A recent report from the Reuters and revenues at Facebook topped $800 million in 2009, well over the (high-end) estimates of $700 million. Facebook is a privately owned company that need not report its precise numbers to shareholders, but Reuters talked with sources within the company who said the income far surpassed the mid-year estimates stated by Facebook board member Marc Andreessen. With some 500 million members (by far the most popular social network site in the US, and with ever-growing allegiances through much of the world), Facebook makes most of its income via advertising. The question is: how much are advertisers willing to pay to reach those millions via their Facebook accounts?believes that
The New York Times did some mathematical speculations on such a question based on ‘Costs Per Click’ reported by some advertisers and the revenue likely flowing into Facebook based on such costs. Again, Facebook need not open its books to the public, so the data is ‘suggestive,’ not conclusive.
Adults (35-44 years old) generally are more expensive to reach than teenagers at a rate of about $1.15 to $.65. People in Britain and the US are generally more expensive to tempt than people in Japan (where Facebook is growing, but still has a rather small presence). Those who list CNBC and other financial news sources as main interests are expensive to reach as well, probably because they are more aware of the pull of online advertising and are more willing to resist it until a message/advertisement really connects with them.
Indeed, as Reuters reports, connecting to users’ interests may be Facebook’s strongest suit, as part of the allure of the network is sharing your interests with others:
“We can provide really good, relevant advertising to people because they tell us exactly what they are interested in, and who they know, and those people tell us what they’re interested in,” Facebook Chief Executive Zuckerberg said at the All Things Digital conference this month.
He cited statements by other Facebook executives that the number of advertisers on Facebook had increased by a factor of four during the past year-and-a-half.
The company’s reach and income is set to expand still further as itas a means to draw people towards its partners and their products or online applications. The credits will be rolling out this summer, and although Facebook has demanded 30% of revenues from all developers who buy into the system, few third parties have expressed any real resistance. Indeed, Facebook will be giving away credits for a while to get people engaged in the program. Deb Liu, Facebook’s Credit Manager, also argues that the burgeoning credits system will have built in protections for users:
Developers can detect fraud in their apps alone. But Facebook can look at a user’s behavior across all apps and figure out if there is an attempt at fraud. If a user who lives in the U.S. signs on from another country and then starts buying a lot of things, out of habit, Facebook alone will be able to spot that as a red flag.
Another red flag, though, will be Facebooks efforts to ‘improve liquidity’ and ‘remove friction’ from users’ purchases by, for example, automatically adding credits (via a credit card or bank account) when one’s Facebook account drops below a stated threshold. Such an abstraction of virtual money (and thus virtual value) might also make Facebook Credits a source of financial woe for those who do not keep a sharp eye on their real money as it flows toward Facebook and its partners. Easy credit and bundled payments have a way of upsetting markets. Take housing, for example…