The Marketing Solutions or advertising-related segment of LinkedIn (LNKD) is still not generating as much money as its Talent Solutions segment. I am therefore elated to learn that LinkedIn is allegedly negotiating with media publishers to help it build a rival to Facebook’s (FB) Instant Articles.
Creating an Instant Articles-like service is a great way to improve the future revenue stream from Marketing Solutions. As a global social network, LinkedIn professionals badly needs to improve its advertising business. As you can see from Statista’s chart below, Marketing Solutions only delivered $154 million during Q1 2016. Talent Solutions generated $558 million.
(Source: Statista)
LinkedIn already has 433 million users. The company is clearly not doing enough to better monetize its huge pool of users through Sponsored Content or targeted ads. During its most recent quarter, Facebook made $5.2 billion from advertising, this is more than 33x higher than LinkedIn Marketing Solutions’ revenue of $154 million.
It’s no wonder why most institutional and retail investors have rallied around FB, but went bearish on LNKD. On a one-year basis, FB (+45%) greatly outperformed LNKD (-24%).
(Source: Google Finance)
Instant Articles Are Not As Annoying As App-Install Ads
I understand that LinkedIn has a different user base than Facebook. I do not think the professionals using LinkedIn will tolerate the cash cow of Facebook-style app-install ads. Statista estimates that Facebook made more than $6.4 billion from app-install ads last year. Unfortunately, LinkedIn will likely alienate a large part of its users if it tries to imitate Facebook’s app-install tactic.
Creating a news-centric service like Instant Articles is therefore the logical move for LinkedIn. Fast-loading news content from third-party publishers are acceptable ad-delivery vehicles to business users. Instant Articles could also be considered as Sponsored Content.
Leave A Comment