LinkedIn is a still developing a search marketing platform
Google Inc (NASDAQ:GOOG) can trace its tremendous success to its ability to leverage data to serve the most relevant ad to the right users at the right time. For this reason Google is highly regarded as the best search engine, and an ideal model for LinkedIn to follow. The cost per click for any merchant bidding on the Google platform is dictated by the Average Order Value as well as the conversion rate for any given SKU. Based on the Google Inc (NASDAQ:GOOG) model, LinkedIn Corp (NYSE:LNKD) can be viewed as undercharging for the leads and has ample room to move subscription prices higher in the future.
LinkedIn can maybe take a page out of Google’s book when it comes to advertising. Google Inc (NASDAQ:GOOG) announced a beta launch of image extensions, which will allow advertisers to add new visual elements to their search ads. Image extensions will show in some cases when Google determines that a search is likely for visual content. At the end of the day, LinkedIn Corp (NYSE:LNKD) users rely heavily on searching for new job prospects, or new clients. Google Inc (NASDAQ:GOOG) seems to understand that can be easier to ‘show’ rather than ‘tell’ when it comes to advertising.
Conclusion
When investors think of LinkedIn, it is almost automatically compared to Facebook Inc (NASDAQ:FB) which is not a fair comparison for several reasons. Firstly, Facebook is the ideal example of a great company with a great product, but a stock to be avoided. Facebook has received a lot of negative news being called a ‘fad,’ sentiments echoed by the company COO, who has said that “teens are using more of our competitors.” LinkedIn, on the other hand, is the only player in the professional networking domain with virtually no competition in terms of online social networking. When it comes to the revenue stream, Facebook does not offer any membership tiers and only collects revenues from advertisements, games, and small gimmicks like gifts. Facebook Inc (NASDAQ:FB) has also been under tremendous pressure to better monitor their ads, and have seen several large advertisers temporarily remove their ads from the site as they were displayed next to pages glorifying violence against women. Facebook acknowledged that their system to remove such negative pages is not working, and Facebook is not providing a positive environment for advertisers to reach consumers in a positive way. Now, all this being said, Facebook’s main source of revenue is under pressure, so any investor that places the two companies in the same field should avoid Facebook Inc (NASDAQ:FB) and be buying LinkedIn Corp (NYSE:LNKD).
Jayson Derrick has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google Inc (NASDAQ:GOOG), and LinkedIn. The Motley Fool owns shares of Facebook Inc (NASDAQ:FB), Google, and LinkedIn Corp (NYSE:LNKD).
The article LinkedIn Has Plenty Of Room To Grow originally appeared on Fool.com.
Jayson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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