(SPOILER ALERT: LinkedIn will likely make billions of dollars from the Lynda acquisition)
LinkedIn acquired Lynda last week for $1.5 billion and it represents LinkedIn's largest acquisition in its twelve-year history.
Lynda.com is an online learning platform which lets people take courses on a variety of topics. Topics include anything from web design and learning how to code to courses on body language and managing your time better.
LinkedIn explained that it acquired Lynda to create a better experience for LinkedIn users. For example, LinkedIn users will be suggested courses from Lynda that will improve their career prospects or allow them improve their skills at their current job.
On the other side of the deal, it makes sense that Lynda would pair up with LinkedIn. LinkedIn currently has 347 million users and this number has grown by an average yearly rate of 43% since 2009.[i] Lynda's future integration into LinkedIn will expose Lynda's course offerings to a wider audience, which will grow their user base and revenue rapidly.
Here are 5 "money-making" reasons why LinkedIn's acquisition of Lynda could make LinkedIn an even more powerful and lucrative business:
#1: LinkedIn will be able to better target ads
Lynda's in-depth database of user information makes it valuable to LinkedIn. When LinkedIn integrates Lynda into its platform, LinkedIn will know more about its users. The more LinkedIn knows about its users, the better it can target sponsored content and ads to users. Better targeting means more effective the ads, which makes them a more attractive advertising investment to companies.
#2: LinkedIn will be able to predict the future
LinkedIn's goal is to map the economic graph, which means they want to be in the business of using user profile data to garner insights into the current and future state of the economy and job market.[ii]
Previously LinkedIn had to depend on retroactive data such as job skills and keywords in profiles to figure out which job skills coincide with which industry and whether a certain job market is growing or retracting. Lynda gives LinkedIn the ability to predict which job skills are going to create a hot new trend and what the job growth trends are before a market change actually happens.
For example, let's say you work in marketing and you have a LinkedIn profile. Once LinkedIn integrates with Lynda you might get a message suggesting that you take a course in "programmatic marketing". You decide to click on the message, look at the course and realise that programmatic marketing skills will be important to your career advancement in the future. You sign up for the course.
The more people that sign up for a course in programmatic marketing, the more there will be a strong indicator that programmatic marketing could be the next hot trend companies should watch for. This information would be extremely valuable to companies. Trends in job skills often parallel trends that effect entire industries. LinkedIn can now create predictive reports on these trends and sell them, and many companies would be interested in the information.
#3: LinkedIn will be able to expand its user base
The Lynda acquisition allows LinkedIn to be more attractive to a younger user base. In an interview Jeff Weiner, LinkedIn's CEO, noted that Lynda has a strong user base among the college and university demographic.[iii]
Typically college and university students do not engage on platforms like LinkedIn until they are in job seeking mode in their final years of school. With the Lynda acquisition, LinkedIn can now give a younger demographic a reason to engage on LinkedIn years before they are in job-seeking mode.
#4: LinkedIn will likely upgrade more users from free to paid accounts
Once LinkedIn and Lynda are integrated, LinkedIn will be more likely to convert free LinkedIn accounts to paid LinkedIn accounts. Lynda courses are something that provide tangible value and many users will be willing to pay for an upgraded LinkedIn account if it means it includes Lynda courses.
#5: LinkedIn will increase engagement
When LinkedIn and Lynda integrate it will give users another reason to visit LinkedIn.com on a regular basis. This will increase LinkedIn's user engagement stats such as monthly active users and time on site. LinkedIn loves it when user engagement stats increase because it makes an even more compelling case for why businesses should be advertising on LinkedIn.
The Lynda acquisition allows LinkedIn to increase user engagement, increase the number of users, and have more in-depth information about their users. All of this helps LinkedIn make their advertising product better through targeting and increased response rates. Better ad engagement means businesses will spend even more on LinkedIn advertising. The Lynda acquisition also enables LinkedIn to venture into predictive analytics and sell these reports to interested parties. (Read: Mo' money, mo' money, mo'money fo' LinkedIn)