Home Ad Exchange News Microsoft’s $26.2B LinkedIn Buy Brings Massive B2B Data Set And Mobile Identity

Microsoft’s $26.2B LinkedIn Buy Brings Massive B2B Data Set And Mobile Identity



Updated with details from the Microsoft/LinkedIn investor call.

Microsoft’s surprise $26.2 billion deal to acquire LinkedIn, among the largest digital technology acquisitions ever if it goes through, has the potential to transform the competitive dynamics in the CRM software industry.

It also holds the promise of rebirth for Microsoft’s moribund, outsourced digital advertising business, via the infusion of a rich B2C and B2B data set that also includes logged-in mobile users.

Here’s what we know about the “enormous” opportunity LinkedIn and Microsoft see in merging their assets. More to come on this story as details emerge.

In a missive to LinkedIn employees Monday morning, CEO Jeff Weiner said the deal will expand LinkedIn’s reach by adding its social identity data to some 1 billion users of Microsoft products like email (Outlook), workplace productivity (Office), CRM (Dynamics), communications (Skype) and search (Bing).

Weiner also called out LinkedIn’s native ad products – sponsored content – and said the acquisition will fuel access to “Microsoft users anywhere across the Microsoft ecosystem, unlocking significant untapped inventory.”

And he said the deal could redefine “social selling” through a combination of LinkedIn Sales Navigator and Microsoft Dynamics. Sales Navigator, LinkedIn’s prospecting tool, was rumored to be the company’s Salesforce competitor.

But beyond LinkedIn’s Marketing Solutions business, which constitutes only 18% of LinkedIn’s total $861 million revenue at last count, some experts think Microsoft wanted LinkedIn’s deterministic graph – now reaching 433 million members with 60% who log in via the mobile app. 

“This is ultimately a battle for identity,” said Ray Wang, chairman and principal analyst of Constellation Research. “Microsoft gets a great consumer social graph around mobile identity. … They also have an opportunity to jump in on HR [software] with profiles [that] can be transacted against.”

The acquisition also gives Microsoft a consumer-facing social app. Though it acquired enterprise collaboration tool Yammer (think of it as a first-generation Slack) in 2012 for $1.2 billion, it “lost money,” noted Wang, leading Microsoft to ultimately slash Yammer’s price and merge it with another cloud product.


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Could the deal revitalize Microsoft’s digital ad business? Outlook: unclear.

It’s been less than a year since Microsoft outsourced its display ad business to AOL-Verizon. And LinkedIn has clocked quarter after quarter of dwindling display revenue (a 30% drop last quarter) as the company prioritized native, in-feed ad units like Sponsored Updates and In-Mail, which now comprise 56% of Marketing Solutions’ revenue.

“Microsoft’s acquisition of LinkedIn is further proof of the importance that large technology cloud companies are placing on reaching business users,” said Chris Golec, CEO of Demandbase. “B2B has continued to grow in value, which is why Microsoft would pay a 50% premium to secure LinkedIn’s member base. The deal also continues the macro trend of the merging of ad tech with mar tech to help engage the business audience more effectively.”

LinkedIn will remain a standalone company, with Weiner reporting to Microsoft CEO Satya Nadella. The deal is expected to close this year, upon which LinkedIn financials will be broken out within Microsoft’s productivity and business processes segment.

Microsoft CEO Satya Nadella, LinkedIn CEO Jeff Weiner See Tremendous Data Opportunity

Microsoft plans to augment LinkedIn’s business audience data set with the “Microsoft graph,” the data layer that sits beneath Microsoft Office 365 apps and its CRM platform Microsoft Dynamics.

“LinkedIn becomes the social fabric across all of Microsoft,” Nadella told investors during an analyst call on Monday. “The news feed is the fastest growing part of LinkedIn’s [marketing solutions] offering – imagine your feed now being informed by your work projects, calendar and all the people you’re meeting over the next month to make it more relevant.”

LinkedIn has focused on connecting email and list-based data to an individual’s professional social graph to date. Those connections give Microsoft a tremendously powerful dataset.

“There is no better source of data for first degree engagement – that is pointing enterprise employees toward opportunities for collaboration, partnership and sales both within the company but also in close adjacencies,” said Gartner research VP Martin Kihn. “It is the best source of data for hiring – which could be combined with competitive intelligence.”

Kihn also pointed out how the coupling could power ad buying opportunities.

“There is a tremendous untapped opportunity for highly targeted dynamic creative ad placements both for B2B and higher margin B2C products and services,” Kihn said.

This promise goes beyond display advertising. After all, AOL now handles sales of most of Microsoft’s display assets while AppNexus is its ad tech platform. Additionally, LinkedIn’s premium display business has dipped precipitously over the last year. But LinkedIn has instead devoted resources to its Sponsored Updates products.

“We have an ad sales force that brings marketing services to customers who can unlock additional inventory from Microsoft’s ecosystem,” LinkedIn CEO Jeff Weiner said. “There will be additional opportunities with [native] formats and to expand social selling to Microsoft [Dynamics] through the combination of business intelligence tools and data flowing through the ecosystem.”

Weiner noted how Microsoft-owned assets like Skype, Windows or even Xbox could help inform LinkedIn news feed content by offering greater personalization.

“Monetization is naturally built into intensity of usage,” Nadella added. “If anything, we are saying there is more value now to being Microsoft Dynamics, LinkedIn and Office 365 users.”

Ryan Joe contributed.

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