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STRATEGY

What Twitter, Facebook, and LinkedIn Make off Their Users

It's the ultimate smackdown--which company wins the revenue race?
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Twitter's IPO is all anyone can discuss at the Keurig machine. But what people really want to know is how much the microblogging service makes off its 218.3 million monthly active users. 

So how is the company doing compared to the likes of Facebook and LinkedIn? We talked to Morningstar senior equity analyst Rick Summer about how these companies stack up--and which site has the most profitable users.

Twitter

Estimated revenue per user: $0.64

Though Twitter refrained from disclosing this information in its IPO filing, Summer estimates that the micro-blogging service earned $0.64 per monthly active user in the second quarter of 2013. The majority of Twitter's quarterly revenue (87 percent) came from advertising, about $389 million. The rest came from data licensing. The company may find new paths to revenue, says Summer, as Twitter is "heavily investing" in other areas including its sales and technology platforms. It also has a firm grasp on mobile; about 60 percent of its users check Twitter via their phones at least once a month. 

Facebook

Estimated revenue per user: $1.60

Summer speculates that Facebook earned $1.60 per monthly active user over the same quarter, driven mostly by advertising. Facebook also has a payments service, which padded its profits (though growth has stalled as not everyone feels comfortable sharing their credit card info with the social network). Still, despite its shaky stock market debut, the company is solidly profitable, thanks to its engaged user base and ads that effectively target users based on their age, location, and interests.

LinkedIn 

Estimated revenue per user: $0.60

According to Summer, the professional social network earned $0.60 per monthly active user in the second quarter. Unlike the other companies mentioned here, LinkedIn makes three-quarters of its revenue from subscriptions and premium services. LinkedIn's users are not as active on its site as they are on Facebook or Twitter. But LinkedIn has managed to create a wealth of content that keeps visitors hanging around longer. 

Last updated: Oct 9, 2013




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