LinkedIn has 90 million members. These members are a little bit older, professional, and wealthy – some of the best demographics luxury advertisers could hope for.
But despite all that, LinkedIn’s advertising business is tiny.
In the three months ending September 30, 2010, LinkedIn generated just $18 million in advertising revenue.
By way of rough, directional contrast, consider that Vogue‘s September issue alone sold 100 ads for something like $150,000 a pop, for a total around $15 million. Both properties have rich consumers looking at their ads, but Vogue has far fewer of them – 11 million to LinkedIn’s 90 million.
Fortunately for LinkedIn, it’s found a way to generate revenues elsewhere – 45% selling tools to recruiters and another 24% selling subscriptions.
We think it’s pretty clear all the other biggies in social media are going to have to do the same: figure out a way to make money through products other than ad units.
Facebook is already well on its way toward doing that. It had $2 billion revenues in 2010, and we hear taxes on the virtual games industry (credits + ads) generated around $400 million. If LinkedIn is a model, Facebook’s non-ad businesses – offsite credits? coupons? – will eventually outpace its brand advertising business.
All reports suggest that Twitter’s ad revenues remain tiny. New-ish Twitter CEO Dick Costolo should follow LinkedIn and Facebook’s lead: find the professionals that depend on his service – for LinkedIn, it’s recruiters, for Facebook, it’s developers – and charge them as much as he can.