The recent announcement of Microsoft’s acquisition of LinkedIn has raised many questions about how Microsoft will monetize this data. We examine LinkedIn value per user and compare to Google, Facebook, Yahoo, and Twitter.
The recent announcement of Microsoft’s acquisition of LinkedIn has raised many questions about how Microsoft will monetize this data. In my recent article of how Microsoft can create value from this transactions, many people rightfully raised the point that data contributed to LinkedIn is given in exchange for networking. LinkedIn, like all social media and digital platforms, creates value from customer data. Of course, we contribute data to get a service or benefit back. I examine strategies for data monetization in my book, From Big Data to Big Profits: Success with Data and Analytics. But what is that data worth in LinkedIn’s case? Was it a good value to Microsoft?
LinkedIn Value per Customer: With a sale price of $26.2 billion and some 443 million users, a coarse measure of value is $59.14 per user. Of course many users are more active and therefore more valuable in the LinkedIn network, and indeed some users might not even be real. Still, such a course measure gives us a very preliminary start on the value of customer data (at least as claimed by LinkedIn and accepted by Microsoft). I thought it valuable to look at a few other large networks that are monetizing customer data. I used market capitalization numbers and user numbers available as of June 15, 2016.
The results are interesting (B below stands for billions, MM for millions)
LinkedIn: $26.2 B sale price from 443 MM users = $59.14 per user Facebook: $323 B market cap from 1.65 B users = $195.76 per user Twitter: $11.01 B market cap from 310 MM users = $35.52 per user
Some other networks to consider include Yahoo and Google. I used unique searchers for Google, which might not capture all of its unique users, but is probably close users search, as anyone using its other products most likely uses search, too. Yahoo estimates users at 800 million. So the gives us:
Google: $401 B market cap on 1.