Battle of the Business Models – Why LinkedIn May Be More Profitable than Facebook

This Business Insider article discusses some really interesting information about how two different social media companies monetize their networks.
Facebook, as we all know, gets the bulk of its income from corporate advertising. Facebook’s philosophy seems to be that if there are consumer eyeballs on its network, then it will be up to the advertiser to find a way to monetize that network. GM famously has had a difficult time justifying this business model for Facebook (although you could argue that GM is having a difficult time with advertising in general). The net effect is that Facebook is letting the market dictate the value of Facebook advertising, and providing a minimal amount of customer support for that market.

LinkedIn takes a different approach. For LinkedIn, the “product” is arguably either employees or B2B sales leads. As above referenced Business Insider article discusses, LinkedIn has built a very successful business selling a high-value cost to a very few customers, and providing the rest of the world with a valuable tool for free. LinkedIn has a more rigid pricing structure, and seems to be paying a high-value sales force to ensure customer success.

The contrast between the two companies (both of which are profitable) serves to illustrate that there are many, many different ways to monetize your own network. Which business model appeals to you the most?  Can you think of a third business model that would be a good fit for you?

If you have questions about how you can monetize your network, contact us and one of our account managers will be happy to discuss your options with you.

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