It’s been suggested recently by the Wall Street Journal that Facebook revenues for 2010 could hit between $1.2 and $2 billion. The article was published just a few days ago by Jessica Vascellaro and also touches on how Facebook’s CEO Mark Zuckerburg isn’t itching to take Facebook public. Estimates from December last year had said Facebook’s 2010 revenues would be around $700 million.
InsideFacebook.com (IF) reports similar news, though their numbers hit the lower end of the scale. Reporter Eric Eldon explains that various sources have revealed expectations for Facebook’s revenue to hit over a billion this year, possibly $1.1 billion.
So how does the company make all this money? IF’s article lists four sources of Facebook’s income: brand advertising, Microsoft advertising, virtual goods, and performance advertising. Because Facebook’s traffic is continuing to grow, IF expects Facebook’s ad inventory and value to big brands to increase to $350 million. It expects Microsoft advertising on Facebook to falter, its virtual goods sales were its real gold mine (it takes a 30 percent cut on virtual credits).
“The company will, in our view, gradually chip away at brand advertising spending on other big web sites, including Yahoo and MySpace,” states IF. “The optimistic case for Facebook, in terms of its brand advertising revenue, is that it will get most of this advertising and bring it alone up into the billions range, eventually.”
IF also revealed something from the rumour mill: apparently Facebook may make credits mandatory, and the exclusive virtual currency for purchasing virtual goods from applications on Facebook.
Finally, performance advertising was the fourth way Facebook has been generating this massive cash flow. Apparently, though, social games are going to be spending more this year on advertising than they ever have before, due to more competition than ever before, and also inhibitions on viral games. Facebook’s features, third-party tools, and interest from advertisers should bring income from this category up to $600 billion in 2010, reports IF.
How do these numbers compare to 2009? The social networking giant made over $600 million. The bulk of this revenue was generated through performance advertising, followed by brand advertising, and trailed distantly by Microsoft advertising (at only $50 million) and even more distantly by virtual goods (at only $30 million).
It has been something of a tradition for Facebook’s revenues to double, year-over-year. In 2007, they were $150 million, and they hit $300 million the next year.
The Facebook execs are keeping their mouths shut when it comes to commenting on these figures, or speculating about future ones. However, it seems clear they’ve got a mighty airtight plan figured out in how to dominate the internet and generate huge streams of income.
The company was also in the news recently for securing the patent for its news feed, which it may be able to use to protect its intellectual property, while also forcing other companies with news feeds (like MySpace, Google, and Twitter) to take them down.
Kaila Krayewski is a freelance journalist with a passion for all things internet. Having worked for nearly two years as the public relations manager for an internation search engine optimization company, and publishing hundreds of articles (how-to, informational, and otherwise) on SEO, she knows a thing or two about the field. Furthermore, having just started up her own website blondetraveler.com, she is doing her best to keep one step ahead of the search engines in order to keep the traffic flowing.
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