What the LinkedIn IPO means for social networking and your marketing plans

LinkedIn made history as the first social networking site to go public, in an initial public offering that left investors stunned. At the end of the first day, LinkedIn was valued at an impressive $8.9 billion - an opening day surge of 109 percent.

Social media has arrived

 

LinkedIn's internet IPO was the biggest since Google went public in 2004, and for many investors it represents social media's debut on Wall Street. Financial analysts believe that this stunning IPO will cause other social media companies to scramble to go public as well, with the hopes of reaping similar profits (it is worth noting that the closing price on LinkedIn's first day was 36 times its revenue in 2010).

A new business model?

 

What is intriguing about social networking companies is that they usually grow quickly and organically. This is because social media is more valuable to users if they can involve their friends and acquaintances, so it is in users' best interest to attract as many new users if they can. With this business model, social media companies do not have to spend obscene amounts of money on marketing and incentives - their users do the selling for them.

 

The next social networking IPO will be...

 

There are more social networking companies poised for IPOs. Analysts believe that companies like Facebook, Pandora, Yelp and Groupon will go public within the next year.

 

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