Facebook’s Numbers Are Head-Spinning

Being spent after a flight from LA to London, there hasn’t been a lot of opportunity to catch up on what’s going on, so it’s a good thing that eMarketer’s Facebook revenue projections caught my eye.  With a projection of more than doubling their worldwide revenue from year to year – 4.27 billion in 2011 after 2 billion in 2010 – my already exhausted head is spinning further.

The report highlighted that advertising will bring in the bulk of it at 3.8 billion.  The concern advertisers have with effectiveness of ads on Facebook has been brought up due to low click-through rates, with many brands choosing to rely solely on building their own Facebook pages and relying on people to like them.  That direction is cost-effective, but brands are still having to build in budgets for the constant updates to their sites or tabs in order to keep up with Facebook’s tinkering.  Perhaps the sales group will devise special upgrade components that allow for more dynamic updating of content as the site changes.  I had asked the team representing Facebook sales at ad:tech London last year and they didn’t know of any programs to do so – effectively providing more added value for your brand page if you engage in actual spend.

Certainly, Advertising revenue is a no brainer but the huge upswing in Facebook Credits is an eye opener – jumping from 140 million in 2010 to 480 million this year.  Facebook Credits is something that could end up taking on an entire life of its own and end up being much larger than the percentage of revenue from advertising.  Think about it.  People are constantly bringing up that Facebook would be one of the top economies in the world based on the active users and the money going through their system – again, 4.27 BILLION.  What to say that Facebook Credits will not become an accepted form of currency outside of the digital realm.  From a barter point of view, those credits have already jumped out of the computer.  Imagine if that much value – and it continues to grow – was being circulated as currency equivalent of Dollars, Pounds and Euros.  There would be quite a blip in our financial system.

Many people saw The Social Network and were amazed that advertising was essentially pushed aside at the onset of Facebook.  In hindsight, it might have only been the stop-gap measure that was either low-hanging fruit or effectively forced upon it to make the investors happy at the time.  Perhaps the beauty of their growth – whether it was intended or not – is that when you base a product on the people and just grow that community, the revenue streams can become just as organic.  That organic value can really enable you to not worry so much about focusing on one source of revenue, like advertising, but being open to anything and trying anything within reason.  As long as you don’t lose users because of anything you try, you’re in good shape.  Perhaps this is too much jetlagged altruism, but it is exciting and daunting to see where this all ends up.

After two consecutive years of projected doubling of revenue, could there be a third and a fourth doubling?  Could advertising revenue end up being a small percentage of the company’s worth as it continues to evolve?  Will Facebook ever release their own numbers? How fitting that I get to ask that very question to Gail Power, Facebook’s EMEA Director of Online Sales and Operations tomorrow during ad:tech London!

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