Facebook Inc (FB), LinkedIn Corp (LNKD): How Local Advertising Matters for These Global Brands

Unlike Facebook Inc (NASDAQ:FB), which doesn’t charge individual users for access, LinkedIn Corp (NYSE:LNKD) provides the chance to upgrade one’s profile for a fee to gain better access to job opportunities. In a tough economy like this one, having better access to job providers and getting one’s resume out there could be vital, meaning those that can, will pay for that advantage.

This all translates to strong earnings. With 189 million monthly unique visitors, it’s a growing website that markets almost as Facebook in a suit jacket. Thanks to the premium subscription services, it has netted $364 million of revenue and $89 million in EBITDA, 62% of which came from North America. Like Facebook, it does sell advertising as well, but the main advertising comes from job seekers themselves looking for career advancement, which is a unique, and much needed, service to workers.

The bottom line: a bit pricey, but room for growth

Suffice to say, we have hit the point  where social media can be used to reward investors through selling custom, data-driven advertising. In addition to the growing daily usage of popular social networking sites, all three companies posted solid returns in the 2^nd quarter.

So far though, each company is very expensive when looking at forward P/E, with Yelp posting a 237.6 ratio, LinkedIn Corp (NYSE:LNKD) with a 112.2, and Facebook Inc (NASDAQ:FB) with a 40.5. Yelp is the weak link with a profit margin in the red at -9%, owing largely to less monetization than the other two, but with local advertising becoming more important, Yelp should erase these red numbers in due course. As long as Main Street thrives, Wall Street will thrive as well.

John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article How Local Advertising Matters for These Global Brands originally appeared on Fool.com and is written by John McKenna.

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