Everyone and their mothers (okay, maybe not everyone’s mother) know that there is money to be made in social media. We know that platforms like Facebook, Zynga, Twitter, GroupOn, and LinkedIn have access to hundreds of millions of consumers. I often daydream of what it would be like to run one of those companies. They are basically gold mines waiting to be tapped.
But it turns out getting to that gold is a lot harder for some.
If you’ve been following the CEM blog, Andrew wrote a great analysis a few weeks ago about Facebook, and the problems it faces after going public. “Facebook’s outlook is not good compared to LinkedIn,” he wrote. Andrew pretty much hit the nail on the head. Today’s news proves it.
LinkedIn Raises Outlook, Makes lots of Money
As Reuters reported early this morning, “LinkedIn Corp reported higher-than-expected revenue and raised its full-year outlook.” This can be attributed to the company’s services for businesses, advertisers, and from subscribers. They exceeded expectations, as their second-quarter revenue was $228.2 million
Compared to Facebook, the social media company everyone assumed would dominate Wall Street, LinkedIn is doing a fantastic job. CNBC shared an interesting statistic: “Facebook shares hit a low of $19.91 on Thursday, losing almost half of their value since the company’s IPO at $38 in May.” That’s quite a slide in two months. In fact, the Washington Post cut right to the chase in regards to Facebook, Zynga, and LinkedIn going public: “LinkedIn, which went public more than a year ago, is among the best-performing of the newly traded companies, with its stock trading at more than twice the level of its IPO price.”
Why do Investors Like LinkedIn?
LinkedIn is more attractive to investors than a giant like Facebook for a few reasons. LinkedIn “‘[has] a distinct value advantage. They own an identity in the professional user,’” Rick Summer, analyst, told Reuters. In addition to that, LinkedIn has three clear revenue sources: subscribers, advertising, and companies that hire through the platform. They are even showing signs of success with mobile advertisements, an area Facebook has been struggling with.
What to Learn from LinkedIn
LinkedIn’s story, since going public, is further proof that when it comes to social media, it’s not about number of users; it’s about conversions. LinkedIn has only a fraction of Facebook’s 900 million users, but the company turns their modest 175 million user’s conversions into revenue.
LinkedIn understands its audience. They have a clear strategy to convert online users into revenue, and they execute it. Most importantly, they’ve created a brand that consumers identify with.
This sort of success should be the goal of every business that operates online and in the “real world.” The bottom line is that when it comes to the online world, the rules are different. You need competent content marketing teams to build your online presence. When executed properly, the conversions will come. Just like they do for LinkedIn.
Are you utilizing the web for your business the way you should be?
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