As if we needed more evidence that Facebook is not only making money but it appears to be making very real money, the estimates for this year’s revenue keep going up.
It was only last month that eMarketer said Facebook’s ad sales for the year would likely total $1.2 billion. In a report today on the state of the overall ad market, Cowen & Co. analyst Jim Friedland says he expects that number to actually total more than $1.6 billion and non-ad revenue to bring Facebook’s overall sales to nearly $1.75 billion for the year.
Not bad for a company whose beginnings are the stuff of Silicon Valley lore that will this weekend show up in the theaters as entertainment.
So why the increase in estimates? First of all, they are just that …. estimates. Facebook is a privately held company and even after the year is over we will only be left guessing at just how much the social media behemoth was able to make in 2010.
Why is it important? It’s important for us as marketers to get a true sense of the real impact of Facebook. How Facebook impacts a business through advertising and exposure are all being discovered anew every day. If there is evidence, however, that people are seeing it as a viable advertising alternative then that merits more attention by the business community at large.
One caution is that while advertisers keep flocking to Facebook it will be important to watch to see who stays. Right now Facebook will enjoy the ride as more people experiment with the site with their ad dollars. With 500 million users there are a lot of reasons for a lot of companies to at least give the option a shot. As a result, Facebook will see revenue rise just on companies experimenting. It’s the return that these companies receive that will determine just how high in the sky this star can rise.
The real story will be told when there is enough data and evidence as to how effective that advertising is. Also, Facebook will need to continue to innovate and find more ways to monetize their unprecedented popularity.
As for the future? It depends on whose guesstimate you want to pay attention to
Friedland expects Facebook’s U.S. ad sales to total $1.05 billion and international ad sales to come in at roughly $500 million. eMarketer put U.S. ad revenue at $835 million and worldwide sales at $450 million. Next year, Friedland expects Facebook’s ad sales to total $3.2 billion, nearly double what eMarketer is expecting.
So the future looks bright for Facebook which comes as no surprise.
Now for the real question. Do you plan to spend your entertainment dollars on seeing “The Social Network” in the theaters? For me personally there has never been a more “wait for the DVD then maybe watch it later” movie but that’s just me. How about you?