I’ve just received yet another weekly update from LinkedIn, and this time one of the headlines caught my interest: Did you know that LinkedIn gets 20 times more money per user compared to Facebook?
Yes, that is correct – according to a cover story from Forbes on LinkedIn, LinkedIn generates $1.30/hour/user, making LinkedIn $895 million in revenue and $70 million in net profits this year.. Facebook? 6.2 cents/hour/user.
Facebook users are by far the most engaged one – spending 6.4 hours a month vs. LinkedIn’s 18 minutes a month, but LinkedIn successfully make the most of the limited users’ usage time. If I am an investor, I would invest on LinkedIn, not Facebook (both LinkedIn and Facebook have went public) simply due to the fact that LinkedIn has a “healthy” business model financially.
So, yes – Mark Zuckerberg can have all the fun, but it’s LinkedIn CEO Jeff Weiner who gains all the trust from investors. Check this out: Facebook shares dropped by 17% since the Facebook IPO, while LinkedIn shares enjoy a 64% rises in 2012.
LinkedIn business model
LinkedIn has several monetization methods – ads, employment solutions, etc. However, the real cash cow here is LinkedIn Recruiter, a recruiting solution. LinkedIn clearly monetize their gold mines well: The members’ resumes. In essence, Recruiter helps clients to unearth the best talents on LinkedIn that just won’t show up via traditional searches.
Recruiter was sold at $5,000 per seat; now it would cost you $21,000 for minimum of three seats. For recruiters, the investment is well worth it.
LinkedIn also works wonder with on mobile platforms: With the rising mobile trends, LinkedIn has the ability to monetize its assets, not traffic. As PPC ads are not working so well with mobile devices, Facebook – including Google – should find a better way to monetize its traffic beyond advertising. Job search and employee search via mobile phone? Also on the rise.
Lessons learned
So, you see – you don’t have to get so much traffic to generate considerable revenue. Sure, Facebook makes huge amount of money, but that’s due to huge user base. Unlike Facebook, LinkedIn monetizes both traffic and asset – very well.
If we are going to start yet another social media site – or simply running any kind of web business, you and I need to focus on products. Advertising will always something that fuel websites, but products will help you monetize your traffic even better. As acquiring new users would be expensive, it’s better to focus on what we have.
So my (and should be your) to-do list: Focus on creating on-demand products so you can monetize your website better from your existing traffic.
How about you? What can you learn from LinkedIn regarding its business model and profitability?
Ivan Widjaya
LinkedIn rocks!