LinkedIn Shutters Ad Network After One Year

LinkedIn Mobile App iOS Profile Q1 2014LinkedIn has shut down its advertising network only 12 months after beginning to let marketers use its wealth of user data to target ads at people outside of its core website and app.

While the company estimates that it will lose out on $50m (£34.7m) in revenues by doing so, the costs of growing and operating the ad business apparently offset any profits that the firm was seeing, and with the companys entire ad business only accounting for 21 per cent of its revenues in Q4 2015, the closure is more of a blow to the firms ego than its wallet.

“While initial demand was solid, the product required more resources than anticipated to scale,” said Steve Sordello, chief financial officer for LinkedIn, in the companys Q4 2015 earnings statement. “This change should ultimately benefit the entire Sponsored Content customer base with a stronger product and more streamlined experience.”

Key technology from the ad network (which the company gained in its acquisition of Bizo) will be integrated into the Sponsored Content adverts that appear on the LinkedIn website and app. The sponsored update ads are by far the companys most profitable and fastest growing ad products, accounting for 52 per cent of the firms ad revenue.

Overall, LinkedIns ad revenues grew 20 per cent year-on-year in Q4 2015, hitting $183m, but the company struggled overall, reporting an $8m net loss for the quarter and sending its share price tumbling over the weekend.

“As we look towards 2016, our focus is on investing intelligently in our core member and customer value propositions to capture the large, addressable opportunity ahead of use,” said Sordello. ”