Millions of users have been feeding LinkedIn information about their career and industry for the past five years. Now LinkedIn wants to cash in by using that information to serve ads on their own third party ad network.

LinkedIn is launching its ad network today in conjunction with Collective Media. The two companies will team up to target ads based on seniority, gender, industry, company size, location and total number of connections on third party sites.

LinkedIn has built a database of over 27 million registered users that are highly attractive to advertisers. Many of their users are young, affluent and billed as influencers by LinkedIn’s advertiser information. Given that 95% of LinkedIn members are college graduates and their average household income is $110,000, they represent a wealth of buying power.

This new venture commands a much higher CPM rate than other social networks. Because LinkedIn users share so much information about their careers, it guides much better targeting than networks such as Myspace. Where sites like Myspace sell ads for approximately one dollar CPM, LinkedIn’s rates range from $12 CPM for a low end text ad to a whopping $76.50 CPM.

The partnership between LinkedIn and Collective Media will help launch the display network rapidly, but questions remain as to whether it can be truly valuable for LinkedIn. By splitting the revenue from their advertising deal with partner sites and Collective Media, it will be difficult to eke out much profit in an already cramped market.

There’s also no telling how LinkedIn members will react to the news that the company is using their information to target ads. Social Networking juggernaut Facebook heard numerous outcries from its user base when implementing its Beacon ad targeting system, however the noise faded within a few weeks with little effect.

LinkedIn is increasingly becoming the staple social network for managing professional relationships. In turn, the value of its third party advertising network will continue to increase in value as the site’s membership grow.

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Entry was posted on Monday, September 15th, 2008 at 8:36 am under Advertising, Social Media.

Read more entries by Dave Jeyes.
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