LinkedIn (NYSE:LNKD), which gets about half of its stock value
from its recruitment services and job postings business, also
derives about 28% of its value from advertisements and marketing.
Revenue per 1,000 page views (
), a parameter used to measure ad pricing, is an important metric
for the online ad market. In this space, LinkedIn competes with big
names like Facebook, Yahoo (NASDAQ:YHOO) and Google
We currently maintain a
$30 price estimate for LinkedIn stock
, which suggests that LinkedIn's current market valuation is
LinkedIn's Valuation as Facebook of Recruiting Hard
More Targeted Approach Should Lift LinkedIn's Ad
LinkedIn's RPM has declined over the last few years from around
$5.2 per 1,000 page views in 2007 to $4.4 per 1,000 page views in
2010. However, we expect a rebound in ad pricing levels for
LinkedIn as the company has started to focus on providing features
to serve more targeted ads.
A few months back, the company introduced the self-service
advertising offering named LinkedIn Ads, which allows advertisers
to target people by specific job title, company name or
LinkedIn Group, in addition to the previously available options of
geography, job function, industry, company size, seniority, age and
gender. This feature allows companies to show ads only to
members most likely to purchase their products or services.
According to LinkedIn, customers who have launched
campaigns with these new targeting options report click-through
rates 3x to 4x higher than other campaigns. Click-through rates
have a direct correlation with the advertisement RPM rates, and
hence LinkedIn should benefit from this increase.
See our complete analysis for LinkedIn stock