LinkedIn slow to connect with mobile advertising dollars

Professional social networking giant LinkedIn has seen its share price tumble after announcing weaker-than-expected second quarter revenues, suggesting the company’s new mobile advertising initiatives could take longer to bear fruit than first anticipated.

According to Reuters, the company announced strong first-quarter revenues of $US324.7 million, up 72% from $US188.5 million a year earlier.

LinkedIn’s core recruiting services business generated 57% of the company’s sales, with its revenues up 80% to $US184.3 million, with the company reporting a solid first quarter net income of $22.6 million.

However, despite a strong first quarter, the company disappointed investors by announcing projected second quarter revenues of between $US342 million and $US347 million, below the $US359.3 million tipped by analysts.

The projections caused a 10% fall in the company’s share price, suggesting recent initiatives aimed at growing the company’s advertising could take longer to generate revenue growth than many analysts predicted.

As SmartCompany recently reported, LinkedIn has revealed plans to run trials of mobile ads in future versions of its iPhone and Android apps.

The professional social networking service will also give greater prominence to its newsfeed in future versions, with Twitter-style advertisements interspersed.

The news comes as the percentage of LinkedIn users accessing the service through its mobile apps has grown to a quarter, up from 15% a year ago, as content publishers (including social networks) grab a greater slice of the mobile display ad market at the expense of traditional ad networks.

Meanwhile, recent IDC figures show that in the display sector of the US mobile ad market, publishers (including social media services such as LinkedIn) controlled 52% of US mobile display revenue in 2012, compared to just 39% in 2011, at the expense of ad networks (companies that display advertising in other company’s apps and mobile sites).

In turn, mobile display advertising in the US accounted for 39% of all mobile ads in the US during 2012, with traditional web search ads still accounting for 61% of sales.