A new report from eMarketer yesterday suggests that over $1.2 billion will be spent on advertising on Facebook. That spending accounts for the vast majority of the $1.68 billion that will be spent on advertising across all social networks. The rapid growth illustrates a number of things however the most obvious is that Facebook is completely dominating social advertising expenditures as well as that 2010 may just be the year that social media advertising becomes more mainstream. eMarketers projections also suggests that at the current rate, social network advertising will not generate the breakthrough revenues that Facebook is in search of.
Given that advertising was hit hard by the recession, it’s actually somewhat impressive that social network ad spends have been so resilient. This was actually somewhat predictable though, which is why Facebook has continued hiring and acquiring companies during the down turn. Also, eMarketer’s existing projections are most likely conservative estimates which means Facebook could theoretically come up with a “breakthrough” advertising model as long as advertisers decide that the ROI is dramatic enough. While advertisers are pouring money into the company, Facebook still has very few “large” advertisers who spend anymore than a couple million a quarter.
While any client who spends $8 million a year is notable, the reality is that Facebook needs to start attracting brands who are willing to invest $100 million a year if they are going to reach Google-scale. To put things in perspective, Google generates almost 6 times Facebook’s annual ad revenue per quarter. In other words, Google generates as much revenue as Facebook does for the entire year, in a mere 2 weeks. While it’s incredible to tout the billion dollar revenue figures, Facebook is involved in a high stakes game in which large investors have poured hundreds of millions of dollars into the company, expecting for Facebook to generate substantial returns in what’s becoming the immediate future.
Mark Zuckerberg, CEO of Facebook, appears to continue to drive the company in the direction of growing its user base over allocating resources toward monetization. Yes, Facebook has launched their Credits service, and there’s no doubt that it will add up to become a very large business. However Facebook needs to focus on new monetization sources and on ways that will be able to fuel the global marketplace. While most entrepreneurs would give just about anything to have a company that’s generating $1.2 billion a year in ad revenue, Facebook’s going to need to be able to produce something much greater that will will make eMarketer’s estimates look outlandish.
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Yeah, because they just FINANCED another 100mill for servers, and they haven't even paid off the FIRST 100mill worth of servers they financed. Making money FB is; the media and everyone says? BULL. They'd be broke if it weren't for idiot companies who keep pouring wasted money in FB hoping it will pay off. It won't. It's a spam hole now that they let everyone and their hacker spambot friend on.
Comment by Guest — August 17, 2010 @ 2:57 pm
unfortunately I agree. The reports says that its kind of weird that with recession, a social ad spends rose. here is my story: a friend comes to me that he just learnt about facebook and that he can advertise there…. he narrowed ad search to exactly what users would be interested in and still got oexited seeing 450,000 users. wow! so he put $10 per day… that generated about 45,000 impressions… wow! then… the clickthrough … 1.2% == 540 clicks… out of which 99% bounce rate. now, you can think that there are many aspects why this didnt work out: 1) bad advertise 2) bad targeting 3) bad website 4) bed product… and for that reason Facebook will not go anywhere! there will be millions of people that need to figure out on their own that advertising there does not work. people dont go to facebook to shop, period! as of my friend, he tested with other forms of add, get really good webdesign house and spent another 5,000 in redesigning his site… he came to me a while ago and told me this is b*** s*** and he wont put a dollar more (waste). I guess before 1 billion people finds out the same hard way, facebook WILL produce couple strong quarters. its a business model that takes advantage of uninformed and unexperienced internet users (business owners) that are being fooled by billion of eyeballs (not buy-balls, only eyeballs)
Comment by danie — September 22, 2010 @ 1:12 pm
[...] knows whether Facebook is providing advertisers with public data or, you know, the other kind. With $1.2 billion in ad revenue this year, they might not rely on self-reported stats. Ooh, imagine if they read your IP?). Twitter, however, [...]
Pingback by Erica Glasier: Oversocialized! » Blog Archive » Extracting demographics from social media profiles: holes in (Twitter) data. — December 21, 2010 @ 7:50 am
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Comment by gadget | technology — November 16, 2011 @ 8:14 am