Last week, Viadeo, “the LinkedIn of France” and a GigaOM Euro 20 company, introduced an API via a developer contest. When LinkedIn went public, Viadeo withdrew its own IPO, but Viadeo has grown to 35 million members and has aggressive plans, especially for China. The company’s strategy is differentiated enough, especially in emerging markets, for it to make a run at LinkedIn.
Viadeo CEO Dan Serfaty told me the company was strongest in France, Italy and Spain, as well as in China, through its Tianji acquisition. It opened a U.S. office last year. But it isn’t aiming to gain U.S. market share versus LinkedIn, which claims that less than half of its 116 million members are in the U.S. Rather, Viadeo targets expatriates.
Product and API strategies
Both companies’ APIs are more focused on activities that happen outside their platform than on cultivating apps. Each wants to drive traffic back to its site with a Facebook Connect–like strategy, but LinkedIn has been at it longer and has grander ambitions.
Serfaty says Viadeo has three types of developers that it wants to partner with beyond its open API. But it feels like it’s only gone after building brand awareness via telcos and enterprise communications companies like Cisco and Salesforce.com. Perhaps the contest will introduce it to developers that might build money-making apps or data and traffic exchanging relationships. In contrast, LinkedIn already has 30,000 developers using its APIs and 100,000 publishers using its share button, and it recently launched a job application plug-in. The two may have similar API objectives, but LinkedIn is ahead in attracting developers, and because of its user base and its own collection of company information, it can support richer functionality.
Both companies are trying to increase day-to-day usage by offering personalized news and a few personal productivity apps. And each has a mobile offering to increase usage frequency, though with few innovations. Their end strategies are different, though. LinkedIn wants increased activity to show more targeted advertising. Viadeo wants to make its network less about job hunting and more about other business relationships. It says its local market focus drives it to offer different features for a given region. For example, in India it offers horoscopes and is working on integrating SMS messaging. LinkedIn is more one-size-fits-all.
Different revenue mix
The subtly different product approaches have resulted in very different business models. For the second quarter of 2011, 48 percent of LinkedIn’s $121 million in revenue was from hiring solutions, 32 percent from advertising and 20 percent from subscriptions. In contrast, Viadeo, which keeps its total revenue figure private, focuses on subscriptions: Its mix is 30 percent hiring, 20 percent advertising and 50 percent subscriptions.
Serfaty claims to have an almost 10 percent conversion rate for paid subscriptions. That’s very high for online services. It’s likely due to Viadeo’ de-emphasis of hiring and partly attributable to a low price (6 Euros per month). Viadeo offers unlimited connecting/introductions, while LinkedIn saves some of that value for its hiring products for recruiters. If Viadeo can prove its worth for, say, delivering sales leads, a membership model would be less vulnerable to economic swings than an ad- and hiring-based one. LinkedIn’s efforts to make itself into a marketplace via ads and company pages is further along than Viadeo’s, but they haven’t paid off yet.
Integration and two-way data exchange with enterprise applications like Salesforce and SharePoint will be critical for professional networking. We’re already seeing feature-set divergence for social platforms that are internal versus customer-facing. Meanwhile, companies like BranchOut and Monster are building Facebook apps for jobs and networking. And Facebook, Google and LinkedIn are all vying to be the home of authenticated identity.
LinkedIn dominates the U.S., is further along with its API development and has the scale advantage. But it needs to be big in individual country markets to achieve a network effect. Viadeo’s more-localized approach could pay off in high-growth markets like India, Brazil and China. But it will have to bring more enterprise apps and business service opportunities to its users, the way Salesforce.com, for example, acquired its Jigsaw crowdsourced sales leads database.