Is Mark Zuckerberg crazy, or can he boost revenue 70% in ‘09?

Yesterday, Facebook announced a $200 million investment from Digital Sky Technologies, a Russian-based investment group that I am sure 99% of the Internet business had never heard of before yesterday. But DST is the company behind some of Russia’s biggest Websites, including Mail.ru and social network VKontakte (an amazing clone of Facebook, by the way).

During the conference call announcing the deal, Mark Zuckerberg reiterated a statement, first made in March, that Facebook’s revenue will increase 70% in 2009. Sheryl Sandberg, in a follow-up interview with PaidContent yesterday, also said:

“Our revenue is doing incredibly well—70 percent year over year (growth) this year means that the ad products we’ve built are working, it means that all of our sales channels, all of our markets international and domestic are very healthy, and it means that our ad models are working.”

The 70% figure first came out in a March 2009 New York Times article on the departure of finance chief Gideon Yu:

Regarding its financial state, Facebook said that in the quarter ending Tuesday, it beat its own internal projections and is on track to increase revenue by 70 percent this year.

Can Facebook actually achieve this goal? I’m doubtful. My eMarketer projections estimate 20% growth in ad spending on Facebook this year, to $300 million. Advertising forms the vast majority of Facebook’s revenue. I said as much to Businessweek in an article about the new funding:

“Where is that [70%] going to come from? I can’t see it coming solely from advertising. Either he [Zuckerberg] has some new revenue stream up his sleeve or he is crazy.”

Investment bank Cowen & Co., in a new report on online ad spending, believes the growth will indeed come from advertising and estimates that Facebook’s ad revenue will increase from $258 million in 2008 to $428 million in 2009. Cowen is one of the few companies aside from eMarketer that estimates Facebook revenue.

But Facebook’s future growth, however large or small, will not be solely from advertising. Facebook already generates some revenue from virtual gifts those little icons that people buy with credits and give to friends) and has been rumored to be considering a raft of other revenue streams, from a developer “tax” to ecommerce to virtual currency. New investor Alexander Tamas, of DST, has experience with payment systems and virtual goods at his other Internet companies.

One wild card: the rumor that Facebook is getting ready to launch an ad network based on Facebook Connect. Such a network would be very, very interesting, but also very, very tricky from a consumer privacy perspective. And, as Business Insider points out, advertisers are more focused on performance networks these days than on targeted brand advertising. The business climate for a Facebook ad network may not be right this year, but it could be the perfect temperature in 2010.

How Much Data Do Websites Collect? A Lot

It’s a no-brainer that targeting, in all its forms, is getting huge play on the Internet these days. Ad networks are springing up all over, each promising to deliver the right consumer at the right point in time.

Still, it’s an eye-opener to read in The New York Times that Yahoo and its ad networks collected data on Internet users an average of 2,500 times PER PERSON in December. You probably thought Google was the biggest collector of data, but it gathered information “just” 578 times in the month.

The figures do not include data that people publicly post on social networking sites or blogs. It’s based on search queries, page views and video views, among other things.

It’s curious that comScore was so involved in assisting the NY Times in this story.  They did the original analysis for the paper. (All you metrics geeks can click on the graphic links to the left of the article for more charts and a full spreadsheet of numbers.)

What isn’t discussed much in the article is that data can have varying degrees of value to marketers. A page impression may have low value, but a search query may be even more valuable. But the article and data do show why ad networks are such a hot commodity these days. The more information they have, the more valuable they may be.