Ventana Research Analyst Perspectives

Microsoft Accepts LinkedIn Connection: Will it Matter?

Posted by Ventana Research on Jun 18, 2016 6:09:02 AM

For some people in sales and marketing who struggle to meet their quarterly targets, the blockbuster announcement that Microsoft will buy LinkedIn for US$26.2 billion may seem like a midyear holiday present: a digital business Rolodex filled with new global connections that can make the task of generating revenue dramatically easier. Problem is, sales leaders and revenue-focused marketers worth their weight already know everything there is to know about their target audience, and they’re taking action on that intelligence every day. They’re already power LinkedIn users who have optimized their personal profiles, ensured that their public-facing company information is up-to-the-minute, scrubbed buyer and influencer pages, read the latest corporate and competitive intel updates and scanned their Pulse newsfeeds, and they have done so for free before finishing their morning coffee ahead of the next meeting. Microsoft’s ownership of LinkedIn won’t cause top performers in sales and marketing to dramatically alter or change their productive and profitable habits. At least not right away.

For marketing organizations that already spend part of the budget to target business professionals by advertising and pay per click (PPC) with LinkedIn, not much will change in the short term. Microsoft of course will want to increase this revenue stream but hopefully not increase the cost per click. After all, knowledgeable marketers spend their time and money on LinkedIn with one goal in mind: to cost-effectively identify and contribute highly qualified leads and revenue opportunities to the sales pipeline. Microsoft will have to work to demonstrate that it can increase the size of the business community and the accuracy of information in LinkedIn, and that any investment in its services will stand up to all other lead- and revenue-generating expenditures competing for immediate attention and budget. Moreover, for most marketing organizations, Microsoft is not a relevant provider of applications that could benefit from synergies with LinkedIn. In this way it is unlike IBM, Oracle and Salesforce, which made acquisitions to build out their respective marketing portfolios, or Marketo, which is being taken private by Vista Equity Partners.

In human resources, many organizations have used LinkedIn Recruiting services to present career opportunities to appropriate audiences and help identify candidates who may not necessarily be looking for a new job. This service has been invaluable to many organizations, and it is part of the value LinkedIn can add to Microsoft, which has lacked a comprehensive strategy for human resources and recruiting. How Microsoft capitalizes on this part of the revenue stream, and where it could use existing efforts to move forward, is not clear, since it has no competencies in this area except for its own recruiting teams.

After the acquisition, the two companies intend to bring together their respective professional cloud and professional networks to increase engagement with LinkedIn, Office 365 and Microsoft Dynamics. As if it were important, we’re also being told that LinkedIn’s brand, culture and independence will remain intact. During the investor conference call, Microsoft CEO Satya Nadella said that LinkedIn is to become the “social fabric” for all of Microsoft’s efforts. Of course, that depends on the willingness of intensive users of LinkedIn to share their personal, professional and corporate data. Without our cooperation, the value of the acquisition is greatly diminished.

For sales and marketing professionals, the value proposition of the acquisition is obvious: Tighter integration between Microsoft and LinkedIn means more available prospect and customer information, timelier corporate information and more relevant insights, all of which could lead to highly -targeted lead generation campaigns, an influx of qualified revenue opportunities, greater sales efficiency and effectiveness, and award-winning customer service. But why would anybody who has integrated a process for smartly using LinkedIn content now as part of their current sales, marketing, and customer service programs actually value Microsoft hanging its “new ownership” shingle over the storefront? This is the critical question, it seems to me.

It also seems that this acquisition has come along at a very opportune time for Microsoft. The global sales and marketing audience has an insatiable appetite for data to increase the velocity of demand generation and insights into its targeted community. But the cautionary note is this: Sales and marketing leaders already crushing it will view new analytical offerings as a value-added piece complementing their own well-oiled machine, while industry laggards who enthusiastically hand over a check for snappy-looking reports will find little benefit without the people or sales and marketing processes needed to make sense out of it, let alone drive value, revenue or return on the investment.

Another of area of opportunity for Microsoft resides in upgrading of multiple facets of the LinkedIn user experience. Advancing the integration between Microsoft Dynamics CRM and LinkedIn’s Sales Navigator seems like a great place to introduce innovation in the service of those seeking better sales and marketing enablement, efficiency and effectiveness. And something must be done about LinkedIn’s stale and clunky community, which has been slow to advance. For those of us who have not been revenue-generating subscribers of LinkedIn, the process of mining data and content through LinkedIn’s seemingly neglected website has become a predictable, step-by-step procedural slog that has grown long in the tooth in an era of rapid technological advancement. In addition, the support of LinkedIn has been its weak spot; many users can attest to the weak responsiveness for recapturing your business profile that links to an old employer email address. How Microsoft addresses the LinkedIn user experience, on the Web and in the Office 365 and Dynamics environments, will be closely watched and improvement welcomed. Indeed, the success or failure of the new venture is riding on that user experience. Because LinkedIn’s content is provided by users willing to publicly share data, without a better user experience data and content contribution will suffer, and the negative downstream impact will be felt by all.

If all goes according to plan, Microsoft will monetize the avalanche of business contacts and company information found within the LinkedIn environment, expertly fold that public and private data into tools for social selling, and enable sales and marketing organizational transformation. But while that sounds compelling to some, that package of services will appear lackluster those at the head of the sales and marketing class.  To the marketing producers and the champion closers on the sales team, those business solutions will have the appeal of a road side gas station that only warrants a mere glance. When the engine is racing and the gas tank is full, there’s no need to pull over and pay for services you don’t need.  Organizing and bringing structure to LinkedIn’s data as it migrates into the Microsoft Office 365 and Dynamics environments has potential value, but do I really need to have where somebody went to college or worked last listed in my Outlook Calendar each and every time we have a sales call? After all, if I have a 10 a.m. sales meeting with the CFO at MultiNational Corp. and I don’t know everything about the source of that opportunity, all of the details surrounding the business opportunity, and how I’m going to communicate and close the deal, I have much bigger problems. Microsoft will need to work to find ways to further enrich the data in LinkedIn, elevate its importance to business, and eventually force sales and marketing professionals to stop and take notice.

For sales, marketing and human resources professionals, not much has changed in how we use LinkedIn in the short term. It will be up to Microsoft to determine how to improve the offering to make it more valuable. It will require more investment and integration to make LinkedIn more relevant by increasing the size of the community and its value to business. How Microsoft accomplishes this with LinkedIn being managed separately is not clear, but for now the connection has been made, for more than $26 billion, and it remains to be seen how successful the ROI will be. Microsoft has not had the best track record for acquisitions, so let’s hope it can manage this one more closely and learn from its own past experiences.


Tony Compton

VP & Research Director, Sales and Marketing

Topics: Sales Performance, Social Media, Business Analytics, Business Intelligence, Business Performance, Cloud Computing, Uncategorized, Microsoft, LinkedIn, CMO, Sales

Ventana Research

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