During the early rise of social media, Facebook Inc (NASDAQ:FB)‘s similarities to LinkedIn Corp (NYSE:LNKD) were only skin-deep.
Both are social networks, but one company focused on personal friendships while the other was all about professional networking. The two companies still have entirely different monetization strategies. Facebook Inc (NASDAQ:FB)’s business is built on advertising at 85% of revenue last quarter, while only 23% of LinkedIn Corp (NYSE:LNKD)’s sales come from advertising.
Nowadays, Facebook Inc (NASDAQ:FB) and LinkedIn Corp (NYSE:LNKD) are finding themselves more at odds than ever. Facebook has been trying to grow its professional status, and LinkedIn is aggressively expanding into content and launching new social feeds. LinkedIn has just fired another shot.
This isn’t exactly a surprise considering LinkedIn Corp (NYSE:LNKD)’s recent focus on content. After all, advertising is easily the most common way to monetize content on the Internet.
Growing the marketing business is an incremental opportunity for LinkedIn Corp (NYSE:LNKD), and one that shows how asymmetrical its rivalry with Facebook Inc (NASDAQ:FB) will be. To the extent that LinkedIn can grow its content offerings, traffic, and advertising business, it can compete directly with Facebook for ad dollars. Meanwhile, its core business of connecting recruiters with job candidates is somewhere Facebook can’t venture.
Facebook Inc (NASDAQ:FB) has reiterated countless times that it will never impose a membership fee, greeting prospective new Facebookers with the assurance that “it’s free and always will be.” Facebookers also loathe the idea of the social network selling their data to advertisers, although that probably doesn’t dissuade most people from using the site.
In those two ways, LinkedIn Corp (NYSE:LNKD) has advantages. LinkedIn members want the company to sell their data, because they might end up with a better job, and many users find enough value to pay membership fees. Recruiters pay handsomely for an efficient way to find talent. LinkedIn gets to play both sides of the matchmaking, while Facebook Inc (NASDAQ:FB) users have no particular interest in hooking up with advertisers more than they already have to, and Facebook’s had limited success at cracking the professional segment.
LinkedIn Corp (NYSE:LNKD) is still much smaller than Facebook Inc (NASDAQ:FB) in terms of users, revenue, net income, market cap, and many other metrics. LinkedIn also trades at much higher premiums, but its business is much more sustainable than Facebook’s.
The article LinkedIn Can Become Facebook Before Facebook Can Become LinkedIn originally appeared on Fool.com.
Fool contributor Evan Niu, CFA, owns shares of LinkedIn. The Motley Fool recommends and owns shares of Facebook and LinkedIn.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
