Forget Facebook -- Here's the Tech IPO You Should Be Buying

The 1960s birthed an era of counterculture and social revolution.

The '70s brought oil crises, bell bottoms, and a president resigning in disgrace.

Modern Wall Street was born, rock bands filled arenas, and communism began to crumble in the '80s.

Then the '90s witnessed the Internet change the face of technology while the global economy added billions of dollars to the middle class.

Every decade had moments that defined it.

So where are we today?

We're in the Facebook generation.

This generation is defined by the constant connection that binds us together and that has transformed the very essence of the Internet. In many ways our lives are no longer private...

We're part of an interconnected web where our every action is detailed through one central force. Companies strive to bind users through a sense of community; and Facebook is the central hub of these Internet connections.

And to think, you've got a chance to buy into the company that defined a generation!

However, for all its promise, Facebook holds a dark secret...

While the company sells itself as the can't-miss investment that could make this generation rich, there's a key reason you should look past Facebook and toward another company with similar qualities, but that doesn't suffer from its greatest weakness.

Click below to find out more.

Internet Advertising Doesn't Pay

The reason why Facebook is not the best bet for your money right now is because displaying ads on Web pages is a brutal business.

And yet Facebook generates 85% of its revenue from this type of advertising.

Why is Internet advertising such a brutal business to squeeze profits out of?

For starters, think about how many times you've clicked an Internet ad in the past week.

If you saw it on Facebook, it likely won't be that high -- people only click on 1 in every 2,000 Facebook ads. For Facebook advertisers, buying an ad is like buying a lottery ticket: The odds aren't in your favor.

General Motors -- a top buyer of Facebook's ad slots -- recently discovered this and canceled its Facebook ads. Because despite the massive reach, Facebook ads just weren't effective.

It all goes back to the beginning

When the Internet was born, users were trained to ignore ads. This behavior has led to ad rates so low that many websites relying solely on ads can barely keep the lights on.

True, Facebook is a company with more unique visitors than any other website. Its total pages viewed are about 10 times the size of its next closest competitor!

Yet despite Facebook's dominance, it collected significantly less advertising revenue last year than NBC -- a company that finished dead last among the four main broadcasters!

Which is the main reason why Facebook's business model of selling advertising is not your best path to riches.

Even with this reality, some investors might assume that as people stay connected with Facebook and spend more time on the Internet, Facebook's revenues will begin to explode.

But there are a number of problems that will prevent this:

• Inventory: Advertising space in printed newspapers and television is capped. There can only be so many advertisements in an hour long TV show or across a sports section. Likewise, there are only so many broadcast networks or newspapers in a town. Compare that to Google's YouTube, where more than two days of video are uploaded every minute and 4 billion videos are viewed a day! That seemingly endless level of supply will continue to keep Internet advertising rates down.
• Internet spending is already high: While it seems like the sky is the limit when it comes to spending on Web ads, Internet advertising has already passed print advertising, and the total level of Internet spending isn't far behind the percent of time users spend on the Internet in total. According to eMarketer, the average American spent 43% of their media interaction watching television in 2010. TV advertising accounted for 43% of all ad dollars. Likewise, time spent on the Internet was 25% of users' time but was 19% of ad spending. There's upside to Internet advertising, but it's not the growth market many investors expect.
• Can't make money off mobile: Mobile is becoming increasingly important to Web traffic. So it's troubling that right before going public, Facebook had to amend its filings to show that it's having a hard time making money off mobile. Internet advertising is already difficult, but that problem is compounded when users visit your website or mobile app and there's either no real estate to serve up an ad, or it's a bad experience for your users

Investors might further point at Google and the $40 billion it collects each year as proof that Facebook can continue securing higher advertising spend.

The problem with this thinking is that search advertising -- unlike the display advertising Facebook relies on -- is hyper-targeted.

It's similar in television. A mid-day TV shows will share commercials about heading back to school to get a degree. Because chances are, if you're watching Judge Judy at noon on a Tuesday you're far more likely to be looking to get back to work.

Advertising is all about relevancy.

And it's the same online. If you're searching for a new mattress on Google, you're probably serious about buying one. This is why Google boasts higher than ten times the click through rate of Facebook ads and provides companies with better leads.

However, the banner style advertising Facebook offers lacks this precise level of targeting. Improvements can -- and likely will -- be made, but display advertising has suffered from this flaw and the poor click-through rates that inevitably follow since the Internet began.

