like Talentbin, Stack Overflow, and Github, which aggregate or facilitate positive interactions and allow skilled individuals to display their work — showing why they’re good at what they do.

People today have a very short attention span. Today it stands at 8 seconds and hence marketers today are concentrating on focused channels. The rise of vertical network is an outcome of this focused approach. This is where LinkedIn is losing out on. Today if you are not relevant enough, you will lose out on both the battles - bringing customers to the platform and marketer to showcase their products here.

 In recent times, niche vertical networks have gained momentum. Some of them have become household names in the internet world. People have flocked in numbers to engage with likeminded people. Academia.edu boasts more than 25 million users, GitHub reports having more than 12 million users and over 5 million IT professionals use Spiceworks. The huge amount of funds raised by these networks demonstrates their potential as well as provides them with fuel for future growth. GitHub raised $250 million last July, valuing it at $2 billion, from marquee investors like Andreessen Horowitz, Thrive Capital, IVP and Sequoia Capital. Spiceworks ($111 million), Doximity ($82 million) and Edmodo ($87.5m) have also raised big money. 

More and more industry specific branches are coming out and forming their own vertical networks and this is giving LinkedIn a big challenge. Though LinkedIn has started with the philosophy of being a professional network and has been a boon for recruiters for so long, it is losing its sheen lately due to industry specific vertical networks that are being carved out of LinkedIn itself. With high skilled professionals moving away from LinkedIn, it won’t take a lot of time for remaining ones to follow.

What LinkedIn can do?

Linkedin has realized the importance of content and its acquisitions have certainly indicated towards the same direction. Its acquisition of Pulse, Lynda and Slideshare is a sign of linkedin moving towards the content side of things. Though Linkedin is winning the B2B content space, but this is niche space and hence monetizing content has been a huge problem.

For LinkedIn to sustain for long term, it would need a network of networks model, where they can aggregate smaller networks. Like Facebook acquired WhatsApp and Instagram to protect its two major features (photo sharing and messaging), LinkedIn may soon have to acquire such smaller networks to regain similar levels of engagement and traction. These acquisitions can act as starting point to gain focus on providing relevant content and experience to different professionals. Also, it will provide tools to the marketers for niche segmentation of the audience.

Improving on relevance, making acquisitions or something else, LinkedIn has to have a strategy to counter the threat from these vertical networks.