LinkedIn Starts Selling Ads Programmatically as Its Display Business Dwindles

Desktop Display Ads Now Offered on Both Private and Open Exchanges

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LinkedIn's display ad business has been shrinking, but the business-oriented social networking site is now making its inventory available to marketers programmatically through both private and open exchanges, the company said Tuesday.

LinkedIn ran a pilot with its own private marketplace about two years ago, but said its latest effort allows it to deliver its display offerings at a larger scale than that.

The move allows marketers to buy banners ads on the right-hand side of LinkedIn's desktop site.

Ads will be available for purchase through a "majority" of open exchanges as well as LinkedIn's private marketplace auction.

Marketers can use their first- and third-party data to target the ads they buy through either the open or private exchange. Those that come in through the private exchange also have the option of instead using LinkedIn's targeting capabilities, specifying that their ads will show up only for IT decisionmakers, for example.

In March, LinkedIn introduced a new service that allowed marketers to run targeted campaigns on a large scale, capable of targeting people at up to 30,000 companies at once. Targeting can be further refined so it can reach profiles based on job function or seniority.

LinkedIn's ad business, or what the company calls Marketing Solutions, generated $154 million in revenue for the first quarter of 2016, a 29% increase when compared to the same time last year. Of that, its display business brought in 10%, or about $15 million, a 30% decline from the quarter a year prior, Steven J. Sordello, chief financial officer at LinkedIn, said during the company's most recent earning's call in April.

The bulk of LinkedIn's ad revenue now comes from sponsored content, which brought in $86 million during the first quarter of 2016, an 80% increase year-over-year.

Russ Glass, head of products at LinkedIn Marketing Solutions, said he's "thrilled" his company now offers programmatic solutions, adding that it has "become the primary way our customers buy display."

LinkedIn was acquired by Microsoft earlier this month for about $26 billion.