I’ve been getting the question a lot lately: If Facebook says it will increase revenue 70% in 2009, and if board member Marc Andreessen publicly says revenue will be at least $500 million this year, then why is eMarketer’s estimate only $300 million?
I’ll take a moment to explain.
Our estimate covers only ad spending on Facebook, and does not include any other form of revenue. Facebook currently gets some revenue from virtual goods (as much as $75 million, according to one estimate I saw recently). In addition, I expect that Facebook will launch other revenue streams this year, such as payments/e-commerce.
Our estimate for worldwide ad spending on Facebook in 2009 is $300 million. That breaks down to $230 million in the US and $70 million outside the US.
So if you add our estimate of $300 million in worldwide ad spending, plus about $75 million in virtual gift revenue, that equals $375 million. Assuming Facebook launches a payments system, that could bring in several million more in revenue (I don’t have a specific estimate on that).
The end result would still be lower than $500 million, and the reason for the difference is that while I am optimistic about Facebook, I am not as confident as Facebook is on its ability grow revenue 70% this year. With total US online ad spending slated to rise just 4.5% this year (according to eMarketer’s most recent projections) it will be an immense challenge for Facebook to increase total revenue 70%.
I will continue to watch the numbers, so we’ll see how things shake out.