Much shock this week as Microsoft paid $26 Billion to buy LinkedIn. Let’s look at that again, $26 BILLION. That’s a huge amount of money, surely a social media platform can’t be worth that much?
Probably not if you just look at the software behind it, remarkable, clever and complex though it undoubtedly is.
So why would Microsoft spend that sort of money on buying LinkedIn and why would I suggest that they got an absolute bargain?
User Data. Simple. User Data.
LinkedIn has 433,000,000 users, that’s 433 Million users. Whilst many people are not overly active, certainly compared to Facebook for example, there’s still a fair amount of activity and the information provided by even the most casual user profile is marketing gold dust.
Pictures, job titles, length of employment, skills, education, network relationships, email addresses. All that information is provided just on the most basic user profiles.
And $26 Billion divided by 433 Million means Microsoft have bought that marketing gold for the grand sum of $60 per user, approximately £42 at the current exchange rate.
When Facebook bought WhatsApp in 2014 they paid $42 per user, (£29.56) which at first glance appears a steal, but comparing the quality of data, LinkedIn definitely comes out way ahead.
Any marketing person who has purchased data knows how inaccurate it is and how quickly it goes out of date. Microsoft have just bought a marketing database where the data is voluntarily regularly updated by the subjects themselves!
With that in mind $60 per user, with a free social media platform thrown in for good measure, begins to look like the biggest bargain of the century so far.
Well played Microsoft, well played.