Unless you have an expensive subscription to a service such Dunn and Bradstreet, or an even more expensive subscription to an analyst house, collating market sizing data can be a daunting task. You might have some historical internal data, but that’s of little use if you’re looking to size a new geography or industry vertical where you have no experience.
If budget is lacking and you need to size a new market and build your TAM (Total Addressable Market), there are some free tools available to you – the most obvious being LinkedIn. It’s not perfect (as you’ll see), but in many cases it’ll get you 80% of the way there. At least far enough to prove / or disprove your TAM hypotheses.
What to watch for
LinkedIn can be a powerful tool for segmenting markets by type, size and geography. But while it can provide useful guidance, beware! Having just run a project to build a TAM spanning several verticals and geographies, there are some “gotchas” you need to be aware of if you’re to collate anything meaningful.
1. Go Premium
You’ll need a LinkedIn Premium subscription to do the job properly. This will allow you to run more advanced searches, including segmenting by organization size (useful if you are just searching for SMBs for example). A Premium account isn’t cheap, so take advantage of the free 30-day trial to get the job done.
2. Industry vs function
When running a People search, LinkedIn doesn’t pull “industry type”from the individual’s associated company; instead it pulls it from a drop-down selection made by the user during profile creation. This can cause a couple of issues.
Most commonly, when creating or editing their profile many LinkedIn users mistake their business function with their industry type. For example, perhaps you are targeting Accounting firms and want a headcount. A People search including “industry type = Accounting”, will pull in profiles not only for individuals who work in Accounting firms, but also internal accounting professionals in almost every other possible industry. Likewise “Industry type = Public Relations & Communications” will also deliver results for internal PR Managers. If you are running a People search to gauge headcount against an industry vertical, this is a huge gotcha that can skew your results. Any category where there’s potential for confusion between industry type and function should be a red flag (think legal services, utilities, human resource etc.).
3. Consider weighting the results
If you run into this problem, you might need to apply a weighting system. Run a People search on a particular industry and limit it to your 1st (even 2nd) level connections (ie: those whose companies and jobs you know). If you have enough connections you might be able to get a sense of the percentage of profiles that accurately match the industry type. Some industries will be worse than others. In my own TAM project I estimated only 25% profiles connected to “Industry=Public Relations & Communications”, actually worked in the PR industry, the rest were in-house professionals across industries spanning travel to IT Services.
Note: If you just need a count of companies, rather than running a headcount search, your results will be more accurate as Company Profiles are a little more reliable.
4. Beware country bias
LinkedIn isn’t as universal as you might think. That means results will show bias towards countries where adoption is high. You will need to consider this if you are comparing multiple geographies. You might even want to apply a weighting system for a fairer analysis, or to ensure you aren’t underestimating your TAM.
As you might imagine, LinkedIn use is more prevalent in North America and Western Europe. If we measure countries by their available workforce we can get some interesting insights into LinkedIn’s prevalence.
|Country||LinkedIn Users||Labour Force||Penetration (%)|
Of course, these results don’t factor for users with multiple profiles, nor % of economy in industries outside of LinkedIn’s target audience (ie: agriculture).
5. Industry overlap
Take the time to review all industry types listed by LinkedIn. There are some ambiguous categories and some noticeable overlap. For example, Legal Services and Law Practices; Public Relations & Communications and Marketing & Advertising. Make sure you include these overlaps where they exist, or you could end up under-estimating the true market opportunity.
6. It’s slow
Unless you’re part of the LinkedIn developer network you’ll find it almost impossible to extract / scrape LinkedIn data as a .csv file to manipulate later. There used to be several 3rd party, plug-in tools available but last year LinkedIn restricted full API access to selected partners only. In most scenarios, manually inputting the data into your own spreadsheet will be the only option. It’s perfectly achievable – if not a little slow with page refreshes occurring after every search filter you apply. Grab another cup of coffee and be patient!
If budget is lacking, Linkedin might be your best choice for TAM analysis. And while it may not be perfect, as long as you understand its limitations it’s a perfectly acceptable tool for building preliminary market assessments.