Some of the numbers given out by social media sites can look very impressive. That Facebook has a billion active users each month is an incredible statistic. That Twitter sends out more than 340 million tweets each day is an amazing feat for a service that for a long time seemed to have no obvious use at all. That LinkedIn has more than 2.7 million business pages makes the Yellow Pages look like a miniature Post-It note.
And yet, dig a little further into those figures and you turn up some other numbers that are a little less impressive.
Those 340 million tweets that go out each day, for example, may be sent by 200 million people but in practice half of those tweets could be coming from just 0.05 percent of the service’s userbase. The median number of friends per user on Facebook is just 100. LinkedIn might now have 200 million users but the site has been around since 2003. Pinterest, by contrast, picked up 100 million users in its first two years.
But the most startling figures are the most important to investors: the average revenue per user. Of the main social media sites, LinkedIn is the most impressive — at least in terms of the rate at which it translates views into revenues. The site generates an average of $1.30 in revenue for every hour its users spend on the site. That’s about twenty times what Facebook is able to generate from its larger and broader but less targeted and less professional userbase.
Make More than a Fiver and You’re Winning
To put it another way, Facebook has to persuade its users to spend an average of 6.4 hours a month on the site to earn what LinkedIn makes serving its content to its users for just eighteen minutes a month.
The result, though, is the same. Facebook’s revenues in 2012 were around $5 billion from around one billion users. LinkedIn made $972 million from 200 million users, so both were averaging around five bucks per user.
Those figures do hide some pretty broad variations between members in different parts of the world and in the different ways in which they access the platforms. Facebook’s US users generated an average of $9.51 in ad revenue each in 2011, making up for income as low as a $1.42 per user outside Europe, Asia and North America. And the biggest challenge for the site now is to generate ad revenue on the small screens served by what CEO Sheryl Sandberg is already calling a mobile company.
For business users of social media, that five dollar figure is the one to bear in mind. If the overall revenues for the most successful and mature social media sites tend to be around $5 per user per year then you have a pretty good ball park for the amounts to aim at in your own strategies. Generate more than ten bucks from each North American user and you can say that you’re outperforming the sites themselves.
Okay, this is my financial report for the year. It is kind of useless and silly like the toad in the picture above.