At least one social network knows how to make money: LinkedIn, the social network for business professionals.

Presumably because of both its desirable member base - professional and affluent - and the network’s ability to target them, LinkedIn has experienced enormous demand from companies wanting to advertise on the network. So much so that it’s able to charge CPMs (cost per thousand impressions) for display ads that start at $30 CPM and text ads from between $12 and $20 CPM. This is when most social networks are lucky to get $1 CPM.

Demand from advertisers appears to have prompted LinkedIn to launch its own ad network. It will also work ad network Collective Media (which targets high-end media sites) to let other select sites target its users when they visit those partner sites.

LinkedIn has 27 million registered users, far behind the 100 million Facebook has worldwide. But, TechCrunch points out, it’s not about quantity… it’s about quality.

It seems that LinkedIn’s ‘quality’ 27 million users offers advertisers a much more valuable audience - with members having an average household income of $110,000, 64 percent male, an average age of 41, and 49 percent ‘decision makers’.

Presumably advertisers expect to achieve a greater return on investment (ROI) money by advertising to these people rather than the members of other social networks.

Source: Erick Schonfeld, “LinkedIn To Launch Its Own Ad Network”, TechCrunch, September 14, 2008