LinkedIn Can Teach Facebook a Few Things About Being a Publicly Traded Social Media Company

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Thanks to Facebook’s faltering stock prices since its IPO, many in the business world wonder if social media companies like Twitter and Pinterest will ever become business models worth investing in.  It would seem that monetizing social activity is the current holy grail of business.  After the posting of last quarter’s earnings, LinkedIn is proving it possesses the grail.


This is the gist of the 4th Quarter LinkedIn earning statement according to the New York Times:

LinkedIn’s stock has tripled from its I.P.O. price of $45. After LinkedIn reported its fourth-quarter results, its shares surged $11.36, or 9.15 percent, to $135.45 in after-hours trading.

Besides a 66 percent increase in earnings from the previous year, the latest quarter was highlighted by an influx of 15 million accounts to propel LinkedIn’s total membership beyond 200 million. Visitors to LinkedIn’s Web site also viewed 67 percent more pages than the previous year, an indication that the company’s efforts to add more business news and career tips from top business executives are paying off.

LinkedIn earned $11.5 million, or 10 cents a share, during the final three months of last year. That compared to $6.9 million, or 6 cents a share, a year earlier.

The success of the business networking site has inspired much discussion of what happens next in the industry.  Jim Cramer, host of CNBC’s Mad Money, set the blogosphere abuzz by suggesting that Facebook should buy LinkedIn.  “The thing that is amazing from the conference call is that the company is in Portuguese now, they’re taking over Brazil, they’re in German,” Cramer said. “Recruiters want them in their countries. They have an ad business that’s up by 60 percent? This is a company that, at $20 billion, Facebook should buy.” “This is too valuable a property,” Cramer continued, “This is a company that has figured out mobile, it has figured out global, it is indispensable in a whole bunch of countries.”

That would certainly be typical of what Facebook has done in the past, buy companies that would add to Facebook’s talent pool.  But rather than simply scooping up LinkedIn, why not take the lessons of success and run with them?  LinkedIn has an advertising model that is generating serious revenue for the company.  They have also created a paid premium account system for business users that has seen steady and reliable growth in usage.  They are making in-roads on the international front, like in China, where Facebook cannot seem to get more than a toe-hold.  Finally, LinkedIn has created tools for a specialized niche, and recruiters love them for it.

What do you think?  Should Facebook buy or simply take a few pages from the LinkedIn playbook for revenue success?

Michelle Stinson Ross

Michelle Stinson Ross

Content & Outreach Goddess at AuthorityLabs
Michelle Stinson Ross is a digital marketing industry recognized authority on the outreach power of social media. She has worked as a community manager and consultant for several brands to increase brand awareness, raise the visibility of special promotions, and train their teams to use the social space to connect with media influencers and the public. Michelle is part of the marketing team at AuthorityLabs and co-hosts #SocialChat, a Twitter based live chat that covers a variety of topics geared toward social media marketing (Mondays at 9 p.m. ET). Her passion for social media marketing has made her a regular conference speaker at events like ClickZ Live, and Search Marketing Expo. She has also been a featured guest on Webmaster Radio and several industry Hangouts on Air.
Michelle Stinson Ross
Michelle Stinson Ross
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  • Angelo de Gracia

    I think that’s because linkedin has established itself as a must have business tool. Even hiring managers request to view an applicants linkedin profile to see his professional image. Facebook on the other hand is mostly a leisure (and gossip) site (which makes it suitable for ads for leisure and gossip!) which is why they can’t cover china. Facebook is just a better friendster or multiply. Linkedin pioneered the entire business model and actually created the need to be linked. If facebook buys linkedin, that’s when its stocks crash. Mark Zuckerberg’s reputation is not really very “business like”