LinkedIn and Twitter Struggle to Balance Their Dual Business Model

By Kimberlee Morrison Comment

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Every successful startup has to prove its business model to become a viable business. For social sites, it’s often a delicate balancing act between engaged communities and advertising revenue. It’s a challenge both Twitter and LinkedIn are facing as they increase their offerings for marketers, while trying not to alienate their users-base.

LinkedIn recently launched a service called Marketing Solutions Program, with the goal to deliver better outcomes for marketers as customers move through the buying cycle. The core product in this program is the Linkedin Lead Accelerator: an “analytics tool that helps marketers design campaigns and then track, measure and improve impact across the metrics they care about.”

The tool is designed to track Linkedin users, and their data will be used to generate better leads, both on and off the site. According to VentureBeat, some users were upset by the prospect that LinkedIn might monetize their data, when they’re paying for premium service.

Peter Isaacson, chief marketing officer of B2B marketer Demandbase, told VentureBeat.

I registered [on LinkedIn] because it offered good networking,“and I put all my data in. Now the site is using that data to monetize (the site) I didn’t sign up for that. My personal view is that they are changing the rules of the game.

Twitter is also focusing on revenue and marketing lately, but their stated goal is to improve the user experience, according to VP of Product Kevin Weil.

Weil told TechCrunch:

If we’re building products that leverage those unique aspects of Twitter, then we’re building a product that’s going to make a ton of sense for our users. It’s going to be a great experience. It’s going to feel natural as part of Twitter. That’s really our philosophy.

TechCrunch co-editor Matthew Panzarino sees the focus on users as essential for Twitter moving forward. He also realizes that there’s a tension between users and revenue when it comes to the site.

He wrote:

Recent product decisions appear to be displaying more thoughtfulness about how to balance Twitter’s Dilemma. It remains to be seen whether the market will bear that, or if there is a way to truly find an equilibrium there.

It’s obvious that LinkedIn and Twitter need to leverage their user-data to generate revenue. However, alienating the user-base by exploiting their data could be a risky move.

Image courtesy of Quka / Shutterstock.com.

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