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LinkedIn Launches Targeted Ad Service

Pay-per-click service can select users based on job title, company, LinkedIn group.

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After a two-year beta test, LinkedIn on Wednesday launched LinkedIn Ads, a self-service pay-per-click product that allows advertisers to target participants by job title, company name, or LinkedIn group.

These capabilities are in addition to those made available when LinkedIn originally rolled out the program, then called LinkedIn Direct Ads, in 2008. At that time, businesses could target their ads by geography, industry, company size, job function, age, seniority, and gender.

The social media site, which has more than 90 million members, said it only lets ads appear to members who are most likely to purchase a company's products or services. These targeted ads have increased click-through rates up to fourfold for some advertisers, LinkedIn said.

"We achieved a conversion rate for our client that was almost 3x that of the overall website average by targeting the professional audience on LinkedIn," said Danielle Leitch, executive VP of client strategy at MoreVisibility, on LinkedIn's Web site.

The business-oriented site accounted for 1% of all online display ads in the United States last month, according to ComScore. By comparison, Facebook represented more than one-fourth of the total online display ad market, the research and tracking firm determined. But LinkedIn members are clearly defined, often using the site as a business-networking and career-promotion tool.

Matt Johnston, VP of marketing at uTest, said, "50% of our paid inbound leads come from LinkedIn. LinkedIn is our most cost-effective online marketing channel," in a statement on LinkedIn's Web site.

LinkedIn generates about one-third of its revenue from advertising from companies such as HP and American Express, with the remainder coming from subscription services and recruiting tools, according to reports. Combined, this income has made LinkedIn worth almost $3 billion, Bloomberg said.

Rumors also are circulating -- and getting louder -- that LinkedIn soon plans to file an initial public offering. Morgan Stanley, Bank of America, and JPMorgan are the three main contenders to be the financial underwriters of the IPO, expected to occur in 2011 -- before Facebook's anticipated 2012 IPO, according to Reuters.

"If Facebook went public before LinkedIn, do you think anyone would pay that much attention to LinkedIn? You might want to surpass the beast," an unnamed source told Reuters earlier this month.

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