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.
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