Facebook Forecast To Earn $1.29B In Ad Revenue This Year

Facebook’s raking in the money and crushing the competition, according to a new report from eMarketer. eMarketer believes advertisers will pay Facebook $1.29 billion this year, which is about 3.7 times the amount it expects MySpace to receive.

You can read a Facebook-specific chart for yourself below. As for its traditional rival, eMarketer said in a statement, "MySpace is diminishing in importance, with an expected $297 million in ad revenues worldwide next year, down 14% from $347 million this year."

MySpace isn’t the only company that’s not doing so well in comparison to Facebook, either. Remember AOL and the revival that was/is supposed to take place due to former Googler Tim Armstrong’s leadership? Well, eMarketer thinks AOL will see just $890 million in U.S. ad revenues this year, which is pretty close to Facebook’s $835 million.

That puts Facebook in an impressive position, considering that the company doesn’t even seem to be trying hard to attract advertisers at this point. We’re all familiar enough with its growth rate to know users aren’t exactly jumping ship, either.

Meanwhile, these stats make it look even more unlikely that Google will be able to create a successful social product. After all, failures like Google Lively and Google Wave have shown that it has trouble appealing to consumers; now it appears Facebook can imitate Google’s renowned ability to appeal to advertisers.

eMarketer senior analyst Debra Aho Williamson concluded, "Brand advertisers are making Facebook a core buy. Ad spending is building quickly and the mass audience is one that marketers cannot ignore any longer."

As you point out, MySpace and AOL have become less relevant than they were at their pinnacle, and so too will be the case with Facebook.

I say this for two reasons. First, our company has monitored and tracked both top-of-funnel (TOF) leads and bottom-of-funnel (BOF) sales for the advertising campaigns that we’ve developed and managed on behalf of our clients. Although TOF cost per lead (CPL) tends to be in the same range as a well-structured and managed Google campaign, the leads generated by Facebook tend to convert poorly at BOF, leading to a significantly higher average cost of acquisition (COA).

Fortunately for Facebook, their growth in advertising revenue is being fueled by less-sophistocated advertisers who don’t yet realize that that Facebook leads don’t convert into paying customers as well as they do on other more mature advertising channels, but advertisers of all sorts will soon figure that out, and when they do it will be revealed that “the Emeror has no clothes.”

Second, although Facebook has made it very easy to place advertisements (further fueling the growth of less-sophistocated advertisers), the monitoring and optimimizations tools to enhance the performance of a Facebook advertising campaign are virtually non-existant.

I think Facebook advertising revenue growth looks great today, but it’s important to remember that “a rising tide lifts all boats”. As long as Facebook’s subscriber growth continues, advertisers will always want to be where the people are. But soon advertisers will realize that Facebook advertising is more of a fad than a sustainable, useful advertising vehicle.

– @MySEMexpert

There are 6 Comments. Add Yours.

Blue Lotus
August 12, 2010 at 5:40 pm

1.29 billion is an obcene amount of money. They should reduce their advertizing costs or give a chunk of that to charity.
MySEMexpert
August 12, 2010 at 8:47 pm

As you point out, MySpace and AOL have become less relevant than they were at their pinnacle, and so too will be the case with Facebook.

I say this for two reasons. First, our company has monitored and tracked both top-of-funnel (TOF) leads and bottom-of-funnel (BOF) sales for the advertising campaigns that we’ve developed and managed on behalf of our clients. Although TOF cost per lead (CPL) tends to be in the same range as a well-structured and managed Google campaign, the leads generated by Facebook tend to convert poorly at BOF, leading to a significantly higher average cost of acquisition (COA).

Fortunately for Facebook, their growth in advertising revenue is being fueled by less-sophistocated advertisers who don’t yet realize that that Facebook leads don’t convert into paying customers as well as they do on other more mature advertising channels, but advertisers of all sorts will soon figure that out, and when they do it will be revealed that “the Emeror has no clothes.”

Second, although Facebook has made it very easy to place advertisements (further fueling the growth of less-sophistocated advertisers), the monitoring and optimimizations tools to enhance the performance of a Facebook advertising campaign are virtually non-existant.

I think Facebook advertising revenue growth looks great today, but it’s important to remember that “a rising tide lifts all boats”. As long as Facebook’s subscriber growth continues, advertisers will always want to be where the people are. But soon advertisers will realize that Facebook advertising is more of a fad than a sustainable, useful advertising vehicle.

– @MySEMexpert
wholesale japanese fashion
August 13, 2010 at 2:44 am

$1.29B?Wow,It’s so much.But this may be Facebook deserved.Congratulation!
Robart Dino
August 13, 2010 at 9:23 am

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Guest
August 15, 2010 at 10:15 am

Give a chunk to charity? Right. Take my hard-earned money and give it to a moocher that has no clue how to earn their own money. If the charity would be a little creative and advertise on FB, they would earn more money than they could claim a tax exemption for.
blackjack
August 16, 2010 at 8:28 am

So why doesnt Facebook offer Facebook owners and users a residual share of the proceeds

after all its the Facebook people that build the base that Facebook derives its revenue from so fairs fair give some back