When it comes to Facebook, this time it isn't different

Add all these factors up, and you can see why advertising on the Internet is by no means a revolutionary business model. Sure, there's growth ahead for advertising, but not the runway growth you'd expect.

What investors need is a company with the ability to create an enormous base of engaged users, yet with a business model that actually works.

Which is why I'd like to share with you the social media stock you'd be wise to own over the next five years...

Simply click the link below to uncover its name and ticker symbol.

The REAL Winner in the Social Media World

LinkedIn [Nasdaq: LNKD] might look like it's standing in Facebook's shadow, but it's a company that has a number of hidden weapons that keep it from falling in Facebook's advertising trap.

LinkedIn offers a network much like Facebook's, but it instead caters to the professional market. As investors focus on Facebook and its possibilities, LinkedIn toils away in its position as the dominant professional network across the world.

Why is this important?

Although Facebook has a higher number of members, it's an umbrella platform designed to connect friends.

LinkedIn, on the other hand, caters to a professional identity. So even though Facebook has become the de facto social network globally, LinkedIn will thrive as an alternate network for professional contacts.

The great thing about LinkedIn is that it's not a competitor to Facebook. But it is in a valuable niche market. This places it more in competition with companies that operate traditional job websites, such as Monster Worldwide -- even though it's not exactly a strong competitor.

As LinkedIn continues to take up more of job seekers' time and job recruiters' spending power (more on that shortly), the greatest threats to its continuing domination of the professional networking segment are smaller professional networking sites that operate in different geographical markets across the world.

However with more than 160 million members, 61% of this membership in international markets. Meaning the company has cemented itself as the global leader in professional social networks.

What makes this leadership position so valuable? Because this niche market doesn't have to rely on Internet advertising, the business model that has stymied Facebook's profitability and turned Yahoo! into an also-ran.

LinkedIn has found a better way to make money, giving investors like you a way to finally profit along with social media.

A better way to profit from social media

When LinkedIn was created, a simple decision led to a billion-dollar opportunity. The company standardized users' resumes, making them the center of each profile. Competitors instead treated resumes as something that is uploaded and soon forgotten.

Big mistake.

LinkedIn now had something very powerful: data!

This data allowed LinkedIn to package professional information and sell it to job recruiters.

Hiring is often an expensive endeavor, consuming a big chunk of time and money from companies. Yet LinkedIn has revolutionized this process.

The best part is that once you're on LinkedIn, your profile is among the first Google search results when anyone searches your name. The fact that people's resumes are so public creates a reason for users to keep coming back and making sure their resumes are updated.

That in turn makes LinkedIn's already valuable data even more valuable.

The proof of how successful LinkedIn has been is readily apparent.

Last quarter, revenues at LinkedIn surged by more than 100%! Meanwhile, Facebook's revenues grew just 45%.

And this, of course, is because LinkedIn created a product it can sell with recurring revenues. It only has to rely on the fickle advertising market for a quarter of its sales. More than half of sales come from its "hiring solutions" segment where the company packages information and sends it off to recruiters that are quickly moving on to LinkedIn as their main source for identifying talent.

This a huge market that LinkedIn has just scratched the surface of

Monster Worldwide, which has never been known for its vision or world-class execution, collected $1.3 billion in revenues through this model in 2008.

LinkedIn should easily be able to best Monster. The company already has 10,400 large "enterprise" accounts, of which the average account spent about $28,000 last year. However, as recruiters keep interacting with LinkedIn and its best-in-the-industry data, this number has been rising.

LinkedIn is not just adding new accounts, it's taking more and more of the job recruiting dollars from existing accounts. That only happens if your product is substantially better than rival offerings.

Recruiting is a highly fragmented industry relying on headhunters whose information can't match LinkedIn's database of job candidates. Meaning the opportunity for LinkedIn is nothing short of massive.

In the years ahead, the company will continue growing at rates much higher than Facebook as it consolidates its top-dog status over the recruiting industry.

And best of all, there's plenty of growing left to be done. LinkedIn estimates its addressable market at about $27 billion. Having made just $522 million last year, there's a dizzying amount of growth ahead.

So although Facebook might be the sound bite of this generation, sound bites don't lead to investing success; great business models do.

Facebook will continue to soak up all the attention, but LinkedIn has a much stronger ability to make money -- and should continue its gangbuster growth into the future. If you want a social media stock, make the right connection and go with LinkedIn.

Knowing all this, it's little wonder Motley Fool Co-founder David Gardner considers LinkedIn one of the best stocks you can buy right now.

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All numbers as of May 15, 2012.