PARIS (Reuters) - Professional social networking companies are recovering well from the recession, boosted by a surge in members, and growth in fees from advertisers and recruiters.
Membership of professional social networks like LinkedIn and Viadeo has bloomed since late 2008 as tens of millions of consumers from around the world have sought to widen their “safety networks” fearing worsening economies.
“People spend less time on Facebook and more time on Viadeo during recession,” Dan Serfaty, chief executive of the world’s second largest professional social networking site Viadeo, said at the Reuters Global Technology Summit.
Professional sites seek to distance themselves from social networks like Facebook, taking a more sober approach and giving members more control over their profiles.
When economies have started to improve, advertisers and recruiters are returning to use the services, while continuing uncertainties over sustainability of the recovery and European economic problems are still boosting the take-up of services.
“It is almost a perfect mix, you have this underlying fear, but at the same time the economy is still growing, so business with recruiters, advertisers is exploding,” Serfaty said.
He said this perfect mix could not last for long as consumers’ continuing fears would hurt business growth.
“The professional social networking industry is recovering very well,” said Martin Olausson, director of digital media strategies unit at research firm Strategy Analytics.
“Because of the recession a lot of people have updated their resumes and increased their professional networking activities in the last year,” Olausson said.
Janel Landon, who runs a small public relations consulting firm in Chicago, joined LinkedIn in late 2008 when the recession started to bite. She spends an hour each morning on LinkedIn and other social networking sites and sees high value in them.
“It’s a learning tool as much as it is a place to make new acquaintances,” she said.
Viadeo CEO Serfaty said when the professional social networking market matures he expects key players to sign agreements which would enable access to other networks from within their own service.
“My bet is there will be a kind of roaming agreement at some point, like in the telecoms world,” Serfaty said, but added this would not happen any time soon.
“It’s too early, everybody is fighting for market share. You do it when market share has been established.”
LinkedIn said there are around 500 million professionals who could become its members. This compares with some 100 million members in professional social networks today. LinkedIn has more than 65 million members, compared with some 30 million members of Viadeo.
LinkedIn is among the Web’s fastest-growing social networking sites along with Facebook and Twitter, fueling speculation that it is positioning itself for an initial public offering.
An IPO “is not in the front of mind,” CEO Jeff Weiner told the Reuters Global Technology Summit in San Francisco.
At the last Viadeo board meeting, investors said unanimously it was not time to think about going public yet, Serfaty said, adding he would likely ask the board again in two years’ time.
LinkedIn is primarily looking for smaller deals that could provide important technology or talented staff.
Weiner said LinkedIn was growing its number of users fast enough that acquiring another social network was not necessary.
“The larger the network, in theory the more valuable the network. But we’re in a very strong organic trajectory right now,” Weiner said.
Viadeo’s Serfaty said he was actively looking for acquisitions to expand its business in its key markets of China, India and Latin America.
LinkedIn said it will have 900 employees by the end of the year, up from about 500 at the start of the year, while Viadeo aims to almost double its staff to 350 by the end of the year from around 200.
Additional reporting by Alexei Oreskovic in San Francisco; Editing by Jon Loades-Carter