Dwell Time is Crucial for Social Media Advertising Revenue

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By Jacob Maslow

Computer Keyboard With Social Media Keys
Computer Keyboard With Social Media Keys

Whether you’re a shareholder in LinkedIn (NYSE:LNKD), Twitter (NYSE:TWTR), or Facebook (NASDAQ:FB), you need to pay attention to one key online advertising metric: dwell time. Dwell time is the amount of time people look at a screen or spend consuming content. Dwell time is crucial because it can impact the overall revenue potential of a company. If a company has a very short dwell time, unless it has other offsetting features, its advertising revenues might not be all that hot. However, if a company does have a lot of dwell time, but it’s low quality dwell time, that might not be any good either.

Dwell time is kind of a tricky metric to consider because it’s very contextual. Its value totally depends on what people are consuming, who these people are, and the overall context of their content consumption. This is very important to know because if you are looking to get into Twitter, you need to make sure that you’re not throwing away your hard-earned money. The same with Facebook.

Facebook is having a great time right now in terms of stock valuations, but it’s under a lot of pressure. It needs to generate a lot more money to justify its market value. Facebook is worth a lot of money now. It’s worth more than established companies like Ebay (NASDAQ:EBAY). Ebay actually generates tons of cash through online sales. How long can Facebook keep generating billions off its ads at the same rate?

That’s the open question and a lot of it boils down to dwell time.

As an investor, you have to look at the quantity of dwell time as well as its quality implications. With quality, you need to pay attention to who’s looking at the content. Are these people looking for jobs?

Are these people who have jobs that occupy certain levels in the company hierarchy? Are these specialists or are these rank and file consumers? Worst of all, are these students? What countries are these people from? Are they in the United States or Europe or are they coming from developing countries? All these different factors combine and can directly impact not just present revenues but future revenue levels as well.

Based on all these factors, LinkedIn is probably your best social media bet. In fact, I would venture to guess that LinkedIn is a smarter bet than Facebook. Think about it, people will always be looking for jobs. People have been looking for jobs in the past, are looking for employment now, and will be looking for a livelihood way into the future. Just from that perspective alone, there will always be a need for LinkedIn.

However, if LinkedIn really improves its dwell time and content management systems, it can really blow away Facebook in terms of advertising revenues for the content shared on LinkedIn. Don’t count LinkedIn out as a social networking play. I think it’s a stronger social networking play than it is as a job site play.

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