LinkedIn May Be Different From MySpace, but Not Its Ad Strategy

Launches Custom Groups, Tries to Lure Consumer Luxury and Business Brands

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NEW YORK ( -- "We've got a lot of rich people and we're bigger than Twitter."

LinkedIn launched Custom Groups today.
LinkedIn launched Custom Groups today.
That's the LinkedIn sales pitch, courtesy of a half-joking David Hahn, director of product management at the social network. He launched a few other jabs at fellow social networks during an advertiser presentation this mroning in New York (in a dig at MySpace, he noted the person interacting with your brand on LinkedIn "is not the one with the screen name TooCute4U"), before making a more serious pitch for ad dollars.

While LinkedIn is trying to differentiate its audience from other social networks, its ad strategy looks awfully familiar. Today, the site announced it's launching Custom Groups in the hopes advertisers will create more robust presences on the site -- and then buy media to help drive people to the groups. The move is similar to the advertising programs that MySpace and Facebook have set up, in which they encourage brands to create pages and then use Facebook's advertising offerings to help drive awareness and membership.

Focused on groups
"A lot of the community on LinkedIn originally seemed to be focused on answers, but now the focus is entirely around groups," said David Berkowitz, senior director of emerging media and innovation at digital marketing agency 360i, citing an early and existing LinkedIn feature in which members ask questions of the LinkedIn community. "That's a net plus for LinkedIn, since groups allow for much deeper levels of engagement rather than the quick hits from answers."

He referenced numbers LinkedIn cited today: 100,000 people join groups daily, while 1,000 people post questions and 3,000 people submit answers weekly.

Already there are 400,000 groups on LinkedIn, but the site has "carved out special real estate" for custom, advertiser-created groups, said Steve Patrizi, VP-ad sales and operations. Brands that want to create a custom group will be able to import content like video or RSS feeds into the group -- features that aren't available on non-branded LinkedIn groups. The custom groups will be priced based on their "individual engagements," Mr. Patrizi said. It depends, he said, on customization and integration and "a big part of that is the promotional media."

Separate from 'Meritage'
In that way, it's a lot more like MySpace than Facebook, said Mr. Berkowitz. "Facebook has the same principle, and philosophically it's where most are converging, but in practice Linkedin is more like MySpace has been: You pay for the presence, which includes a media buy on the site to promote it," he said. "Generally, marketers should plan earned and paid media together with social marketing, but not all are organized that way."

Custom Groups are separate from a secretive product referred to as Meritage, which is still in development. The topic leaked out when someone in the audience of advertisers asked about it. "How'd you know about that?" asked Mr. Hahn, looking genuinely surprised. Mr. Hahn wouldn't elaborate but explained the idea behind Meritage is about "how do I better use my company's network. ... It's about how employees can better leverage their connections around them."

Mr. Hahn also made a plea for banner advertising being alive and well -- as long as the targeting is specific and smart.

He cited Fico, which used LinkedIn to target a specific group -- VPs of analytics in the health-care industry -- and found 10% to 20% of his responses came from the site.

Unlike the other major social networks, LinkedIn has three major revenue streams, all about equal in share: advertising, subscription revenue and enterprise-level access for corporations. It had 20 million unique visitors in October, according to ComScore.

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