Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



A Beautifully Positioned Social Media Stock

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Twitter is going to triple revenue by 2014, but if you look beyond the numbers, you'll see it's nowhere near as well-positioned as LinkedIn (NYSE: LNKD  ) .

Let's address the basic data first. According to analysts at EMarketer, Twitter is on track to grow revenue from last year's $139.5 million to $540 million two years from now. LinkedIn's ad sales will come in lower, at $405.6 million in 2014, the group says, but that would still amount to 162% growth.

"Ad sales" is the phrase that matters most here. While Twitter is probably stuck with an ad-only strategy for now, LinkedIn has done wonderfully selling premium subscriptions to both corporations and job seekers. In Q3, the "marketing solutions" segment that does business with advertisers accounted for just 28.7% of revenue.

There's genius in how LinkedIn does it. Get users to post data about themselves and then collect the resulting information into new networks and tier pricing according to access level. Want to get a closer look at which fellow alumni work for a favored company? You can -- but you'll have to pay for a premium subscription.

LinkedIn has other uses as well. As an investment analyst, I use the network's built-in tools to follow company hires, departures, and popular links posted by employees. Were legendary investor Philip Fisher still with us, my guess is he'd call it a wonderful source of scuttlebutt.

You could say the same for Twitter, but only if you're willing to commit the extra time and attention required to cut through the noise. Facebook has a similar problem. Google (Nasdaq: GOOG  ) might offer the best alternative with Google+ and its ability to embed custom searches called "sparks" into its stream, but it still pales compared to the organized intelligence available in LinkedIn.

This is why you see the company charging hundreds monthly for premium access. CEO Jeff Weiner is positioning LinkedIn less as another social offering and more as a premium-data provider cut from the same mold as comScore (Nasdaq: SCOR  ) and Dun & Bradstreet (NYSE: DNB  ) . Of the three, LinkedIn's 83.5% gross margin ranks highest, followed by comScore at 67.7% and D&B at 65.9%. Exactly what I'd expect from a Rule Breaker in the making.

Do you agree? Disagree? Either way, it makes sense to study the new era of Web-based computing emerging around us. We can help. The Motley Fool has created a video tutorial entitled "The Two Words Bill Gates Doesn't Want Your to Hear." Watch and you'll not only learn the technology behind cloud computing but also get details of some of the best opportunities available right now. Click here to get started -- the research is 100% free for a limited time.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Google at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Google and LinkedIn. Motley Fool newsletter services have recommended buying shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1771216, ~/Articles/ArticleHandler.aspx, 10/27/2016 1:22:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:00 PM
LNKD $189.29 Down -0.01 -0.01%
LinkedIn CAPS Rating: ***
DNB $125.17 Down -0.62 -0.49%
Dun and Bradstreet CAPS Rating: *****
GOOGL $822.10 Down -6.45 -0.78%
Alphabet (A shares… CAPS Rating: *****
SCOR $29.65 Down -0.07 -0.24%
comScore CAPS Rating: ***